As filed with the Securities and Exchange Commission on April 20, 2012
Registration Statement No. 333-139776
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RIVERSOURCE LIFE INSURANCE COMPANY
(Exact name of registrant as specified in charter)
------------------------
Minnesota 41-0823832
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
70100 Ameriprise Financial Center
Minneapolis, MN 55474
(800) 862-7919
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
Dixie Carroll
RiverSource Life Insurance Company
50605 Ameriprise Financial Center
Minneapolis, Minnesota 55474
(612) 678-4177
------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: as soon as
practicable after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
================================================================================
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] Smaller reporting company [ ]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Amount to Proposed Proposed maximum Amount of
be maximum offering aggregate offering registration
Title of each class of securities to be registered registered price per unit price* fee**
---------------------------------------------------------- ---------- ---------------- ------------------ ------------
Guarantee Period Account Interests offered in connection
with the following variable annuity contracts:
RiverSource(R) AccessChoice Select Variable Annuity
RiverSource(R) Builder Select Variable Annuity
RiverSource(R) Endeavor Select Variable Annuity
RiverSource(R) FlexChoice Variable Annuity
RiverSource(R) FlexChoice Select Variable Annuity
RiverSource(R) Galaxy Premier Variable Annuity
RiverSource(R) Innovations Variable Annuity
RiverSource(R) Innovations Select Variable Annuity
RiverSource(R) Innovations Classic Variable Annuity -- -- $ 0 $ 0
RiverSource(R) Innovations Classic Select Variable Annuity
RiverSource(R) New Solutions Variable Annuity
RiverSource(R) Pinnacle Variable Annuity
RiverSource(R) Signature Variable Annuity
RiverSource(R) Signature Select Variable Annuity
RiverSource(R) Signature One Variable Annuity
RiverSource(R) Signature One Select Variable Annuity
Evergreen Essential(SM) Variable Annuity
Evergreen New Solutions Variable Annuity
---------------------------------------------------------- ---------- ---------------- ------------------ ------------
Evergreen New Solutions Select Variable Annuity
Evergreen Pathways(SM) Variable Annuity
Evergreen Pathways(SM) Select Variable Annuity
Evergreen Privilege(SM) Variable Annuity
Wells Fargo Advantage(R) Variable Annuity
Wells Fargo Advantage(R) Select Variable Annuity
Wells Fargo Advantage(R) Builder Variable Annuity
Wells Fargo Advantage Choice(SM) Variable Annuity
Wells Fargo Advantage Choice(SM) Select Variable Annuity
*The proposed aggregate offering price is estimated solely for determining the
registration fee. The amount being registered and the proposed maximum offering
price per unit are not applicable since these securities are not issued in
predetermined amounts or units.
** No new securities are being registered pursuant to this registration
statement on Form S-3. In reliance on Rule 429 under the Securities Act of 1933,
the difference between the $350,000,000 of securities registered on Securities
Act Registration Statement No. 333-65080 (for which a registration fee of
$87,500 was paid) and the dollar amount of securities sold thereunder is carried
forward into this registration statement on Form S-3, and the prospectuses
contained as part of this registration statement shall be deemed to be combined
with the prospectus contained in the above-referenced registration statement,
which has previously been filed.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
This Post-Effective Amendment No. 1 on Form S-3 relates solely to the guarantee
period account interests initially registered by the registrant on the
Registration Statement on Form S-1 (File No. 333-139776, which acts as an
effective Post-Effective Amendment to Nos. 333-114937, 333-65080 and 333-86297)
declared effective by the Securities and Exchange Commission on January 3, 2007.
This Post-Effective Amendment No. 1 on Form S-3 is being filed to convert such
Registration Statement on Form S-1 into a Registration Statement on Form S-3 and
to update the information in such Registration Statement for the information
included in the registrant's annual report on Form 10-K for the year ended
December 31, 2011. All filing fees payable in connection with the registration
of these securities were previously paid in connection with the filing of the
original registration statements relating to the guarantee period account
interests.
PART I.
INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
NEW SOLUTIONS VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc.
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM)
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
The contract provides for purchase payment credits which we may reverse up to
the maximum withdrawal charge under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits.") Expense charges from contracts with
purchase payment credits may be higher than charges for contracts without such
credits. The amount of the credit may be more than offset by additional fees and
charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
GUARANTEE PERIOD ACCOUNTS (GPAS)............. 16
THE ONE-YEAR FIXED ACCOUNT................... 18
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 21
VALUING YOUR INVESTMENT...................... 26
MAKING THE MOST OF YOUR CONTRACT............. 27
WITHDRAWALS.................................. 32
TSA -- SPECIAL PROVISIONS.................... 33
CHANGING OWNERSHIP........................... 33
BENEFITS IN CASE OF DEATH.................... 34
OPTIONAL BENEFITS............................ 37
THE ANNUITY PAYOUT PERIOD.................... 46
TAXES........................................ 48
VOTING RIGHTS................................ 51
SUBSTITUTION OF INVESTMENTS.................. 52
ABOUT THE SERVICE PROVIDERS.................. 52
ADDITIONAL INFORMATION....................... 53
APPENDIX A: PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL................ 55
APPENDIX B: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 57
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 62
--------------------------------------------------------------------------------
2 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There may be restrictions on the timing of transfers from this
account. (See "The One-Year Fixed Account")
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Purchase payment
amounts and purchase payment timing may vary by state and be limited under the
terms of your contract. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. GPAs and one-year fixed account transfers are subject to
special restrictions. (See "Making the Most of Your Contract -- Transferring
Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you purchased a qualified annuity, the payout schedule must meet
IRS requirements. We can make payouts on a fixed or variable basis, or both.
Total monthly payouts may include amounts from each subaccount and the one-year
fixed account. During the annuity payout period, your choices for subaccounts
may be limited. The GPAs are not available during the payout period. (See "The
Annuity Payout Period")
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 7
4 7
5 6
6 5
7 3
Thereafter 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose a death benefit guarantee and whether you want a qualified or
nonqualified plan. The combination you choose determines the mortality and
expense risk fees you pay. The table below shows the combinations available to
you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY TOTAL VARIABLE
ADMINISTRATIVE CHARGE AND EXPENSE RISK FEE ACCOUNT EXPENSE
QUALIFIED ANNUITIES:
Return of Purchase Payment (ROP) death 0.85% 1.00%
benefit 0.15%
Maximum Anniversary Value (MAV) death 0.95 1.10
benefit 0.15
NONQUALIFIED ANNUITIES:
Return of Purchase Payment death benefit 0.15 1.10 1.25
Maximum Anniversary Value death benefit 0.15 1.20 1.35
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.30%*
(As a percentage of the adjusted contract value charged annually on the
contract anniversary.)
PERFORMANCE CREDIT RIDER (PCR) FEE 0.15%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM TOTAL ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.60%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75% 0.25% 0.19% --% 1.19%
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Balanced Fund (Class 3) 0.64 0.13 0.16 -- 0.93(1)
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 0.56 0.10 0.09 -- 0.75
Fidelity(R) VIP High Income Portfolio Service Class 0.57 0.10 0.12 -- 0.79
Fidelity(R) VIP Mid Cap Portfolio Service Class 0.56 0.10 0.10 -- 0.76
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Developing Markets Securities Fund - Class 1.10 0.25 0.25 -- 1.60
2
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
--------------------------------------------------------------------------------
8 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Invesco V.I. Core Equity Fund, Series I Shares 0.61% --% 0.28% --% 0.89%
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(2)
Shares
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(3)
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Growth Fund - Class IB Shares 0.93 0.25 0.33 -- 1.51(4)
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Wells Fargo Advantage VT International Equity Fund - Class 0.75 -- 0.22 0.01 0.98(5)
1
Wells Fargo Advantage VT Omega Growth Fund - Class 1 0.55 -- 0.25 -- 0.80(5)
Wells Fargo Advantage VT Opportunity Fund - Class 1 0.65 -- 0.17 -- 0.82(6)
Wells Fargo Advantage VT Small Cap Value Fund - Class 1 0.75 -- 0.39 0.01 1.15(5)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.79% for Columbia Variable
Portfolio - Balanced Fund (Class 3), 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3) and 1.055% for Columbia Variable
Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(3) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(4) Putnam Management has a contractual obligation to limit certain fund
expenses through April 30, 2013. This obligation may be modified or
discontinued only with approval of the Board of Trustees. After expense
reimbursements, net expenses would be 1.49%.
(5) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.69% for Wells Fargo Advantage VT International Equity Fund - Class 1,
0.75% for Wells Fargo Advantage VT Omega Growth Fund - Class 1 and 0.89%
for Wells Fargo Advantage VT Small Cap Value Fund - Class 1.
(6) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 0.75%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV death benefit and optional GMIB and
Benefit Protector Plus. Although your actual costs may be lower, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Nonqualified
Annuity $1,214 $1,951 $2,701 $4,288 $414 $1,251 $2,101 $4,288
Qualified Annuity 1,188 1,877 2,581 4,065 388 1,177 1,981 4,065
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Nonqualified
Annuity $1,019 $1,373 $1,749 $2,441 $219 $673 $1,149 $2,441
Qualified Annuity 994 1,296 1,617 2,170 194 596 1,017 2,170
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 11
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
12 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Bala- through a combination of capital growth and Investment Advisers, LLC
nced Fund (Class current income.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class whose value FMR believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks a high level of current income, while Fidelity Management &
High Income also considering growth of capital. Research Company (FMR)
Portfolio Service Normally invests primarily in income- is the fund's manager.
Class producing debt securities, preferred stocks FMR Co., Inc. (FMRC) and
and convertible securities, with an other investment
emphasis on lower-quality debt securities. advisers serve as sub-
May invest in non-income producing advisers for the fund.
securities, including defaulted securities
and common stocks. Invests in companies in
troubled or uncertain financial condition.
The Fund invests in domestic and foreign
issuers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital appreciation. The Templeton Asset
Developing fund normally invests at least 80% of its Management Ltd.
Markets net assets in emerging market investments.
Securities
Fund - Class 2
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Growth Stock Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks long-term capital appreciation. Putnam Investment
International Management, LLC,
Growth adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 1 adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 1 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 1 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 1 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods ranging from two to ten years. The minimum
required investment in each GPA is $1,000. These accounts are not offered after
annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine these
future rates based on various factors including, but not limited to, the
interest rate environment, returns we earn on investments in the nonunitized
separate account we have established for the GPAs, the rates currently in effect
for new and existing RiverSource Life annuities, product design, competition and
RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
--------------------------------------------------------------------------------
16 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 17
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 7%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
--------------------------------------------------------------------------------
18 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses.
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable
As the owner, you have all rights and may receive all benefits under the
contract. You can own a nonqualified annuity in joint tenancy with rights of
survivorship only in spousal situations. You cannot own a qualified annuity in
joint tenancy. You can become an owner if you are 85 or younger. (The age limit
may be younger for qualified annuities in some states.)
When you applied, you selected (if available in your state):
the one-year fixed account, GPAs and/or subaccounts in which you wanted to
invest(1);
how you wanted to make purchase payments;
the optional Maximum Anniversary Value Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the optional Performance Credit Rider(3);
the optional Benefit Protector Death Benefit Rider(4);
the optional Benefit Protector Plus Death Benefit Rider(4); and
a beneficiary.
(1) GPAs may not be available in some states.
(2) Available if both you and the annuitant are 79 or younger at contract issue.
May not be available in all states.
(3) You may select either the GMIB or the PCR, but not both. Riders may not be
available in all states. The GMIB is available if the annuitant is 75 or
younger at contact issue. If you select the GMIB you must select the MAV
rider.
(4) Available if you and the annuitant are 75 or younger at contract issue.
These riders may not be available in all states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account to the GPAs and/or to the one-year fixed account in even 1%
increments subject to the $1,000 minimum for the GPAs.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment. If we receive an additional purchase payment at our administrative
office at or after the close of business, we will credit any portion of that
payment allocated to the subaccounts using the accumulation unit value we
calculate on the next valuation date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 19
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will generally receive a purchase payment credit with any payment you make
to your contract that brings your total net payment (total payments less total
withdrawals) to $100,000 or more.
We apply a credit to your contract of 1% of your current payment. If you make
any additional payments that cause the contract to be eligible for the credit,
we will add credits to your prior purchase payments (less total withdrawals). We
apply this credit immediately. We allocate the credit to the GPAs, one-year
fixed account and subaccounts in the same proportions as your purchase payment.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
--------------------------------------------------------------------------------
20 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available because of lower distribution and other expenses
associated with larger sized contracts and through revenue from higher
withdrawal charges and contract administrative charges than would otherwise be
charged. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credit. We use all the revenue from these
higher charges to pay for the cost of the credits. However, we could profit from
the higher charges if market appreciation is higher than expected or if contract
owners hold their contracts for longer than expected.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. Some states limit the amount of any contract charge
to the one-year fixed account. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are base on whether the contract is a qualified annuity or a
nonqualified annuity and the death benefit that applies to your contract.
QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
Return of Purchase Payment death benefit 0.85% 1.10%
Maximum Anniversary Value death benefit 0.95 1.20
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 21
owners or annuitants live. If, as a group, owners or annuitants outlive the life
expectancy we assumed in our actuarial tables, then we must take money from our
general assets to meet our obligations. If, as a group, owners or annuitants do
not live as long as expected, we could profit from the mortality risk fee. We
deduct the mortality risk fee from the subaccounts during the annuity payout
period even if the annuity payout plan does not involve a life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than eight years before the date of withdrawal. In addition, amounts
withdrawn from a GPA more than 30 days before the end of the applicable
Guarantee Period will be subject to a MVA. (See "The Fixed Accounts -- Market
Value Adjustments (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
3%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no withdrawal charge as to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received
--------------------------------------------------------------------------------
22 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
most recently when calculating the withdrawal charge. We determine the amount of
purchase payments being withdrawn (PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ------------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn:
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PAYMENT RECEIPT
1 8%
2 8
3 7
4 7
5 6
6 5
7 3
Thereafter 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the seventh contract anniversary;
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 23
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
560 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
7% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a 7%
withdrawal charge.
----
$980
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge a fee (currently 0.30%) based on the adjusted contract value for this
optional feature only if you select it. If selected, we deduct the fee from the
contract value on your contract anniversary at the end of each contract year. We
prorate this fee among the subaccounts, the GPAs and one-year fixed account in
the same proportion your interest in each account bears to your total contract
value.
--------------------------------------------------------------------------------
24 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB fee after the
rider effective date and it does not apply after annuity payouts begin.
We calculate the fee as follows:
0.30% X (CV + ST - FAV)
CV = contract value on the contract anniversary
ST = transfers from the subaccounts to the GPAs or the one-year fixed account made
six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account on the contract
anniversary.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts and not on the GPAs or the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
The GMIB fee percentage is 0.30%.
We calculate the charge for the GMIB as follows:
Contract value on the contract anniversary: $ 73,250
plus transfers from the subaccounts to the one-year fixed account in the six
months before the contract anniversary: +15,000
minus the value of the one-year fixed account on the contract anniversary: -15,250
--------
$ 73,000
The GMIB fee charged to you: 0.30% x $73,000 = $ 219
PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.15% of your contract value for this optional feature if you
select it. If selected, we deduct the fee from your contract value on your
contract anniversary. We prorate this fee among the subaccounts, GPAs and the
one-year fixed account in the same proportion as your interest bears to your
total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 25
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the one-year fixed account and
GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
- Benefit Protector rider
- Benefit Protector Plus rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
--------------------------------------------------------------------------------
26 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
- Benefit Protector rider
- Benefit Protector Plus rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Special DCA program. There is no charge for the Special DCA program.
Under the Special DCA program, you can allocate a new purchase payment and any
applicable purchase payment credit to a six-month or twelve-month Special DCA
account.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 27
You may only allocate a new purchase payment of at least $10,000 to a Special
DCA account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into GPAs, the one-year fixed account and/or subaccounts you select over
the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Special DCA account at the beginning of the six or twelve-month period.
Therefore, you may receive less total interest than you would have if all your
purchase payments and purchase payment credits were in the Special DCA account
from the beginning. If we receive any of your multiple payments after the six or
twelve-month period ends, you can either allocate those payments to a new
Special DCA account (if available) or to any other accounts available under your
contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Special DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
--------------------------------------------------------------------------------
28 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. Until further notice, however, we have removed this
restriction, and you may transfer contract values from the one-year fixed
account to the subaccounts at any time. We will inform you at least 30 days in
advance of the day we intend to reimpose this restriction.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the
subaccounts or the GPAs will be effective on the valuation date we receive it.
Once annuity payouts begin, you may not make transfers to or from the one-year
fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 29
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
--------------------------------------------------------------------------------
30 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your subaccounts, GPAs or the one-year fixed accounts.
You can start or stop this service by written request or other method acceptable
to us.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 31
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. Until further notice, however, we
have removed this restriction, and you may transfer contract values from the
one-year fixed account to the subaccounts at any time. We will inform you at
least 30 days in advance of the day we intend to reimpose this restriction.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
--------------------------------------------------------------------------------
32 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 33
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. The
GMIB rider and Benefit Protector Plus Death Benefit rider will terminate upon
transfer of ownership. Continuation of the Benefit Protector rider is optional.
(See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are two death benefit options under this contract: the Return of Purchase
Payment Death Benefit (ROP) and the Maximum Anniversary Value (MAV) Death
Benefit Rider. If either you or the annuitant are 80 or older at contract issue,
we require the ROP death benefit. If both you and the annuitant are 79 or
younger at contract issue, you can elect either the ROP death benefit or the MAV
death benefit rider (if it is available in your state) on your application. Once
you elect a death benefit option, you cannot change it. We show the option that
applies in your contract. The death benefit option that applies determines the
mortality and expense risk fee that is assessed against the subaccounts. (See
"Charges -- Mortality and Expense Risk Fee.")
Under either death benefit, we will pay the death benefit to your beneficiary
upon the earlier of your death or the annuitant's death if you die before the
retirement start date while this contract is in force. We will base the benefit
paid on the death benefit coverage you selected when you purchased the contract.
If a contract has more than one person as the owner, we will pay benefits upon
the first to die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENT DEATH BENEFIT (ROP)
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract plus purchase payments
credits minus adjusted partial withdrawals.
PW X DB
DEATH BENEFIT ADJUSTED PARTIAL WITHDRAWALS = ------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $28,000. You take
a $1,500 partial withdrawal leaving a contract value of $26,500.
During the third contract year the contract value falls to $25,000.
--------------------------------------------------------------------------------
34 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
We calculate the ROP death benefit as follows:
Contract value at death: $25,000.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $30,000.00
minus ROP adjusted partial withdrawals calculated as:
$1,500 x $30,000
---------------- = -1,607.14
$28,000
----------
for a death benefit of: $28,392.86
----------
THE ROP DEATH BENEFIT CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$28,392.86
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT RIDER
The MAV rider is intended to help protect your beneficiaries financially while
your investments have the opportunity to grow. This is an optional benefit that
you may select for an additional charge (see "Charges"). The MAV rider does not
provide any additional benefit before the first contract anniversary and it may
not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV rider is appropriate for your situation.
If the MAV rider is available in your state and both you and the annuitant are
age 79 or younger at contract issue, you may choose to add the MAV rider to your
contract at the time of purchase. Once you select the MAV rider you may not
cancel it. You must select the MAV rider if you choose to add the Guaranteed
Minimum Income Benefit Rider to your contract.
The MAV rider provides that if you or the annuitant die before annuity payouts
begin while this contract is in force, we will pay the beneficiary the greatest
of these three values less any purchase payment credits subject to reversal,
minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract plus purchase payment credits
minus adjusted partial withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any payments and purchase payment credits since that anniversary minus
adjusted partial withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV if the current contract value is
higher. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and purchase payment
credits and subtract adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $20,000.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a death benefit of: $18,636.36
----------
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 35
The MAV immediately preceding the date of death:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and purchase payment credits made since the prior
anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000
----------
for a death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $22,363.64
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to
--------------------------------------------------------------------------------
36 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
continue the alternative payment plan following the schedule of minimum
withdrawals established based on the life expectancy of your beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 37
--------------------------------------------------------------------------------
38 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit rider.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV death benefit rider equals the contract value, less any
purchase payment credits added to the contract in the last 12 months, or $104,000.
You have not reached the first contract anniversary so the Benefit Protector does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The death
benefit equals:
MAV rider (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV rider (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal, including the applicable 7% withdrawal charges of
$50,000. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to a 7% withdrawal charge because your payment is two years old, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that
$5,000 of the partial withdrawal is contract earnings). The death benefit equals:
MAV rider (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the death benefit during the third contract year. The reduction in
contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. The death benefit equals:
MAV rider (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of $50,000
and we add a purchase payment credit of $500. Your new contract value is now
$250,000. The new purchase payment is less than one year old and so it has no
effect on the Benefit Protector value. The death benefit equals:
MAV rider (contract value less any purchase payment credits added in the last 12
months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes.
The death benefit equals:
MAV rider (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector(R) rider during the second rider year. Be sure to discuss with
your sales representative whether or not the Benefit Protector(R) Plus is
appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for a purchase through transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 39
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit PLUS
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit rider.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit rider, which is the contract value, less any
purchase payment credits added to the contract in the last 12 months, or $104,000.
You have not reached the first contract anniversary so the Benefit Protector Plus
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You have
not reached the second contract anniversary so the Benefit Protector Plus does not
provide any additional benefit beyond what is provided by the Benefit Protector at
this time. The death benefit equals:
MAV rider (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV rider (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal, including the applicable 7% withdrawal charge, of
$50,000. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to a 7% withdrawal charge because your payment is two years old, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that
$5,000 of the partial withdrawal is contract earnings). The death benefit equals:
MAV rider (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
40 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the death benefit paid during the third contract year. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum of
20%. The death benefit equals:
MAV rider (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of $50,000
and we add a purchase payment credit of $500. Your new contract value is now
$250,000. The new purchase payment is less than one year old and so it has no
effect on the Benefit Protector Plus value. The death benefit equals:
MAV rider (contract value less any purchase payment credits added in the last 12
months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains
constant. The death benefit equals:
MAV rider (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 73 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 7 years;
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary;
the MAV we use in the GMIB benefit base to calculate annuity payouts under the
GMIB is limited after age 81; and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your sales representative.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy required minimum
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 41
distributions, will reduce the GMIB benefit base (defined below), which in turn
may reduce or eliminate the amount of any annuity payments available under the
rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions").
Consult a tax advisor before you purchase any GMIB with a qualified annuity,
such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit at the time you
purchase your contract for an additional annual charge (see "Charges"). You
cannot select the GMIB if you add the Performance Credit Rider to your contract.
You must elect the GMIB along with the MAV rider at the time you purchase your
contract and your rider effective date will be the contract issue date.
In some instances we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the amount you
allocate to subaccounts investing in the RiverSource Variable Portfolio - Cash
Management Fund to 10% of the total amount in the subaccounts. If we are
required to activate this restriction, and you have more than 10% of your
subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB if you have not satisfied the limitation after
60 days.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a seven-year waiting period from the rider
effective date.
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
Plan A -- Life Annuity - no refund
Plan B -- Life Annuity with ten years certain
Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G and an interest rate of 3%. Your annuity payouts remain fixed for the
lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base (described below) equal to the
largest value. The GMIB benefit base, less any applicable premium tax, is the
value we apply to the guaranteed annuity purchase rates stated in Table B of the
contract to calculate the minimum annuity payouts you will receive if you
exercise the GMIB. If the GMIB benefit base is greater than the contract value,
the GMIB may provide a higher annuity payout level than is otherwise available.
However, the GMIB uses guaranteed annuity purchase rates which may result in
annuity payouts that are less than those using the annuity purchase rates that
we will apply at annuitization under the standard contract provisions.
Therefore, the level of income provided by the GMIB may be less than the income
the
--------------------------------------------------------------------------------
42 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
contract otherwise provides. If the annuity payouts through the standard
contract provisions are more favorable than the payouts available through the
GMIB, you will receive the higher standard payout option. The GMIB does not
create contract value or guarantee the performance of any investment option.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the MAV at the last contract anniversary plus any payments and purchase
payment credits since that anniversary minus adjusted partial withdrawals
since that anniversary.
Keep in mind that the MAV is limited after age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments and credits total $50,000 or more or
if they are 25% or more of total contract payments and credits. If we exercise
this right, we subtract each payment and purchase payment credit adjusted for
market value from the contract value and the MAV.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value and the MAV as:
PMT X CVG
------------
ECV
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider any time after the seventh rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB rider will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2003 calendar year with a payment of
$100,000 and we add a $1,000 purchase payment credit to your contract. You
allocate all your purchase payments and purchase payment credits to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 43
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS MAV BENEFIT BASE
1 $107,000 $101,000 $107,000
2 125,000 101,000 125,000
3 132,000 101,000 132,000
4 150,000 101,000 150,000
5 85,000 101,000 150,000
6 120,000 101,000 150,000
7 138,000 101,000 150,000 $150,000
8 152,000 101,000 152,000 152,000
9 139,000 101,000 152,000 152,000
10 126,000 101,000 152,000 152,000
11 138,000 101,000 152,000 152,000
12 147,000 101,000 152,000 152,000
13 163,000 101,000 163,000 163,000
14 159,000 101,000 163,000 163,000
15 215,000 101,000 215,000 215,000
NOTE: The MAV is limited after age 81, but, the GMIB benefit base may increase
if the contract value increases. However, you should keep in mind that you are
always entitled to annuitize using the contract value without exercising the
GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $152,000 (MAV) $ 785.84 $ 766.08 $627.76
15 215,000 (Contract Value = MAV) 1,272.80 1,212.60 984.70
The payouts above are shown at guaranteed annuity rates of 3% as stated in Table
B of the contract. Payouts under the standard provisions of this contract will
be based on our annuity rates in effect at annuitization and are guaranteed to
be greater than or equal to the guaranteed annuity rates stated in Table B of
the contract. The fixed annuity payout available under the standard provisions
of this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 651.42 $ 635.04 $520.38
15 215,000 1,272.80 1,212.60 984.70
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the tenth rider anniversary (see below). This
is an optional benefit you may select for an additional charge (see "Charges").
The PCR does not provide any additional benefit before the tenth rider
anniversary and it may not be appropriate for issue ages 75 or older due to this
required holding period. Be sure to discuss with your investment professional
whether or not the PCR is appropriate for your situation.
--------------------------------------------------------------------------------
44 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot select the PCR if you select the GMIB.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments and purchase
payment credits.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource(R) Variable Portfolio - Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
and purchase payment credits minus the target value adjusted partial withdrawals
accumulated at an annual effective rate of 7.2%. Every rider anniversary after
that, we recalculate the target value by accumulating the prior anniversary's
target value and any additional purchase payments and purchase payment credits
minus the target value adjusted partial withdrawals at an annual effective rate
of 7.2%.
PW X TV
---------
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXERCISING THE PCR: We will inform you if your contract value did not meet or
exceed the target value after your tenth rider anniversary. If your contract
value is less than the target value on the tenth rider anniversary you can
choose either of the following benefits:
Option A) You may choose to accept a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount
of any partial withdrawal attributable to purchase payments received
five or more years before the target value is calculated (on the tenth
year rider anniversary). For a more detailed description of the PCR
adjusted partial withdrawal please see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five
years. We apply the PCR credit to your contract on the tenth rider
anniversary and allocate it among the fixed accounts and subaccounts
according to your current asset allocation.
Option B) You may choose to begin receiving annuity payouts (only with lifetime
income plans; you may not choose Annuity Payout Plan E) within 60 days
of the tenth rider anniversary and receive an additional 5% PCR credit
(for a total PCR credit of 10%) as calculated in (a).
We will assume that you elected PCR Option A unless we receive your request to
begin a lifetime annuity payout plan within 60 days after the tenth rider
anniversary.
If you select PCR Option A, we will restart the ten-year calculation period for
the PCR on the tenth rider anniversary and every ten years after that while you
own the contract. We use the contract value (including any credits) on that
anniversary as your first contract year's payments for calculating the target
value and any applicable PCR credit. We may then apply additional PCR credits to
your contract at the end of each ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments and credits for the calculating the target value and any
applicable PCR credit. If you select PCR Option A, the next ten-year calculation
period for the PCR will restart at the end of this new ten-year period. We must
receive your request to restart the PCR calculation period within 30 days after
a contract anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 45
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first rider
anniversary.
You may terminate the PCR within 30 days following the later of the tenth
rider anniversary or the last rider reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract,
- that a death benefit is payable, or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $1,000
purchase payment credit to the contract
There are no additional purchase payments and no partial withdrawals
On the tenth contract anniversary the contract value is $200,000
We determine the target value on the tenth contract anniversary as our
purchase payments and credits accumulated at an annual effective rate of 7.2%
= $101,000 x (1.072)(10) = $101,000 x 2.00423 = $202,427.
Your contract value ($200,000) is less than the target value ($202,427).
Assuming you select PCR Option A, we add a PCR credit to your contract
calculated as follows:
5% x (PP - PCRPW - PP5) = 0.05 x ($101,000 - 0 - 0) = $5,050.
After application of the PCR credit, your total contract value would be
$205,050.
During the eleventh contract year, the contract value grows to $210,000 and
you choose to begin receiving annuity payouts under a lifetime income plan. We
would now add another PCR credit to your contract. Because you have not made
any additional purchase payments or partial withdrawals the amount of this new
credit is the same as the PCR credit we added to your contract on the tenth
contract anniversary ($5,050). After adding this new PCR credit to your
contract, your total contract value would be $215,050 and we would use this
amount to determine your monthly annuity payout amount.
If you had elected not to receive annuity payouts, the PCR ten-year
calculation period would restart on the tenth contract anniversary with the
target values first year's payments equal to $205,050. We would make the next
PCR credit determination on the twentieth contract anniversary.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
--------------------------------------------------------------------------------
46 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 47
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is
--------------------------------------------------------------------------------
48 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
taxable as ordinary income to the beneficiary in the year he or she receives the
payments. (See also "Benefits in Case of Death -- If You Die Before the
Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 49
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
--------------------------------------------------------------------------------
50 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 51
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.705% as well as
service/trail commissions of up to 1% based on annual total contract value for
as long as the contract remains in effect. We also may pay an additional sales
commission of up to 1% of purchase payments for a period of time we select.
These commissions do not change depending on which subaccounts you choose to
allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
--------------------------------------------------------------------------------
52 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 53
prospectus, the SAI and information about the contract, information incorporated
by reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
54 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question minus the RPA adjusted partial withdrawals
for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and purchase payment credits as there are
no previous withdrawals to subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = --------
CV
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP TWO
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question AND prior to the five year exclusion period
minus EPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and purchase payment credits made before
the five year exclusion period as there are no previous withdrawals to
subtract. Also note that EPA/RPA will always be less than or equal to one.
PW X EPA EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = -------- X ---
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the
partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP THREE
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include purchase payment credits.
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 55
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT
DURATION
IN YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on the
third contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the partial $10,000 x $100,000 $8,333
withdrawal minus the RPA adjusted $120,000
partial withdrawals for all =
previous partial withdrawals =
$100,000 - 0 = $100,000
For the second partial withdrawal on
the eighth contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the partial $10,000 x $191,667 $8,156
withdrawal minus the RPA adjusted $235,000
partial withdrawals for all =
previous partial withdrawals =
$200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal on the
third contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the partial $10,000 x $100,000 $100,000
withdrawal AND the five-year $120,000 $100,000
exclusion period minus the EPA
adjusted partial withdrawals for x = $8,333
all previous partial withdrawals =
$100,000 - 0 = $100,000
For the second partial withdrawal on
the eighth contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the partial $10,000 x $91,667 _$91,667_
withdrawal AND the five-year $235,000 $191,667
exclusion period minus the EPA
adjusted partial withdrawals for x = $1,866
all previous partial withdrawals =
$100,000 - $8,333 = $91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 =
$10,199
--------------------------------------------------------------------------------
56 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30 $0.51
Accumulation unit
value at end of
period $0.40 $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30
Number of
accumulation units
outstanding at end
of period (000
omitted) 89 80 126 156 276 482 552 588 655 372
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74 $0.97
Accumulation unit
value at end of
period $1.09 $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74
Number of
accumulation units
outstanding at end
of period (000
omitted) 295 416 688 1,006 1,348 1,482 1,471 1,573 1,510 1,341
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45 $0.65
Accumulation unit
value at end of
period $0.62 $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45
Number of
accumulation units
outstanding at end
of period (000
omitted) 128 210 363 517 863 934 882 881 893 1,003
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.08 $0.97 $0.79 $1.13 $1.13 $0.99 $0.97 $0.89 $0.75 $0.87
Accumulation unit
value at end of
period $1.09 $1.08 $0.97 $0.79 $1.13 $1.13 $0.99 $0.97 $0.89 $0.75
Number of
accumulation units
outstanding at end
of period (000
omitted) 55 74 235 277 225 58 73 48 49 39
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit
value at end of
period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 341 576 492 720 1,135 646 695 691 813 697
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit
value at beginning
of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit
value at end of
period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 126 203 307 325 354 377 -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61 $0.80
Accumulation unit
value at end of
period $0.93 $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 291 404 521 683 746 811 799 771 748 360
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.56 $1.24 $0.90 $1.48 $1.56 $1.41 $1.36 $1.16 $0.79 $0.96
Accumulation unit
value at end of
period $1.41 $1.56 $1.24 $0.90 $1.48 $1.56 $1.41 $1.36 $1.16 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 9 12 16 22 23 26 15 14
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17 $1.11
Accumulation unit
value at end of
period $1.30 $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 158 313 373 561 759 861 873 916 849 645
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.45 $1.25 $0.93 $1.64 $1.41 $1.27 $1.10 $0.96 $0.76 $0.85
Accumulation unit
value at end of
period $1.40 $1.45 $1.25 $0.93 $1.64 $1.41 $1.27 $1.10 $0.96 $0.76
Number of
accumulation units
outstanding at end
of period (000
omitted) 127 126 184 341 843 953 1,030 993 957 633
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.36 $1.21 $0.85 $1.14 $1.12 $1.02 $1.01 $0.93 $0.74 $0.72
Accumulation unit
value at end of
period $1.40 $1.36 $1.21 $0.85 $1.14 $1.12 $1.02 $1.01 $0.93 $0.74
Number of
accumulation units
outstanding at end
of period (000
omitted) 68 80 148 259 264 215 219 215 204 114
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $2.76 $2.16 $1.56 $2.61 $2.28 $2.04 $1.75 $1.41 $1.03 $1.16
Accumulation unit
value at end of
period $2.44 $2.76 $2.16 $1.56 $2.61 $2.28 $2.04 $1.75 $1.41 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 44 71 129 238 505 657 667 728 693 699
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53 $0.75
Accumulation unit
value at end of
period $0.95 $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53
Number of
accumulation units
outstanding at end
of period (000
omitted) 124 284 441 623 769 877 916 978 712 656
------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01 $1.16
Accumulation unit
value at end of
period $1.54 $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 716 1,184 1,983 2,405 3,218 3,435 3,555 3,640 2,566 753
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON DEVELOPING MARKETS SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $2.79 $2.40 $1.40 $2.99 $2.35 $1.85 $1.47 $1.19 $0.79 $0.80
Accumulation unit
value at end of
period $2.32 $2.79 $2.40 $1.40 $2.99 $2.35 $1.85 $1.47 $1.19 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 22 41 22 10 6 -- 9
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68 $0.85
Accumulation unit
value at end of
period $1.20 $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68
Number of
accumulation units
outstanding at end
of period (000
omitted) 170 251 583 835 1,046 1,146 1,113 1,058 734 513
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (05/30/2000)
Accumulation unit
value at beginning
of period $0.68 $0.60 $0.50 $0.88 $0.79 $0.75 $0.70 $0.66 $0.52 $0.69
Accumulation unit
value at end of
period $0.62 $0.68 $0.60 $0.50 $0.88 $0.79 $0.75 $0.70 $0.66 $0.52
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 65 74 168 258 299 337 331 410 506
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series I Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series I
Shares.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit
value at beginning
of period $1.11 $1.02 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.11 $1.02 $0.80 $1.16 $1.08 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 52 33 39 86 148 254 -- -- -- --
------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50 $0.71
Accumulation unit
value at end of
period $0.76 $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50
Number of
accumulation units
outstanding at end
of period (000
omitted) 65 128 327 449 370 419 500 482 515 421
------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64 $0.95
Accumulation unit
value at end of
period $1.20 $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64
Number of
accumulation units
outstanding at end
of period (000
omitted) 54 137 197 204 314 454 474 495 388 165
------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04 $1.10
Accumulation unit
value at end of
period $1.48 $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) 662 1,080 1,849 2,581 3,209 3,243 3,188 2,934 2,457 1,585
------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit
value at beginning
of period $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79 $0.99
Accumulation unit
value at end of
period $1.02 $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 88 163 212 278 376 343 383 455 530 379
------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit
value at beginning
of period $0.96 $0.87 $0.63 $1.11 $0.99 $0.79 $0.68 $0.60 $0.46 $0.53
Accumulation unit
value at end of
period $0.78 $0.96 $0.87 $0.63 $1.11 $0.99 $0.79 $0.68 $0.60 $0.46
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 16 41 137 238 250 217 209 232
------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 15 21 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 1 (12/08/2003)
Accumulation unit
value at beginning
of period $1.51 $1.31 $1.14 $1.97 $1.73 $1.42 $1.23 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.31 $1.51 $1.31 $1.14 $1.97 $1.73 $1.42 $1.23 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 20 31 105 196 180 142 109 57 --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 1 (05/30/2000)
Accumulation unit
value at beginning
of period $1.09 $0.92 $0.65 $0.90 $0.81 $0.77 $0.75 $0.71 $0.51 $0.69
Accumulation unit
value at end of
period $1.02 $1.09 $0.92 $0.65 $0.90 $0.81 $0.77 $0.75 $0.71 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 48 71 95 149 195 256 264 332 414 338
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 1 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 22 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 1 (07/16/2010)
Accumulation unit
value at beginning
of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.12 $1.22 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 33 38 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.35% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $0.51 $0.44 $0.29 $0.56 $0.47 $0.44 $0.43 $0.41 $0.29 $0.51
Accumulation unit
value at end of
period $0.39 $0.51 $0.44 $0.29 $0.56 $0.47 $0.44 $0.43 $0.41 $0.29
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,151 1,540 1,666 2,150 2,661 2,693 2,798 2,773 2,911 2,423
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $1.00 $0.90 $0.76 $1.30 $1.25 $1.09 $1.05 $0.96 $0.74 $0.96
Accumulation unit
value at end of
period $1.05 $1.00 $0.90 $0.76 $1.30 $1.25 $1.09 $1.05 $0.96 $0.74
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,532 4,404 5,507 7,720 9,292 10,437 11,167 11,742 11,403 10,906
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit
value at beginning
of period $0.63 $0.58 $0.43 $0.72 $0.64 $0.65 $0.58 $0.54 $0.44 $0.65
Accumulation unit
value at end of
period $0.60 $0.63 $0.58 $0.43 $0.72 $0.64 $0.65 $0.58 $0.54 $0.44
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,336 2,898 3,653 4,232 5,262 6,164 6,450 6,937 7,475 7,706
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.04 $0.94 $0.76 $1.10 $1.10 $0.98 $0.95 $0.88 $0.74 $0.86
Accumulation unit
value at end of
period $1.05 $1.04 $0.94 $0.76 $1.10 $1.10 $0.98 $0.95 $0.88 $0.74
Number of
accumulation units
outstanding at end
of period (000
omitted) 456 438 471 480 542 510 363 418 407 300
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.10 $1.11 $1.13 $1.12 $1.08 $1.05 $1.03 $1.04 $1.05 $1.05
Accumulation unit
value at end of
period $1.08 $1.10 $1.11 $1.13 $1.12 $1.08 $1.05 $1.03 $1.04 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,142 4,962 6,194 6,137 4,642 2,008 2,189 2,285 2,810 3,130
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.03 $0.89 $0.73 $1.28 $1.26 $1.10 $1.05 $1.00 -- --
Accumulation unit
value at end of
period $1.07 $1.03 $0.89 $0.73 $1.28 $1.26 $1.10 $1.05 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,688 5,033 5,682 5,925 5,808 6,860 5,948 4,432 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $0.89 $0.78 $0.63 $1.02 $0.98 $0.86 $0.84 $0.77 $0.61 $0.80
Accumulation unit
value at end of
period $0.89 $0.89 $0.78 $0.63 $1.02 $0.98 $0.86 $0.84 $0.77 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,318 3,025 3,531 3,765 4,619 5,376 5,706 5,760 6,015 4,960
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.50 $1.20 $0.87 $1.44 $1.52 $1.38 $1.34 $1.14 $0.78 $0.96
Accumulation unit
value at end of
period $1.36 $1.50 $1.20 $0.87 $1.44 $1.52 $1.38 $1.34 $1.14 $0.78
Number of
accumulation units
outstanding at end
of period (000
omitted) 92 88 118 128 163 228 270 221 214 161
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit
value at beginning
of period $1.26 $1.24 $1.19 $1.24 $1.19 $1.16 $1.16 $1.16 $1.16 $1.11
Accumulation unit
value at end of
period $1.26 $1.26 $1.24 $1.19 $1.24 $1.19 $1.16 $1.16 $1.16 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,031 2,386 4,529 3,958 4,033 4,040 5,626 6,160 7,749 5,451
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.39 $1.21 $0.90 $1.59 $1.37 $1.25 $1.08 $0.95 $0.75 $0.84
Accumulation unit
value at end of
period $1.34 $1.39 $1.21 $0.90 $1.59 $1.37 $1.25 $1.08 $0.95 $0.75
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,674 2,523 3,266 4,253 5,666 6,532 6,482 6,694 6,068 5,134
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.31 $1.17 $0.82 $1.11 $1.10 $1.00 $0.99 $0.92 $0.73 $0.72
Accumulation unit
value at end of
period $1.34 $1.31 $1.17 $0.82 $1.11 $1.10 $1.00 $0.99 $0.92 $0.73
Number of
accumulation units
outstanding at end
of period (000
omitted) 679 1,283 1,180 1,238 1,665 1,766 1,620 1,946 2,482 1,948
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $2.66 $2.09 $1.51 $2.54 $2.23 $2.00 $1.72 $1.40 $1.02 $1.15
Accumulation unit
value at end of
period $2.34 $2.66 $2.09 $1.51 $2.54 $2.23 $2.00 $1.72 $1.40 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,057 1,554 1,987 2,699 3,687 4,268 4,708 4,904 5,042 4,911
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 59
VARIABLE ACCOUNT CHARGES OF 1.35% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $0.97 $0.77 $0.54 $0.96 $0.87 $0.81 $0.79 $0.71 $0.53 $0.75
Accumulation unit
value at end of
period $0.91 $0.97 $0.77 $0.54 $0.96 $0.87 $0.81 $0.79 $0.71 $0.53
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,222 3,025 3,547 4,200 4,873 5,246 5,706 5,930 5,842 4,909
------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $1.52 $1.38 $1.11 $1.79 $1.75 $1.50 $1.38 $1.24 $1.00 $1.15
Accumulation unit
value at end of
period $1.48 $1.52 $1.38 $1.11 $1.79 $1.75 $1.50 $1.38 $1.24 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 6,038 8,194 10,167 11,358 13,267 14,984 15,468 16,072 14,168 6,327
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON DEVELOPING MARKETS SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $2.69 $2.32 $1.36 $2.92 $2.30 $1.82 $1.45 $1.18 $0.78 $0.79
Accumulation unit
value at end of
period $2.23 $2.69 $2.32 $1.36 $2.92 $2.30 $1.82 $1.45 $1.18 $0.78
Number of
accumulation units
outstanding at end
of period (000
omitted) 109 209 210 299 392 441 416 254 265 239
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit
value at beginning
of period $1.30 $1.22 $0.90 $1.53 $1.34 $1.12 $1.03 $0.88 $0.68 $0.84
Accumulation unit
value at end of
period $1.15 $1.30 $1.22 $0.90 $1.53 $1.34 $1.12 $1.03 $0.88 $0.68
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,233 3,134 3,622 4,641 5,623 5,604 5,454 4,969 3,675 2,373
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (05/30/2000)
Accumulation unit
value at beginning
of period $0.65 $0.57 $0.48 $0.85 $0.77 $0.73 $0.68 $0.65 $0.51 $0.68
Accumulation unit
value at end of
period $0.59 $0.65 $0.57 $0.48 $0.85 $0.77 $0.73 $0.68 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,022 1,304 1,569 1,930 2,778 3,370 3,178 3,769 4,485 4,583
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series I Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series I
Shares.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit
value at beginning
of period $1.09 $1.01 $0.80 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 $1.01 $0.80 $1.15 $1.08 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 894 1,168 1,525 1,884 2,652 3,076 -- -- -- --
------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $0.73 $0.66 $0.48 $0.78 $0.71 $0.67 $0.65 $0.60 $0.50 $0.70
Accumulation unit
value at end of
period $0.73 $0.73 $0.66 $0.48 $0.78 $0.71 $0.67 $0.65 $0.60 $0.50
Number of
accumulation units
outstanding at end
of period (000
omitted) 781 924 1,260 1,524 1,985 2,171 2,407 2,642 2,708 2,832
------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.31 $0.98 $0.61 $1.02 $1.01 $0.91 $0.87 $0.83 $0.63 $0.94
Accumulation unit
value at end of
period $1.16 $1.31 $0.98 $0.61 $1.02 $1.01 $0.91 $0.87 $0.83 $0.63
Number of
accumulation units
outstanding at end
of period (000
omitted) 439 719 871 1,018 1,196 1,305 1,343 1,365 1,295 832
------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit
value at beginning
of period $1.42 $1.31 $1.13 $1.47 $1.43 $1.30 $1.29 $1.17 $1.03 $1.10
Accumulation unit
value at end of
period $1.42 $1.42 $1.31 $1.13 $1.47 $1.43 $1.30 $1.29 $1.17 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 6,866 8,367 11,064 13,392 16,024 16,584 18,578 18,107 16,041 8,646
------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit
value at beginning
of period $1.04 $0.92 $0.72 $1.19 $1.29 $1.13 $1.08 $0.99 $0.79 $0.98
Accumulation unit
value at end of
period $0.98 $1.04 $0.92 $0.72 $1.19 $1.29 $1.13 $1.08 $0.99 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 589 751 894 1,007 1,194 1,394 1,667 1,729 1,701 1,879
------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit
value at beginning
of period $0.93 $0.84 $0.61 $1.08 $0.97 $0.78 $0.67 $0.60 $0.45 $0.53
Accumulation unit
value at end of
period $0.75 $0.93 $0.84 $0.61 $1.08 $0.97 $0.78 $0.67 $0.60 $0.45
Number of
accumulation units
outstanding at end
of period (000
omitted) 263 449 617 726 1,126 1,094 1,129 1,200 1,252 1,444
------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 299 409 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 1 (12/08/2003)
Accumulation unit
value at beginning
of period $1.48 $1.28 $1.12 $1.94 $1.71 $1.41 $1.23 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.27 $1.48 $1.28 $1.12 $1.94 $1.71 $1.41 $1.23 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 179 344 488 573 923 1,024 895 742 542 --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 1 (05/30/2000)
Accumulation unit
value at beginning
of period $1.05 $0.89 $0.63 $0.87 $0.79 $0.76 $0.74 $0.70 $0.51 $0.69
Accumulation unit
value at end of
period $0.98 $1.05 $0.89 $0.63 $0.87 $0.79 $0.76 $0.74 $0.70 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 547 971 1,109 1,307 1,971 2,418 2,770 3,115 3,258 3,609
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
60 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.35% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 1 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 345 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 1 (07/16/2010)
Accumulation unit
value at beginning
of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.12 $1.22 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,200 1,611 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 61
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
62 RIVERSOURCE NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
240355 T (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
INNOVATIONS VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc.
(Class B)
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM) - Service Class
Oppenheimer Variable Account Funds - Service Shares
Putnam Variable Trust - Class IB Shares
Please read the prospectuses carefully and keep them for future reference.
This contract provides for purchase payment credits to eligible contract owners,
which we may reverse under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits"). Expense charges for contracts with
purchase payment credits may be higher than expenses for contracts without such
credits. The amount of the credit may be more than offset by any additional fees
and charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 12
FINANCIAL STATEMENTS........................ 12
THE VARIABLE ACCOUNT AND THE FUNDS.......... 12
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 18
THE ONE-YEAR FIXED ACCOUNT.................. 20
BUYING YOUR CONTRACT........................ 20
CHARGES..................................... 23
VALUING YOUR INVESTMENT..................... 28
MAKING THE MOST OF YOUR CONTRACT............ 30
WITHDRAWALS................................. 36
TSA -- SPECIAL PROVISIONS................... 36
CHANGING OWNERSHIP.......................... 37
BENEFITS IN CASE OF DEATH................... 37
OPTIONAL BENEFITS........................... 41
THE ANNUITY PAYOUT PERIOD................... 53
TAXES....................................... 55
VOTING RIGHTS............................... 59
SUBSTITUTION OF INVESTMENTS................. 59
ABOUT THE SERVICE PROVIDERS................. 60
ADDITIONAL INFORMATION...................... 61
APPENDIX A: PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL............... 62
APPENDIX B: CONDENSED FINANCIAL
INFORMATION (UNAUDITED)................... 64
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION....... 70
--------------------------------------------------------------------------------
2 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: This contract allows you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account, and/or
subaccounts of the variable account under the contract; however you risk losing
amounts you invest in the subaccounts of the variable account. These accounts,
in turn, may earn returns that increase the value of a contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. Beginning at a specified time in the future
called the retirement date, these contracts provide lifetime or other forms of
payouts your contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may vary by
state and be limited under the terms of your contract. (See "Buying Your
Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to limit transfers to the GPAs and the one-year fixed account if the interest
rate we are then currently crediting is equal to the minimum interest rate
stated in the contract. (See "Making the Most of Your Contract -- Transferring
Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP death benefit 0.85% 0.15% 1.00%
MAV death benefit(1),(2) 1.05 0.15 1.20
EDB(1) 1.15 0.15 1.30
NONQUALIFIED ANNUITIES
ROP death benefit 1.10 0.15 1.25
MAV death benefit(1),(2) 1.30 0.15 1.45
EDB(1) 1.40 0.15 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP death benefit 1.15 0.15 1.30
MAV death benefit(1),(2) 1.35 0.15 1.50
EDB(1) 1.45 0.15 1.60
NONQUALIFIED ANNUITIES
ROP Payment death benefit 1.40 0.15 1.55
MAV death benefit(1),(2) 1.60 0.15 1.75
EDB(1) 1.70 0.15 1.85
(1) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(2) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GMIB - MAV 0.55%(1),(2)
GMIB - 6% RISING FLOOR 0.75%(1),(2)
(As a percentage of the adjusted contract value charged annually on the contract
anniversary.)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following current annual
rider changes apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
--------------------------------------------------------------------------------
8 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.50% 1.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco V.I. Core Equity Fund, Series II Shares 0.61 0.25 0.28 -- 1.14
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(2)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(3)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68% 0.25% 0.12% --% 1.05%
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(4)
Oppenheimer High Income Fund/VA, Service Shares 0.75 0.25 0.23 -- 1.23(5)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(5)
Service Shares
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Putnam VT Research Fund - Class IB Shares 0.56 0.25 0.27 -- 1.08
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(6)
3)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3) and 0.915% for Columbia Variable
Portfolio - Large Cap Growth Fund (Class 3).
(2)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(3)MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03% .
(4)The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(5)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.00% for Oppenheimer High
Income Fund/VA, Service Shares and 1.05% for Oppenheimer Main Street Small-
& Mid-Cap Fund(R)/VA, Service Shares.
(6)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
--------------------------------------------------------------------------------
10 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV death benefit, GMIB - 6% Rising Floor
and Benefit Protector Plus. Although your actual costs may be lower, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,246 $2,046 $2,854 $4,565 $446 $1,346 $2,254 $4,565
Five-year
withdrawal charge
schedule 1,277 2,034 2,595 4,815 477 1,434 2,395 4,815
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,221 $1,972 $2,736 $4,351 $421 $1,272 $2,136 $4,351
Five-year
withdrawal charge
schedule 1,252 1,961 2,478 4,607 452 1,361 2,278 4,607
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,019 $1,373 $1,749 $2,441 $219 $673 $1,149 $2,441
Five-year
withdrawal charge
schedule 1,050 1,366 1,505 2,757 250 766 1,305 2,757
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $ 994 $1,296 $1,617 $2,170 $194 $596 $1,017 $2,170
Five-year
withdrawal charge
schedule 1,025 1,289 1,375 2,494 225 689 1,175 2,494
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
12 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 13
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks to maximize total return consistent AllianceBernstein L.P.
VPS Balanced with AllianceBernstein's determination of
Wealth Strategy reasonable risk.
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Growth Stock Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer High Seeks a high level of current income from OppenheimerFunds, Inc.
Income Fund/VA, investment in high-yield, fixed-income
Service Shares securities.
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
Research Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 17
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
18 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 19
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 7%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
--------------------------------------------------------------------------------
20 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. Generally, you can
own a nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(1);
how you want to make purchase payments;
the optional MAV death benefit(2);
the optional EDB(2);
the optional GMIB - MAV rider(3);
the optional GMIB - 6% Rising Floor rider(3);
the optional PCR(3);
the optional Benefit Protector Death Benefit(4);
the optional Benefit Protector Plus Death Benefit(4);
the length of the withdrawal charge schedule (5 or 7 years)(5); and
a beneficiary.
(1) GPAs are not available under contracts issued in Maryland, Oregon,
Pennsylvania or Washington and may not be available in other states.
(2) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(3) If you select the PCR, you cannot add a GMIB rider. The GMIB is available if
the annuitant is 75 or younger at contract issue. The GMIB is not available
with ROP death benefit. May not be available in all states.
(4) Available if you and the annuitant are 75 or younger at contract issue. Not
available with EDB. May not be available in all states.
(5) The five-year withdrawal charge schedule may not be available in all states.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 minimum for the GPAs.
The following restrictions on allocation of purchase payments to the GPAs and
the one-year fixed account will apply:
FOR CONTRACTS WITH APPLICATIONS No restrictions on the amount of purchase
SIGNED PRIOR TO JUNE 16, 2003: payments allocated to the GPAs or the one-
year fixed account (if available).
FOR CONTRACTS WITH APPLICATIONS The amount of any purchase payment allocated
SIGNED ON OR AFTER JUNE 16 to the GPAs and the one-year fixed account in
THROUGH DEC. 4, 2003: total cannot exceed 30% of the purchase
payment.
This 30% limit will not apply if you
establish a dollar cost averaging arrangement
with respect to the purchase payment
according to procedures currently in effect,
or you are participating according to the
rules of an asset allocation model portfolio
program available under the contract, if any.
FOR CONTRACTS WITH APPLICATIONS In certain states where we offer GPAs that do
SIGNED ON OR AFTER DEC. 5, 2003: not require payment of a statutory minimum
guaranteed interest rate, the amount of any
purchase payment allocated to one-year fixed
account cannot exceed 30% of the purchase
payment. The amount of any purchase payment
allocated to the GPAs is not subject to this
30% limit. Please consult your investment
professional to see if these restrictions
apply in your state. In all other states, the
amount of any purchase payment allocated to
the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase
payment. We reserve the right to further
limit purchase payment allocations to the
one-year fixed account and/or GPAs if the
interest rate we are then crediting on new
purchase payments allocated to the one-year
fixed account is equal to the minimum
interest rate stated in the contract.
In all states, the 30% limit will not apply
if you establish an automated dollar cost
averaging arrangement with respect to the
purchase payment according to procedures
currently in effect, or you are participating
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 21
according to the rules of an asset allocation
model portfolio program available under the
contract, if any.
There are no restrictions on allocations of purchase payments to the
subaccounts.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment.
You may make monthly payments to your contract under a systematic investment
plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
--------------------------------------------------------------------------------
22 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with any payment you make to your
contract that brings your total net payment (total payments less total
withdrawals) to $100,000 or more.(1)
For applications signed on or after Nov. 6, 2003, only contracts with a seven-
year withdrawal charge schedule are eligible for a credit. If you make any
additional payments that cause the contract to be eligible for the credit, we
will add credits to your prior purchase payments (less total withdrawals). We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account, special DCA account and the subaccounts in the same proportions
as your purchase payment.
We fund the credit from our general account. Credits are not considered to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available because of lower distribution and other expenses
associated with larger sized contracts and through revenue from higher
withdrawal charges and contract administrative charges than would otherwise be
charged. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credit. We use all the revenue from these
higher charges to pay for the cost of the credits. However, we could profit from
the higher charges if market appreciation is higher than expected or if contract
owners hold their contracts for longer than expected.
(1) For applications signed on or after Nov. 6, 2003 and if your state has
approved this restriction, purchase payment credits are not available for
contracts with a five-year withdrawal charge schedule.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contact is fully withdrawn. We prorate this charge among the GPAs, the one-year
fixed account, and the subaccounts in the same proportion your interest in each
account bears to your total contract value. Some states also limit any contract
charge allocated to the fixed account.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 23
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the death benefit guarantee, whether the contract is a
qualified annuity or a nonqualified annuity and the withdrawal charge schedule
that applies to your contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP death benefit 0.85% 1.10%
MAV death benefit(1) 1.05 1.30
EDB 1.15 1.40
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP death benefit 1.15 1.40
MAV death benefit(1) 1.35 1.60
EDB 1.45 1.70
(1) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than six or eight years before the date of withdrawal (depending on the
withdrawal charge schedule you select. (In addition, amounts withdrawn from a
GPA more than 30 days before the end of the applicable guarantee period will be
subject to a MVA. (See "The Guarantee Period Accounts -- Market Value Adjustment
(MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you select a 7-year withdrawal charge schedule, during the first two
years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the seventh year after it is made is 3%. At the beginning of the
eighth year after that purchase payment is made, and thereafter, there is no
withdrawal charge as to that payment.
--------------------------------------------------------------------------------
24 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value; and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, or the one-
year fixed account or GPA. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next, we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ----------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE(1)
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
(1) The five-year withdrawal charge schedule may not be available in all states.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 25
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with a SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the seventh contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
560 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
7% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a 7%
withdrawal charge.
----
$980
Under the same scenario, the withdrawal charge on a contract with a FIVE-YEAR
WITHDRAWAL CHARGE SCHEDULE would be calculated:
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received six or more years before
withdrawal and is withdrawn without withdrawal charge; and
320 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
4% withdrawal charge; and
360 $6,000 purchase payment is in its third year from receipt withdrawn with a 6%
withdrawal charge.
----
$680
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
--------------------------------------------------------------------------------
26 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
contracts settled using an annuity payout plan unless an annuity payout Plan E
is later fully withdrawn;
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge an annual fee for this optional feature only if you select it. There
are two GMIB rider options available under your contract (see "Guaranteed
Minimum Income Benefit Rider"). The fee for GMIB - MAV is 0.55% of the adjusted
contract value(1). The fee for GMIB - 6% Rising Floor is 0.75% of the adjusted
contract value. Depending on the GMIB rider option you choose, we deduct the
appropriate fee from the contract value on your contract anniversary at the end
of each contract year. We prorate this fee among the GPAs, one-year fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value.
(1) For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the appropriate GMIB fee from the proceeds payable adjusted for the
number of calendar days coverage was in place. We cannot increase either GMIB
fee after the rider effective date and it does not apply after annuity payouts
begin or the GMIB terminates.
We calculate the fee as follows:
GMIB - MAV 0.55% x (CV + ST - FAV)
GMIB - 6% RISING FLOOR 0.75% x (CV + ST - FAV)
CV = contract value on the contract anniversary
ST = transfers from the subaccounts to the GPAs or the one-year fixed account
made during the six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account on the contract
anniversary.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts and not on the GPAs and the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 27
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
The GMIB fee for:
GMIB - MAV IS 0.55%; AND
GMIB - 6% RISING FLOOR IS 0.75%.
We calculate the charge as follows:
Contract value on the contract anniversary: $73,250
plus transfers from the subaccounts to the one-year fixed account in the
six months before the contract anniversary: +15,000
minus the value of the one-year fixed account on the contract
anniversary: -15,250
-------
$73,000
The GMIB fee charged to you:
GMIB - MAV (0.55% x $73,000) = $401.50
GMIB - 6% RISING FLOOR (0.75% x $73,000) = $547.50
PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.15% of your contract value for this optional feature if you
select it. If selected, we deduct the fee from your contract value on your
contract anniversary at the end of each contract year. We prorate this fee among
the GPAs, the one-year fixed account and the subaccounts in the same proportion
as your interest bears to your total contract value. If you select the PCR, you
cannot add a GMIB rider.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocate to the GPAs and the one-year fixed account
directly in dollars. The value of the GPAs and the one-year fixed account
equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs
and the one-year fixed account (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and one-year fixed
account;
plus interest credited;
--------------------------------------------------------------------------------
28 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 29
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Special DCA program. There is no charge for the Special DCA program.
Under the Special DCA program, you can allocate a new purchase payment and any
applicable purchase payment credit to a six-month or twelve-month Special DCA
account.
You may only allocate a new purchase payment of at least $10,000 to a Special
DCA account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, the one-year fixed account and/or subaccounts you select
over the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
--------------------------------------------------------------------------------
30 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfer. We will change the interest rate on each Special DCA account from time
to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Special DCA account at the beginning of the six or twelve-month period.
Therefore, you may receive less total interest than you would have if all your
purchase payments and purchase payment credits were in the Special DCA account
from the beginning. If we receive any of your multiple payments after the six or
twelve-month period ends, you can either allocate those payments to a new
Special DCA account (if available) or to any other accounts available under your
contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify, subject to the 30%
limitation rule (see "Transfer policies"). Similarly, if we cannot accept any
additional purchase payments into the Special DCA program, we will allocate the
purchase payments to the other accounts you selected for your DCA transfers or
in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon your willingness to continue to invest regularly through the periods
of low levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals.
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 31
value. You must allow 30 days for us to change any instructions that currently
are in place. For more information on asset rebalancing, contact your investment
professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
You may transfer contract value from the one-year fixed account to the
subaccounts or the GPAs according to the following transfer policies:
FOR CONTRACTS WITH APPLICATIONS It is our general policy to allow you to
SIGNED PRIOR TO JUNE 16, 2003: transfer contract values from the one-year
fixed account to the subaccounts or the
GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums).
Currently, we have removed this restriction
and you may transfer contract values from
the one-year fixed account to the
subaccounts at any time. We will inform you
at least 30 days in advance of the day we
intend to reimpose this restriction.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER JUNE 16 THROUGH one-year fixed account to the subaccounts
DEC. 4, 2003: or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
GPAs or the one-year fixed account cannot
result in the value of the GPAs and the
one-year fixed account in total being
greater than 30% of the contract value.
Total transfers out of the GPAs and one-
year fixed account in any contract year are
limited to 30% of the total value of the
GPAs and one-year fixed account at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER DEC. 5, 2003: one-year fixed account to the subaccounts
or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which
--------------------------------------------------------------------------------
32 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
can be set up at any time for certain
transfer periods subject to certain
minimums). The amount of contract value
transferred to the one-year fixed account
cannot result in the value of the one-year
fixed account in total being greater than
30% of the contract value. We reserve the
right to further limit transfers to the
one-year fixed account and/or GPAs if the
interest rate we are then crediting on new
purchase payments allocated to the one-year
fixed account is equal to the minimum
interest rate stated in the contract. Total
transfers out of the one-year fixed account
in any contract year are limited to 30% of
the one-year fixed account value at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
Transfers from the one-year fixed account are not subject to an MVA.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts, and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 33
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
34 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 35
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
--------------------------------------------------------------------------------
36 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payments death benefit (ROP);
Maximum Anniversary Value death benefit (MAV); and
Enhanced Death Benefit (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select a GMIB, you must elect either the MAV death
benefit or the EDB. Once you elect a death benefit option, you cannot change it.
We show the option that applies in your contract. The combination of the
contract, withdrawal charge schedule and death benefit option you select
determines the mortality and expense risk fee that is assessed against the
subaccounts. (See "Charges -- Mortality and Expense Risk Fee.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 37
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments plus purchase payments credits applied to the
contract minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = ------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000 ----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. This is an optional benefit
that you may select for an additional charge (see "Charges"). The MAV death
benefit does not provide any additional benefit before the first contract
anniversary and it may not be appropriate for issue ages 75 to 79 because the
benefit values may be limited at age 81. Be sure to discuss with your investment
professional whether or not the MAV death benefit is appropriate for your
situation.
If the MAV death benefit is available in your state and both you and the
annuitant are age 79 or younger at contract issue, you may choose to add the MAV
death benefit to your contract at the time of purchase. Once you select the MAV
death benefit, you may not cancel it. If you choose to add a GMIB rider to your
contract, you must elect either the MAV death benefit or the EDB.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values amounts less any purchase payment credits subject
to reversal, minus any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments and purchase payment credits applied to the contract
since that anniversary minus adjusted partial withdrawals since that
anniversary.
--------------------------------------------------------------------------------
38 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value we calculate on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV to the highest value. We stop
resetting the MAV when you or the annuitant reach age 81. However, we continue
to add subsequent purchase payments and purchase payment credits and subtract
adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $20,000.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $20,000 = -1,363.64
$22,000 ----------
for a death benefit of: $18,636.36
----------
The MAV immediately preceding the date of death plus any payments made since that
anniversary minus adjusted partial withdrawals:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000 ----------
for a death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$22,363.64
ENHANCED DEATH BENEFIT
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow.
This is an optional benefit that you may select for an additional charge (see
"Charges"). The EDB does not provide any additional benefit before the first
contract anniversary and it may not be appropriate for issue ages 75 to 79
because the benefit values may be limited at age 81. Benefit Protector and
Benefit Protector Plus are not available with EDB. Be sure to discuss with your
investment professional whether or not the EDB is appropriate for your
situation.
If the EDB is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB rider to your contract
at the time of purchase. If you choose to add a GMIB rider to your contract, you
must elect either the MAV death benefit or the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values less any purchase payment credits subject to reversal, minus
any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals;
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments and purchase payment credits applied to the contract
since that anniversary minus adjusted partial withdrawals since that
anniversary; or
4. the 5% rising floor.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 39
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------
SV
PWT = the amount by which the contract is reduced as a result of the partial
withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200.
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $22,800.
The death benefit is calculated as follows:
Contract value at death: $22,800.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a return of purchase payments death benefit of: $23,456.79
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a MAV death benefit of: $23,456.79
----------
THE 5% RISING FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the subaccounts,
calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000 ----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
5% rising floor (value of the GPAs, one-year fixed account and the variable
account floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
--------------------------------------------------------------------------------
40 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 41
the risks normally associated with a portfolio of fixed-income securities,
including interest rate, option, liquidity and credit risk. The financial
statements contained in the SAI include a further discussion of the risks
inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
There are two GMIB rider options available under your contract. Both GMIB riders
are intended to provide you with a guaranteed minimum lifetime income regardless
of the volatility inherent in the investments in the subaccounts. If you select
either GMIB rider option:
you must hold the GMIB for 7 years;
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary;
and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If either GMIB rider is available in your state and the annuitant is 75 or
younger at contract issue, you may choose to add this optional benefit at the
time you purchase your contract for an additional charge. If the annuitant is
between age 73 and age 75 at contract issue, you should consider whether a GMIB
rider is appropriate for your situation. Be sure to discuss with your investment
professional whether either GMIB rider option is appropriate for your situation.
The amount of the fee is determined by the GMIB rider option you select (see
"Charges -- GMIB Rider Fee"). If you select a GMIB rider, you must also elect
the MAV death benefit or the EDB at the time you purchase your contract. The PCR
rider is not available with either GMIB rider. The effective date of the GMIB
rider will be the contract issue date.
In some instances, we may allow you to add a GMIB rider to your contract at a
later date if it was not available when you initially purchased your contract.
In these instances, we would add the GMIB rider on the next contract anniversary
and this would become the rider effective date. For purposes of calculating the
GMIB benefit base under these circumstances, we consider the contract value on
the rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION: Under either GMIB rider, you may allocate your purchase
payments and purchase payment credits or transfers to any of the subaccounts,
the GPAs or the one-year fixed account. However, we reserve the right to limit
the amount you allocate to subaccounts investing in RiverSource Variable
Portfolio - Cash Management Fund to 10% of the total amount in the subaccounts.
If we are required to activate this restriction, and you have more than 10% of
your subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB rider if you have not satisfied the limitation
after 60 days.
YOU MAY SELECT ONE OF THE FOLLOWING GMIB RIDER OPTIONS:
GMIB - Maximum Anniversary Value (MAV); or
GMIB - 6% Rising Floor.
GMIB - MAV
GMIB BENEFIT BASE:
If the GMIB - MAV is elected at contract issue, the GMIB benefit base is the
greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the Maximum Anniversary Value (MAV) at the last contract anniversary plus any
payments and purchase payment credits since that anniversary minus adjusted
partial withdrawals since that anniversary.
MAV is a value we calculate on the first contract anniversary as the highest of:
(a) your current contract value, or (b) total purchase payments and purchase
payment credits minus adjusted partial withdrawals. There is no MAV prior to the
first
--------------------------------------------------------------------------------
42 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
contact anniversary. Every contract anniversary after that through age 80, we
compare the previous anniversary's MAV (plus any purchase payments and purchase
payment credits since that anniversary minus adjusted partial withdrawals since
that anniversary) to the current contract value and we reset the MAV to the
highest value. We stop resetting the MAV after you or the annuitant reach age
81. However, we continue to add subsequent purchase payments and purchase
payment credits and subtract adjusted partial withdrawals from the MAV.
Keep in mind, the MAV is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payment
and purchase payment credits made in the five years before you exercise the
GMIB - MAV. We would do so only if such payments and credit total $50,000 or
more or if they are 25% or more of total contract payments and credits. If we
exercise this right, we subtract each payment and purchase payment credit
adjusted for market value from the contract value and the MAV.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value and the MAV as:
PMT X CVG
------------
ECV
PMT = each purchase payment and purchase payment credit made in the five years
before you exercise the GMIB - MAV.
CVG = current contract value at the time you exercise the GMIB - MAV.
ECV = the estimated contract value on the anniversary prior to the payment in
question. We assume that all payments, purchase payment credits and
partial withdrawals occur at the beginning of a contract year.
EXERCISING THE GMIB - MAV:
you may only exercise the GMIB - MAV within 30 days after any contract
anniversary following the expiration of a seven-year waiting period from the
rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund;
- Plan B -- Life Annuity with ten years certain;
- Plan D -- Joint and last survivor life annuity - no refund;
You may change the annuitant for the payouts.
When you exercise your GMIB - MAV, you may select a fixed or variable annuity
payout plan. Fixed annuity payouts are calculated using the annuity purchase
rates based on the "1983 Individual Annuitant Mortality Table A" with 100%
Projection Scale G and an interest rate of 3%. Your annuity payouts remain fixed
for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - MAV benchmarks the contract growth at each anniversary against
several comparison values and sets the GMIB benefit base equal to the largest
value of the MAV, purchase payments and purchase payment credits minus adjusted
partial withdrawals or the contract value. The GMIB benefit base, less any
applicable premium tax, is the value we apply to the GMIB - MAV annuity purchase
described above. If the GMIB benefit base is greater than the contract value,
the GMIB - MAV may provide a higher annuity payout level than is otherwise
available. However, the GMIB - MAV uses guaranteed annuity purchase rates which
may result in annuity payouts that are less than those using the annuity
purchase rates that we will apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the GMIB - MAV may be
less than the income the contract otherwise provided. If the annuity payouts
through the standard contract
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 43
provisions are more favorable than the payouts available through the GMIB - MAV,
you will receive the higher standard payout. The GMIB - MAV does not create
contract value or guarantee the performance of any investment option.
TERMINATING THE GMIB - MAV:
You may terminate the GMIB - MAV within 30 days after the first rider
anniversary.
You may terminate the GMIB - MAV any time after the seventh rider anniversary.
The GMIB - MAV will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - MAV will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and we add a $1,000 purchase payment credit to your contract. You
allocate all your purchase payments and purchase payment credits to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS MAV BENEFIT BASE
1 $107,000 $101,000 $107,000
2 125,000 101,000 125,000
3 132,000 101,000 132,000
4 150,000 101,000 150,000
5 85,000 101,000 150,000
6 120,000 101,000 150,000
7 138,000 101,000 150,000 $150,000
8 152,000 101,000 152,000 152,000
9 139,000 101,000 152,000 152,000
10 126,000 101,000 152,000 152,000
11 138,000 101,000 152,000 152,000
12 147,000 101,000 152,000 152,000
13 163,000 101,000 163,000 163,000
14 159,000 101,000 163,000 163,000
15 215,000 101,000 215,000 215,000
NOTE: The MAV value is limited at age 81, but, the GMIB benefit base may
increase if the contract value increases. However, you should keep in mind that
you are always entitled to annuitize using the contract value without exercising
the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $152,000 (MAV) $ 784.32 $ 763.04 $627.76
15 215,000 (Contract Value = MAV) 1,268.50 1,210.45 982.55
--------------------------------------------------------------------------------
44 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
The payouts above are based on the "1983 Individual Annuitant Mortality Table A"
with 100% Projection Scale G and an interest rate of 3%. Payouts under the
standard provisions of this contract will be based on our annuity rates in
effect at annuitization and are guaranteed to be greater than or equal to the
guaranteed annuity rates stated in Table B of the contract. The fixed annuity
payout available under the standard provisions of this contract would be at
least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 215,000 1,268.50 1,210.45 982.55
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - MAV payout is less than the payout available under the standard
provisions of the contract, you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
GMIB - 6% RISING FLOOR
GMIB BENEFIT BASE:
If the GMIB - 6% Rising Floor is elected at contract issue, the GMIB benefit
base is the greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the 6% rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments and purchase payment credits allocated to the
subaccounts increased by 6%;
plus any subsequent amounts allocated to the subaccounts; and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% then adding any subsequent amounts allocated to the subaccounts and
subtracting any adjusted transfers or partial withdrawals from the subaccounts.
We stop resetting the variable account floor after you or the annuitant reach
age 81. However, we continue to add subsequent amounts you allocate to the
subaccounts and subtract adjusted transfers or partial withdrawals from the
subaccounts. We calculate adjusted transfers or partial withdrawals for the 6%
rising floor using the same formula as adjusted transfers or partial withdrawals
for the 5% rising floor.
Keep in mind that the 6% rising floor is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments total $50,000 or more or if they are
25% or more of total contract payments and credits. If we exercise this right,
we:
subtract each payment adjusted for market value from the contract value.
subtract each payment from the 6% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 6% for the number of full contract years they
have been in the contract before we subtract them from the 6% rising floor.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, the GPAs and the one-year fixed account value
of the 6% rising floor as:
PMT X CVG
------------
ECV
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 45
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
For each payment, we calculate the 6% increase of payments allocated to the
subaccounts as:
PMT X (1.06)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB - 6% RISING FLOOR:
you may only exercise the GMIB - 6% Rising Floor within 30 days after any
contract anniversary following the expiration of a seven-year waiting period
from the rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
You may change the annuitant for the payouts.
When you exercise your GMIB - 6% Rising Floor, you may select a fixed or
variable annuity payout plan. Fixed annuity payouts are calculated using the
annuity purchase rates based on the "1983 Individual Annuitant Mortality Table
A" with 100% Projection Scale G and an interest rate of 2.5%. Your annuity
payouts remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - 6% Rising Floor benchmarks the contract growth at each anniversary
against several comparison values and sets the GMIB benefit base equal to the
largest value of the 6% rising floor, ROP or contract value. The GMIB benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates we use in the 2.5% Table to calculate the minimum annuity
payouts you will receive if you exercise the GMIB - 6% Rising Floor. If the GMIB
benefit base is greater than the contract value, the GMIB - 6% Rising Floor may
provide a higher annuity payout level than is otherwise available. However, the
GMIB - 6% Rising Floor uses annuity purchase rates that may be more conservative
than the annuity purchase rates than we will apply at annuitization under the
standard contract provisions. Therefore, the level of income provided by the
GMIB - 6% Rising Floor may be less than the income the contract otherwise
provided. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB - 6% Rising Floor,
you will receive the higher standard payout. The GMIB - 6% Rising Floor does not
create contract value or guarantee the performance of any investment option.
TERMINATING THE GMIB - 6% RISING FLOOR:
You may terminate the GMIB - 6% Rising Floor within 30 days after the first
rider anniversary.
You may terminate the GMIB - 6% Rising Floor any time after the seventh rider
anniversary.
The GMIB - 6% Rising Floor will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - 6% Rising Floor will terminate* 30 days following the contract
anniversary after the annuitant's 86th birthday.
--------------------------------------------------------------------------------
46 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all of your purchase payment to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT 6% RISING GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS FLOOR BENEFIT BASE
1 $107,000 $100,000 $106,000
2 125,000 100,000 112,360
3 132,000 100,000 119,102
4 150,000 100,000 126,248
5 85,000 100,000 133,823
6 120,000 100,000 141,852
7 138,000 100,000 150,363 $150,363
8 152,000 100,000 159,388 159,388
9 139,000 100,000 168,948 168,948
10 126,000 100,000 179,085 179,085
11 138,000 100,000 189,830 189,830
12 147,000 100,000 201,220 201,220
13 215,000 100,000 213,293 215,000
14 234,000 100,000 226,090 234,000
15 240,000 100,000 239,655 240,000
NOTE: The 6% Rising Floor value is limited at age 81, but the GMIB benefit base
may increase if the contract value increases. However, you should keep in mind
that you are always entitled to annuitize using the contract value without
exercising the GMIB - 6% Rising Floor.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $179,085 (6% Rising Floor) $ 872.14 $ 850.65 $ 691.27
15 240,000 (Contract Value) 1,346.40 1,286.40 1,034.40
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the guaranteed annuity rates stated in Table B of the contract.
The fixed annuity payout available under the standard provisions of this
contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 240,000 1,416.00 1,351.20 1,096.80
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - 6% Rising Floor payout is less than the payout available under the
standard provisions of the contract, you will receive the higher standard
payout.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 47
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the tenth rider anniversary (see below). This
is an optional benefit you may select for an additional charge (see "Charges").
The PCR does not provide any additional benefit before the tenth rider
anniversary and it may not be appropriate for issue ages 75 or older due to this
required holding period. Be sure to discuss with your investment professional
whether or not the PCR is appropriate for your situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot add the PCR if you select either GMIB rider
option.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments and purchase
payment credits.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource Variable Portfolio - Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
and purchase payment credits minus the target value adjusted partial withdrawals
accumulated at an annual effective rate of 7.2%. Every rider anniversary after
that, we recalculate the target value by accumulating the prior anniversary's
target value and any additional purchase payments and purchase payment credits
minus the target value adjusted partial withdrawals at an annual effective rate
of 7.2%.
PW X TV
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = ------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXERCISING THE PCR: We will inform you if your contract value did not meet or
exceed the target value after your tenth rider anniversary. If your contract
value is less than the target value on the tenth rider anniversary you can
choose either of the following benefits:
OPTION A) You may choose to accept a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal amount
is an adjustment we make to determine the proportionate amount of any partial
withdrawal attributable to purchase payments received five or more years
before the target value is calculated (on the tenth year rider anniversary).
For a more detailed description of the PCR adjusted partial withdrawal please
see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five years.
We apply the PCR credit to your contract on the tenth rider anniversary and
allocate it among the GPAs, the one-year fixed account and subaccounts according
to your current asset allocation.
OPTION B) You may choose to begin receiving annuity payouts (only with lifetime
income plans; you may not choose Annuity Payout Plan E) within 60 days
of the tenth rider anniversary and receive an additional 5% PCR credit
(for a total PCR credit of 10%) as calculated in (a).
--------------------------------------------------------------------------------
48 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
We will assume that you elected PCR Option A unless we receive your request to
begin a lifetime annuity payout plan within 60 days after the tenth rider
anniversary.
If you select PCR Option A, we will restart the ten-year calculation period for
the PCR on the tenth rider anniversary and every ten years after that while you
own the contract. We use the contract value (including any credits) on that
anniversary as your first contract year's payments for calculating the target
value and any applicable PCR credit. We may then apply additional PCR credits to
your contract at the end of each ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments and credits for the calculating the target value and any
applicable PCR credit. If you select PCR Option A, the next ten-year calculation
period for the PCR will restart at the end of this new ten-year period. We must
receive your request to restart the PCR calculation period within 30 days after
a contract anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first rider
anniversary.
You may terminate the PCR within 30 days following the later of the tenth
rider anniversary or the last rider reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract;
- that a death benefit is payable; or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $1,000
purchase payment credit to the contract
There are no additional purchase payments and no partial withdrawals
On the tenth contract anniversary, the contract value is $200,000
We determine the target value on the tenth contract anniversary as our
purchase payments and credits accumulated at an annual effective rate of 7.2%
= $101,000 x (1.072)(10) = $101,000 x 2.00423 = $202,427.
Your contract value ($200,000) is less than the target value ($202,427).
Assuming you select PCR Option A, we add a PCR credit to your contract
calculated as follows:
5% x (PP - PCRPW - PP5) = 0.05 x ($101,000 - 0 - 0) = $5,050.
After application of the PCR credit, your total contract value would be
$205,050.
During the eleventh contract year, the contract value grows to $210,000 and
you choose to begin receiving annuity payouts under a lifetime income plan. We
would now add another PCR credit to your contract. Because you have not made
any additional purchase payments or partial withdrawals the amount of this new
credit is the same as the PCR credit we added to your contract on the tenth
contract anniversary ($5,050). After adding this new PCR credit to your
contract, your total contract value would be $215,050 and we would use this
amount to determine your monthly annuity payout amount.
If during the eleventh contract year, you had elected not to receive annuity
payouts, the PCR ten-year calculation period would restart on the tenth
contract anniversary with the target values first year's payments equal to
$205,050. We would make the next PCR credit determination on the twentieth
contract anniversary.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
Benefit Protector is not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 49
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary, plus:
the applicable death benefit,
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV death benefit equals the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charges. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether, we will
withdraw $50,000 and pay you $47,235. We calculate purchase payments not
previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of
the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
-------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
--------------------------------------------------------------------------------
50 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Benefit Protector Plus is
not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum
distributions. Be sure to discuss with your investment professional and tax
advisor whether or not the Benefit Protector Plus is appropriate for your
situation.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 51
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death"), plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate
--------------------------------------------------------------------------------
52 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract earnings). The
death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit paid during the third contract year.
The reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 53
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
--------------------------------------------------------------------------------
54 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 55
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment
--------------------------------------------------------------------------------
56 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
contract under which payments will begin no later than payments would have begun
under the contract exchanged, (3) the exchange of an annuity contract for
another annuity contract or for a qualified long-term insurance contract, and
(4) the exchange of a qualified long-term care insurance contract for a
qualified long-term care insurance contract. However, if the insurance policy
has an outstanding loan, there may be tax consequences. Depending on the issue
date of your original policy or contract, there may be tax or other benefits
that are given up to gain the benefits of the new policy or contract. Consider
whether the features and benefits of the new policy or contract outweigh any tax
or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 57
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and
--------------------------------------------------------------------------------
58 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
financial statements. Investment income is reinvested in the fund in which each
subaccount invests and becomes part of that subaccount's value. This investment
income, including realized capital gains, is not subject to any withholding for
federal or state income taxes. We reserve the right to make such a charge in the
future if there is a change in the tax treatment of variable annuities or in our
tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 59
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.00% as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the
--------------------------------------------------------------------------------
60 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
outcome of any such proceedings could have a material adverse impact on results
of operations in any particular reporting period as the proceedings are
resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 61
APPENDIX A: PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE:
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question minus the RPA adjusted partial
withdrawals for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and purchase payment credits as there are
no previous withdrawals to subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = ----------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
CV = the contract value on the date of (but prior to) the partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP TWO:
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question AND prior to the five year exclusion period
minus EPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and purchase payment credits made before
the five year exclusion period as there are no previous withdrawals to
subtract. Also note that EPA/RPA will always be less than or equal to one.
PW X EPA EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = ---------- x -------
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
CV = the contract value on the date of (but prior to) the partial withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP THREE:
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include purchase payment credits.
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
62 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT
DURATION
IN YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal the
third contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $8,333
partial withdrawal minus the RPA $100,000
adjusted partial withdrawals for $120,000 =
all previous partial withdrawals
= $100,000 - 0 = $100,000
For the second partial withdrawal the eighth contract
anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $8,156
partial withdrawal minus the RPA $191,667
adjusted partial withdrawals for $235,000 =
all previous partial withdrawals
= $200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal the
third contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000
partial withdrawal AND the five- $100,000 $100,000
year exclusion period minus the $120,000
EPA adjusted partial withdrawals x = $8,333
for all previous partial
withdrawals = $100,000 - 0 =
$100,000
For the second partial withdrawal the eighth contract
anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x _$91,667_
partial withdrawal AND the five- $91,667 $191,667
year exclusion period minus the $235,000
EPA adjusted partial withdrawals x = $1,866
for all previous partial
withdrawals = $100,000 - $8,333 =
$91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 =
$10,199
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 63
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.11 $1.01 $0.82 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 $1.01 $0.82 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 6 5 17 32 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30 $0.51
Accumulation unit value at end of period $0.40 $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30
Number of accumulation units outstanding at end
of period (000 omitted) 89 80 126 156 276 482 552 588 655 372
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74 $0.97
Accumulation unit value at end of period $1.09 $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 295 416 688 1,006 1,348 1,482 1,471 1,573 1,510 1,341
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45 $0.65
Accumulation unit value at end of period $0.62 $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45
Number of accumulation units outstanding at end
of period (000 omitted) 128 210 363 517 863 934 882 881 893 1,003
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit value at end of period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 341 576 492 720 1,135 646 695 691 813 697
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04 $1.00
Accumulation unit value at end of period $1.44 $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 317 645 713 743 1,355 1,120 1,133 1,115 572 63
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78 $1.00
Accumulation unit value at end of period $1.48 $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 130 223 356 367 455 367 326 294 140 26
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit value at beginning of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 126 203 307 325 354 377 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81 $1.00
Accumulation unit value at end of period $1.05 $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 6 6 7 24 30 33 24 28 24 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61 $0.80
Accumulation unit value at end of period $0.93 $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61
Number of accumulation units outstanding at end
of period (000 omitted) 291 404 521 683 746 811 799 771 748 360
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17 $1.11
Accumulation unit value at end of period $1.30 $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 158 313 373 561 759 861 873 916 849 645
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86 $1.00
Accumulation unit value at end of period $1.57 $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86
Number of accumulation units outstanding at end
of period (000 omitted) 447 873 1,505 1,719 1,897 2,032 2,013 1,844 1,212 209
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75 $1.00
Accumulation unit value at end of period $1.11 $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 37 48 79 113 149 130 135 139 127 18
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
64 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85 $1.00
Accumulation unit value at end of period $1.98 $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 212 350 628 721 821 841 769 737 543 94
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75 $1.00
Accumulation unit value at end of period $1.21 $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 62 122 147 189 159 108 64 53 23
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.39 $1.16 $0.98 $1.72 $2.20 $1.84 $1.64 $1.26 $0.93 $1.00
Accumulation unit value at end of period $1.30 $1.39 $1.16 $0.98 $1.72 $2.20 $1.84 $1.64 $1.26 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 44 76 95 90 106 130 125 99 68 14
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80 $1.00
Accumulation unit value at end of period $1.58 $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 88 114 219 285 324 313 315 231 169 24
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53 $0.75
Accumulation unit value at end of period $0.95 $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53
Number of accumulation units outstanding at end
of period (000 omitted) 124 284 441 623 769 877 916 978 712 656
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01 $1.16
Accumulation unit value at end of period $1.54 $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01
Number of accumulation units outstanding at end
of period (000 omitted) 716 1,184 1,983 2,405 3,218 3,435 3,555 3,640 2,566 753
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68 $0.85
Accumulation unit value at end of period $1.20 $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 170 251 583 835 1,046 1,146 1,113 1,058 734 513
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/21/2002)
Accumulation unit value at beginning of period $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 42 72 64 58 59 56 51 62 30
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.09 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 2 9 30 19 24 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76 $1.00
Accumulation unit value at end of period $0.91 $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 297 468 748 743 806 813 843 909 623 113
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50 $0.71
Accumulation unit value at end of period $0.76 $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50
Number of accumulation units outstanding at end
of period (000 omitted) 65 128 327 449 370 419 500 482 515 421
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64 $0.95
Accumulation unit value at end of period $1.20 $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64
Number of accumulation units outstanding at end
of period (000 omitted) 54 137 197 204 314 454 474 495 388 165
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04 $1.10
Accumulation unit value at end of period $1.48 $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 662 1,080 1,849 2,581 3,209 3,243 3,188 2,934 2,457 1,585
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/21/2002)
Accumulation unit value at beginning of period $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87 $1.00
Accumulation unit value at end of period $2.74 $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 18 23 33 60 136 124 98 53 40 --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 65
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78 $1.00
Accumulation unit value at end of period $1.08 $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 64 217 274 315 318 339 399 377 130 9
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.49 $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 57 110 210 287 384 376 391 303 154 25
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04 $1.00
Accumulation unit value at end of period $1.69 $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 365 704 1,221 1,572 1,717 1,600 1,586 1,442 995 38
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER HIGH INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.41 $0.36 $0.29 $1.36 $1.38 $1.28 $1.27 $1.18 $0.96 $1.00
Accumulation unit value at end of period $0.39 $0.41 $0.36 $0.29 $1.36 $1.38 $1.28 $1.27 $1.18 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 86 280 539 351 422 402 397 349 301 18
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79 $1.00
Accumulation unit value at end of period $1.58 $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 76 117 205 221 249 248 220 170 121 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit value at beginning of period $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79 $0.99
Accumulation unit value at end of period $1.02 $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 88 163 212 278 376 343 383 455 530 379
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80 $1.00
Accumulation unit value at end of period $1.08 $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 117 210 300 325 392 419 350 360 178 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 15 21 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.13 $0.98 $0.74 $1.22 $1.22 $1.11 $1.07 $1.00 $0.81 $1.00
Accumulation unit value at end of period $1.09 $1.13 $0.98 $0.74 $1.22 $1.22 $1.11 $1.07 $1.00 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 3 3 3 3 3 3 3 6 4 1
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.60 $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 35 45 62 68 80 78 77 86 54 21
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.09 $1.00 $0.82 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.03 $1.09 $1.00 $0.82 -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40 $1.00
Accumulation unit value at end of period $1.25 $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 3 12 12 37 64 80 86 87 9
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32 $1.00
Accumulation unit value at end of period $1.39 $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32
Number of accumulation units outstanding at end of
period (000 omitted) 18 24 33 28 31 31 31 30 47
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24 $1.00
Accumulation unit value at end of period $1.32 $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24
Number of accumulation units outstanding at end of
period (000 omitted) -- -- 12 12 41 19 19 20 3
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
66 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 298 303 1,258 372 137 91 70 179 55
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02
Number of accumulation units outstanding at end of
period (000 omitted) 167 264 3,966 3,519 3,241 547 165 169 63
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44 $1.00
Accumulation unit value at end of period $1.81 $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 465 559 2,165 1,880 1,267 1,033 512 31 9
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 $1.00 --
Accumulation unit value at end of period $1.03 $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 --
Number of accumulation units outstanding at end of
period (000 omitted) 589 890 1,020 1,054 1,103 1,183 1,307 818 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.83 $1.52 $1.50 $1.38 $1.29 $1.22 $1.00
Accumulation unit value at end of period $1.22 $1.29 $1.12 $0.83 $1.52 $1.50 $1.38 $1.29 $1.22
Number of accumulation units outstanding at end of
period (000 omitted) 2 4 4 60 42 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.43 $1.27 $1.02 $1.66 $1.61 $1.42 $1.39 $1.28 $1.00
Accumulation unit value at end of period $1.42 $1.43 $1.27 $1.02 $1.66 $1.61 $1.42 $1.39 $1.28
Number of accumulation units outstanding at end of
period (000 omitted) 10 11 17 26 26 38 48 30 22
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $1.03 $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 264 356 1,118 628 589 641 492 399 234
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30 $1.00
Accumulation unit value at end of period $1.73 $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 909 1,171 1,641 2,452 2,368 2,760 1,602 814 205
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34 $1.00
Accumulation unit value at end of period $1.41 $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 16 18 26 27 27 13 21 7 5
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38 $1.00
Accumulation unit value at end of period $2.20 $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38
Number of accumulation units outstanding at end of
period (000 omitted) 170 239 607 861 608 488 330 213 143
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.90 $1.71 $1.38 $2.51 $2.18 $1.89 $1.62 $1.46 $1.00
Accumulation unit value at end of period $1.54 $1.90 $1.71 $1.38 $2.51 $2.18 $1.89 $1.62 $1.46
Number of accumulation units outstanding at end of
period (000 omitted) 222 253 305 341 344 445 418 246 5
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.41 $1.19 $1.02 $1.80 $2.31 $1.96 $1.76 $1.36 $1.00
Accumulation unit value at end of period $1.31 $1.41 $1.19 $1.02 $1.80 $2.31 $1.96 $1.76 $1.36
Number of accumulation units outstanding at end of
period (000 omitted) 74 92 116 121 110 104 114 78 --
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37 $1.00
Accumulation unit value at end of period $1.93 $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37
Number of accumulation units outstanding at end of
period (000 omitted) 31 64 75 87 91 94 88 85 50
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.79 $1.43 $1.02 $1.80 $1.65 $1.55 $1.50 $1.37 $1.00
Accumulation unit value at end of period $1.68 $1.79 $1.43 $1.02 $1.80 $1.65 $1.55 $1.50 $1.37
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- 7 -- 5
----------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25 $1.00
Accumulation unit value at end of period $1.44 $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25
Number of accumulation units outstanding at end of
period (000 omitted) 131 188 279 398 502 611 526 516 349
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 67
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34 $1.00
Accumulation unit value at end of period $1.67 $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 54 91 111 158 194 186 154 105 44
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (01/29/2003)
Accumulation unit value at beginning of period $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35 $1.00
Accumulation unit value at end of period $1.56 $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35
Number of accumulation units outstanding at end of
period (000 omitted) 2 14 22 22 32 32 32 33 1
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap
Growth Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.05 $0.98 $0.78 $1.14 $1.08 $1.00 -- -- --
Accumulation unit value at end of period $1.03 $1.05 $0.98 $0.78 $1.14 $1.08 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35 $1.00
Accumulation unit value at end of period $1.14 $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35
Number of accumulation units outstanding at end of
period (000 omitted) 75 113 132 148 151 164 179 110 27
----------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $1.43 $1.30 $0.95 $1.54 $1.41 $1.34 $1.31 $1.22 $1.00
Accumulation unit value at end of period $1.41 $1.43 $1.30 $0.95 $1.54 $1.41 $1.34 $1.31 $1.22
Number of accumulation units outstanding at end of
period (000 omitted) -- 2 2 2 2 2 2 2 2
----------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33 $1.00
Accumulation unit value at end of period $1.78 $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33
Number of accumulation units outstanding at end of
period (000 omitted) 2 3 18 22 24 24 22 21 --
----------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17 $1.00
Accumulation unit value at end of period $1.35 $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17
Number of accumulation units outstanding at end of
period (000 omitted) 192 316 370 439 545 531 435 401 240
----------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30 $1.00
Accumulation unit value at end of period $2.83 $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 7 13 13 30 73 89 94 97 12
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31 $1.00
Accumulation unit value at end of period $1.30 $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31
Number of accumulation units outstanding at end of
period (000 omitted) 232 257 266 283 299 314 284 126 59
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46 $1.00
Accumulation unit value at end of period $1.87 $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46
Number of accumulation units outstanding at end of
period (000 omitted) 9 33 38 38 41 42 15 12 4
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.41 $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 681 912 3,444 3,043 3,205 2,256 1,716 851 141
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER HIGH INCOME FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $0.36 $0.32 $0.26 $1.24 $1.27 $1.19 $1.19 $1.11 $1.00
Accumulation unit value at end of period $0.35 $0.36 $0.32 $0.26 $1.24 $1.27 $1.19 $1.19 $1.11
Number of accumulation units outstanding at end of
period (000 omitted) 4 5 26 47 51 51 52 51 21
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44 $1.00
Accumulation unit value at end of period $1.87 $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 21 22 32 35 40 30 40 33 29
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29 $1.00
Accumulation unit value at end of period $1.23 $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29
Number of accumulation units outstanding at end of
period (000 omitted) 2 2 2 2 7 7 2 2 --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
68 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34 $1.00
Accumulation unit value at end of period $1.33 $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 20 29 33 44 47 53 51 54 41
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 2 2 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.34 $1.17 $0.90 $1.48 $1.50 $1.38 $1.33 $1.26 $1.00
Accumulation unit value at end of period $1.29 $1.34 $1.17 $0.90 $1.48 $1.50 $1.38 $1.33 $1.26
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40 $1.00
Accumulation unit value at end of period $1.94 $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 330 415 510 605 687 648 720 337 3
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS 69
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
70 RIVERSOURCE INNOVATIONS VARIABLE ANNUITY -- PROSPECTUS
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45273 T (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
ESSENTIAL VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Invesco Variable Insurance Funds
Oppenheimer Variable Account Funds - Service Shares
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
This contract provides for purchase payment credits to eligible contract owners,
which we may reverse under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits").(1) Expense charges for contracts with
purchase payment credits may be higher than expenses for contracts without such
credits. The amount of the credit may be more than offset by any additional fees
and charges associated with the credit.
(1) For applications signed on or after Nov. 6, 2003 and if your state has
approved this restriction, purchase payment credits are not available for
contracts with a five-year withdrawal charge schedule.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................. 3
THE CONTRACT IN BRIEF...................... 5
EXPENSE SUMMARY............................ 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED).............................. 12
FINANCIAL STATEMENTS....................... 12
THE VARIABLE ACCOUNT AND THE FUNDS......... 12
GUARANTEE PERIOD ACCOUNTS (GPAS)........... 17
THE ONE-YEAR FIXED ACCOUNT................. 19
BUYING YOUR CONTRACT....................... 19
CHARGES.................................... 22
VALUING YOUR INVESTMENT.................... 28
MAKING THE MOST OF YOUR CONTRACT........... 29
WITHDRAWALS................................ 35
TSA -- SPECIAL PROVISIONS.................. 35
CHANGING OWNERSHIP......................... 36
BENEFITS IN CASE OF DEATH.................. 36
OPTIONAL BENEFITS.......................... 40
THE ANNUITY PAYOUT PERIOD.................. 52
TAXES...................................... 54
VOTING RIGHTS.............................. 58
SUBSTITUTION OF INVESTMENTS................ 58
ABOUT THE SERVICE PROVIDERS................ 58
ADDITIONAL INFORMATION..................... 59
APPENDIX A: PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL.............. 61
APPENDIX B: CONDENSED FINANCIAL INFORMATION
(UNAUDITED).............................. 63
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION...... 66
--------------------------------------------------------------------------------
2 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: This contract allows you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account, and/or
subaccounts of the variable account under the contract; however you risk losing
amounts you invest in the subaccounts of the variable account. These accounts,
in turn, may earn returns that increase the value of a contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. Beginning at a specified time in the future
called the retirement date, these contracts provide lifetime or other forms of
payouts your contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
restrictions. Purchase payment amounts and purchase payment timing may vary by
state and be limited under the terms of your contract. (See "Buying Your
Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to further limit transfers to the GPAs and the one-year fixed account if the
interest rate we are then crediting to the GPAs or one-year fixed account is
equal to the minimum interest rate stated in the contract. (See "Making the Most
of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 5
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
ASSUMED INVESTMENT RATE
SEVEN-YEAR SCHEDULE 3.50% 5.00%
Qualified discount rate 4.86% 6.36%
Nonqualified discount rate 5.11% 6.61%
ASSUMED INVESTMENT RATE
FIVE-YEAR SCHEDULE 3.50% 5.00%
Qualified discount rate 5.16% 6.66%
Nonqualified discount rate 5.41% 6.91%
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP death benefit 0.85% 0.15% 1.00%
MAV death benefit(1),(2) 1.05 0.15 1.20
EDB(1) 1.15 0.15 1.30
NONQUALIFIED ANNUITIES
ROP death benefit 1.10 0.15 1.25
MAV death benefit(1),(2) 1.30 0.15 1.45
EDB(1) 1.40 0.15 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP death benefit 1.15 0.15 1.30
MAV death benefit(1),(2) 1.35 0.15 1.50
EDB(1) 1.45 0.15 1.60
NONQUALIFIED ANNUITIES
ROP Payment death benefit 1.40 0.15 1.55
MAV death benefit(1),(2) 1.60 0.15 1.75
EDB(1) 1.70 0.15 1.85
(1) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(2) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GMIB - MAV 0.55%(1),(2)
GMIB - 6% RISING FLOOR 0.75%(1),(2)
(As a percentage of the adjusted contract value charged annually on the contract
anniversary.)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following current annual
rider changes apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
--------------------------------------------------------------------------------
8 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM TOTAL ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense 0.60% 1.40%
reimbursements
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
FUND NAME** Management 12b-1 OTHER FEES AND ANNUAL
fees FEES EXPENSES EXPENSES*** EXPENSES
Columbia Variable Portfolio - Cash Management Fund (Class 0.33% 0.13% 0.14% --% 0.60%(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(2)
Service Shares
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(3)
3)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(4)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(4)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(5)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(4)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(4)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585%.
(2)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(3)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(4)The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 9
(5)Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
10 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV death benefit, GMIB - 6% Rising Floor
and Benefit Protector Plus. Although your actual costs may be lower, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,250 $2,055 $2,868 $4,590 $450 $1,355 $2,268 $4,590
Five-year
withdrawal charge
schedule 1,280 2,042 2,608 4,840 480 1,442 2,408 4,840
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,224 $1,981 $2,750 $4,377 $424 $1,281 $2,150 $4,377
Five-year
withdrawal charge
schedule 1,255 1,969 2,492 4,633 455 1,369 2,292 4,633
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,030 $1,404 $1,801 $2,547 $230 $704 $1,201 $2,547
Five-year
withdrawal charge
schedule 1,060 1,397 1,556 2,860 260 797 1,356 2,860
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,004 $1,327 $1,670 $2,279 $204 $627 $1,070 $2,279
Five-year
withdrawal charge
schedule 1,035 1,320 1,427 2,600 235 720 1,227 2,600
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates (see "Revenue we
receive from the funds may create conflicts of interest"). These relationships
may influence recommendations your
--------------------------------------------------------------------------------
12 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 13
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine these
future rates based on various factors including, but not limited to, the
interest rate environment, returns we earn on investments in the nonunitized
separate account we have established for the GPAs, the rates currently in effect
for new and existing RiverSource Life annuities, product design, competition and
RiverSource Life's revenues and other expenses.
WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of risks
inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 17
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
18 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 7%, assuming you elected
the 7-year withdrawal charge schedule. (See "Charges -- Withdrawal Charge.") We
do not apply MVAs to the amounts we deduct for withdrawal charges, so we would
deduct the withdrawal charge from your early withdrawal after we applied the
MVA. Also note that when you request an early withdrawal, we withdraw an amount
from your GPA that will give you the net amount you requested after we apply the
MVA and any applicable withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 19
owner, you have all rights and may receive all benefits under the contract. You
can own a qualified or nonqualified annuity. Generally, you can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(1);
how you want to make purchase payments;
the optional MAV death benefit(2);
the optional EDB(2);
the optional GMIB - MAV rider(3);
the optional GMIB - 6% Rising Floor rider(3);
the optional PCR(3);
the optional Benefit Protector Death Benefit(4);
the optional Benefit Protector Plus Death Benefit(4);
the length of the withdrawal charge schedule (5 or 7 years)(5); and
a beneficiary.
(1) GPAs are not available under contracts issued in Maryland, Oregon,
Pennsylvania or Washington and may not be available in other states.
(2) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(3) If you select the PCR, you cannot add a GMIB rider. The GMIB is available if
the annuitant is 75 or younger at contract issue. The GMIB is not available
with ROP death benefit. May not be available in all states.
(4) Available if you and the annuitant are 75 or younger at contract issue. Not
available with EDB. May not be available in all states.
(5) The five-year withdrawal charge schedule may not be available in all states.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 minimum for the GPAs.
The following restrictions on allocation of purchase payments to the GPAs and
the one-year fixed account will apply:
FOR CONTRACTS WITH APPLICATIONS No restrictions on the amount of purchase
SIGNED PRIOR TO JUNE 16, 2003: payments allocated to the GPAs or the one-
year fixed account (if available).
FOR CONTRACTS WITH APPLICATIONS The amount of any purchase payment allocated
SIGNED ON OR AFTER JUNE 16 to the GPAs and the one-year fixed account in
THROUGH DEC. 4, 2003: total cannot exceed 30% of the purchase
payment.
This 30% limit will not apply if you
establish a dollar cost averaging arrangement
with respect to the purchase payment
according to procedures currently in effect,
or you are participating according to the
rules of an asset allocation model portfolio
program available under the contract, if any.
FOR CONTRACTS WITH APPLICATIONS In certain states where we offer GPAs that do
SIGNED ON OR AFTER DEC. 5, 2003: not require payment of a statutory minimum
guaranteed interest rate, the amount of any
purchase payment allocated to one-year fixed
account cannot exceed 30% of the purchase
payment. The amount of any purchase payment
allocated to the GPAs is not subject to this
30% limit. Please consult your investment
professional to see if these restrictions
apply in your state. In all other states, the
amount of any purchase payment allocated to
the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase
payment. We reserve the right to further
limit purchase payment allocations to the
one-year fixed account and/or GPAs if the
interest rate we are then crediting on new
purchase payments allocated to the one-year
fixed account is equal to the minimum
interest rate stated in the contract.
In all states, the 30% limit will not apply
if you establish an automated dollar cost
averaging arrangement with respect to the
purchase payment according to procedures
currently in effect, or you are participating
according to the rules of an asset allocation
model portfolio program available under the
contract, if any.
--------------------------------------------------------------------------------
20 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
There are no restrictions on allocations of purchase payments to the
subaccounts.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment.
You may make monthly payments to your contract under a systematic investment
plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 21
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with any payment you make to your
contract that brings your total net payment (total payments less total
withdrawals) to $100,000 or more.(1)
For applications signed on or after Nov. 6, 2003, only contracts with a seven-
year withdrawal charge schedule are eligible for a credit. If you make any
additional payments that cause the contract to be eligible for the credit, we
will add credits to your prior purchase payments (less total withdrawals). We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account, special DCA account and the subaccounts in the same proportions
as your purchase payment.
We fund the credit from our general account. Credits are not considered to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available because of lower distribution and other expenses
associated with larger sized contracts and through revenue from higher
withdrawal charges and contract administrative charges than would otherwise be
charged. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credit. We use all the revenue from these
higher charges to pay for the cost of the credits. However, we could profit from
the higher charges if market appreciation is higher than expected or if contract
owners hold their contracts for longer than expected.
(1) For applications signed on or after Nov. 6, 2003 and if your state has
approved this restriction, purchase payment credits are not available for
contracts with a five-year withdrawal charge schedule.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
--------------------------------------------------------------------------------
22 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the death benefit guarantee, whether the contract is a
qualified annuity or a nonqualified annuity and the withdrawal charge schedule
that applies to your contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP death benefit 0.85% 1.10%
MAV death benefit(1) 1.05 1.30
EDB 1.15 1.40
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP death benefit 1.15 1.40
MAV death benefit(1) 1.35 1.60
EDB 1.45 1.70
(1) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than six or eight years before the date of withdrawal, depending on the
withdrawal charge schedule you select. (In addition, amounts withdrawn from a
GPA more than 30 days before the end of the applicable guarantee period will be
subject to a MVA. (See "The Guarantee Period Accounts -- Market Value Adjustment
(MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you select a seven-year withdrawal charge schedule, during the first
two years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the seventh year after it is made is 3%. At the beginning of the
eighth year after that purchase payment is made, and thereafter, there is no
withdrawal charge as to that payment.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 23
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next, we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ----------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn, depending on the withdrawal charge schedule you
selected:
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE(1)
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
(1) The five-year withdrawal charge schedule may not be available in all states.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
--------------------------------------------------------------------------------
24 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with a SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the seventh contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
560 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
7% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a 7%
withdrawal charge.
----
$980
Under the same scenario, the withdrawal charge on a contract with a FIVE-YEAR
WITHDRAWAL CHARGE SCHEDULE would be calculated:
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received six or more years before
withdrawal and is withdrawn without withdrawal charge; and
320 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
4% withdrawal charge; and
360 $6,000 purchase payment is in its third year from receipt withdrawn with a 6%
withdrawal charge.
----
$680
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan unless an annuity payout Plan E
is later fully withdrawn;
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 25
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge an annual fee for this optional feature only if you select it. There
are two GMIB rider options available under your contract (see "Guaranteed
Minimum Income Benefit Rider"). The fee for GMIB - MAV is 0.55% of the adjusted
contract value(1). The fee for GMIB - 6% Rising Floor is 0.75% of the adjusted
contract value. Depending on the GMIB rider option you choose, we deduct the
appropriate fee from the contract value on your contract anniversary at the end
of each contract year. We prorate this fee among the GPAs, one-year fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value.
(1) For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the appropriate GMIB fee from the proceeds payable adjusted for the
number of calendar days coverage was in place. We cannot increase either GMIB
fee after the rider effective date and it does not apply after annuity payouts
begin or the GMIB terminates.
We calculate the fee as follows:
GMIB - MAV 0.55% x (CV + ST - FAV)
GMIB - 6% RISING FLOOR 0.75% x (CV + ST - FAV)
CV = contract value on the contract anniversary
ST = transfers from the subaccounts to the GPAs or the one-year fixed account
made during the six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account on the contract
anniversary.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts and not on the GPAs and the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
--------------------------------------------------------------------------------
26 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
The GMIB fee for:
GMIB - MAV IS 0.55%; AND
GMIB - 6% RISING FLOOR IS 0.75%.
We calculate the charge as follows:
Contract value on the contract anniversary: $73,250
plus transfers from the subaccounts to the one-year fixed account in the
six months before the contract anniversary: +15,000
minus the value of the one-year fixed account on the contract
anniversary: -15,250
-------
$73,000
The GMIB fee charged to you:
GMIB - MAV (0.55% x $73,000) = $401.50
GMIB - 6% RISING FLOOR (0.75% x $73,000) = $547.50
PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.15% of your contract value for this optional feature if you
select it. If selected, we deduct the fee from your contract value on your
contract anniversary at the end of each contract year. We prorate this fee among
the GPAs, the one-year fixed account and the subaccounts in the same proportion
as your interest bears to your total contract value. If you select the PCR, you
cannot add a GMIB rider.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 27
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocate to the GPAs and the one-year fixed account
directly in dollars. The value of the GPAs and the one-year fixed account
equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs
and the one-year fixed account (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and one-year fixed
account;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial surrender; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a surrender charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
--------------------------------------------------------------------------------
28 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 29
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Special DCA program. There is no charge for the Special DCA program.
Under the Special DCA program, you can allocate a new purchase payment and any
applicable purchase payment credit to a six-month or twelve-month Special DCA
account.
You may only allocate a new purchase payment of at least $10,000 to a Special
DCA account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, one-year fixed account and/or the subaccounts you select
over the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Special DCA account at the beginning of the six or twelve-month period.
Therefore, you may receive less total interest than you would have if all your
purchase payments and purchase payment credits were in the Special DCA account
from the beginning. If we receive any of your multiple payments after the six or
twelve-month period ends, you can either allocate those payments to a new
Special DCA account (if available) or to any other accounts available under your
contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify, subject to the 30%
limitation rule (see "Transfer policies"). Similarly, if we cannot accept any
additional purchase payments into the Special DCA program, we will allocate the
purchase payments to the other accounts you selected for your DCA transfers or
in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA Program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
--------------------------------------------------------------------------------
30 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit purchase payment
allocations to the GPAs and the one-year fixed account if the interest rate we
are then crediting to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
You may transfer contract value from the one-year fixed account to the
subaccounts or the GPAs according to the following transfer policies:
FOR CONTRACTS WITH APPLICATIONS It is our general policy to allow you to
SIGNED PRIOR TO JUNE 16, 2003: transfer contract values from the one-year
fixed account to the subaccounts or the
GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums).
Currently, we have removed this restriction
and you may transfer contract values from
the one-year fixed account to the
subaccounts at any time. We will inform you
at least 30 days in advance of the day we
intend to reimpose this restriction.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER JUNE 16 THROUGH one-year fixed account to the subaccounts
DEC. 4, 2003: or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
GPAs or the one-year fixed account cannot
result in the value of the GPAs and the
one-year fixed account in total being
greater than 30% of the
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 31
contract value. Total transfers out of the
GPAs and one-year fixed account in any
contract year are limited to 30% of the
total value of the GPAs and one-year fixed
account at the beginning of the contract
year or $10,000, whichever is greater.
Because of this limitation, it may take you
several years to transfer all your contract
value from the one-year fixed account. You
should carefully consider whether the one-
year fixed account meets your investment
criteria before you invest.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER DEC. 5, 2003: one-year fixed account to the subaccounts
or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
one-year fixed account cannot result in the
value of the one-year fixed account in
total being greater than 30% of the
contract value. We reserve the right to
further limit transfers to the one-year
fixed account and/or GPAs if the interest
rate we are then crediting on new purchase
payments allocated to the one-year fixed
account is equal to the minimum interest
rate stated in the contract. Total
transfers out of the one-year fixed account
in any contract year are limited to 30% of
the one-year fixed account value at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
Transfers from the one-year fixed account are not subject to an MVA.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable annuity payout, once annuity payouts begin, you may
make transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
--------------------------------------------------------------------------------
32 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 33
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
34 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 35
employer either by affirmative election or inadvertent action causes
contributions under a plan that is subject to ERISA to be made to this contract,
we will not be responsible for any obligations and requirements under ERISA and
the regulations thereunder, unless we have prior written agreement with the
employer. You should consult with your employer to determine whether your 403(b)
plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payments death benefit (ROP);
Maximum Anniversary Value death benefit (MAV); and
Enhanced Death Benefit (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If
--------------------------------------------------------------------------------
36 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
you select a GMIB, you must elect either the MAV death benefit or the EDB. Once
you elect a death benefit option, you cannot change it. We show the option that
applies in your contract. The combination of the contract, withdrawal charge
schedule and death benefit option you select determines the mortality and
expense risk fee that is assessed against the subaccounts. (See
"Charges -- Mortality and Expense Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments plus purchase payments credits applied to the
contract minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = ------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000 ----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. This is an optional benefit
that you may select for an additional charge (see "Charges"). The MAV death
benefit does not provide any additional benefit before the first contract
anniversary and it may not be appropriate for issue ages 75 to 79 because the
benefit values may be limited at age 81. Be sure to discuss with your investment
professional whether or not the MAV death benefit is appropriate for your
situation.
If the MAV death benefit is available in your state and both you and the
annuitant are age 79 or younger at contract issue, you may choose to add the MAV
death benefit to your contract at the time of purchase. Once you select the MAV
death benefit, you may not cancel it. If you choose to add a GMIB rider to your
contract, you must elect either the MAV death benefit or the EDB.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values less any purchase payment credits subject to
reversal, minus any applicable rider charges:
1. contract value;
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 37
2. total purchase payments plus purchase payment credits minus adjusted partial
withdrawals; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value we calculate on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV to the highest value. We stop
resetting the MAV when you or the annuitant reach age 81. However, we continue
to add subsequent purchase payments and purchase payment credits and subtract
adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments and purchase payment credits minus adjusted partial
withdrawals:
Total purchase payments and purchase payment credits: $20,000.00
minus the death benefit adjusted partial withdrawals, calculated
as:
$1,500 x
$20,000 -1,363.64
--------- ----------
$22,000 =
for a death benefit of: $18,636.36
----------
The MAV immediately preceding the date of death:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and purchase payment credits made since
the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated
as:
$1,500 x
$24,000 -1,636.36
--------- ----------
$22,000 =
for a MAV death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$22,363.64
ENHANCED DEATH BENEFIT
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. This is an optional benefit that you
may select for an additional charge (see "Charges"). The EDB does not provide
any additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited at
age 81. Benefit Protector and Benefit Protector Plus are not available with EDB.
Be sure to discuss with your investment professional whether or not the EDB is
appropriate for your situation.
If the EDB is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB to your contract at the
time of purchase. If you choose to add a GMIB rider to your contract, you must
elect either the MAV death benefit or the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values; less purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% rising floor.
--------------------------------------------------------------------------------
38 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = PWT X VAF
-----------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $22,800.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x -1,543.21
$25,000 ----------
---------
$24,300 =
for a return of purchase payment death benefit of: $23,456.79
----------
The MAV immediately preceding the date of death:
Greatest of your contract anniversary contract values: $25,000.00
plus purchase payments and purchase payment credits made since +0.00
the prior anniversary:
minus adjusted partial withdrawals made since that anniversary,
calculated as:
$1,500 x -1,543.21
$25,000 ----------
---------
$24,300 =
for a MAV death benefit of: $23,456.79
----------
The 5% rising floor:
The variable account floor on the first contract anniversary, $21,000.00
calculated as: 1.05 x $20,000 =
plus amounts allocated to the subaccounts since that +0.00
anniversary:
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x -$1,657.89
$21,000 ----------
---------
$19,000 =
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
5% rising floor (value of the GPAs, one-year fixed account and $24,642.11
the variable account floor):
----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES: $24,642.11
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 39
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to
--------------------------------------------------------------------------------
40 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
the risks normally associated with a portfolio of fixed-income securities,
including interest rate, option, liquidity and credit risk. The financial
statements contained in the SAI include a further discussion of the risks
inherent within the investments of the general account.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
There are two GMIB rider options available under your contract. Both GMIB riders
are intended to provide you with a guaranteed minimum lifetime income regardless
of the volatility inherent in the investments in the subaccounts. If you select
either GMIB rider option:
you must hold the GMIB for 7 years,
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday,
you can only exercise the GMIB within 30 days after a contract anniversary,
and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If either GMIB rider is available in your state and the annuitant is 75 or
younger at contract issue, you may choose to add this optional benefit at the
time you purchase your contract for an additional charge. If the annuitant is
between age 73 and age 75 at contract issue, you should consider whether a GMIB
rider is appropriate for your situation. Be sure to discuss with your investment
professional whether either GMIB rider option is appropriate for your situation.
The amount of the fee is determined by the GMIB rider option you select (see
"Charges -- GMIB Rider Fee"). If you select a GMIB rider, you must also elect
the MAV death benefit or the EDB at the time you purchase your contract. The PCR
rider is not available with either GMIB rider. The effective date of the GMIB
rider will be the contract issue date.
In some instances, we may allow you to add a GMIB rider to your contract at a
later date if it was not available when you initially purchased your contract.
In these instances, we would add the GMIB rider on the next contract anniversary
and this would become the rider effective date. For purposes of calculating the
GMIB benefit base under these circumstances, we consider the contract value on
the rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION: Under either GMIB rider, you may allocate your purchase
payments and purchase payment credits or transfers to any of the subaccounts,
the GPAs or the one-year fixed account. However, we reserve the right to limit
the amount you allocate to subaccounts investing in RiverSource Variable
Portfolio - Cash Management Fund to 10% of the total amount in the subaccounts.
If we are required to activate this restriction, and you have more than 10% of
your subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB rider if you have not satisfied the limitation
after 60 days.
YOU MAY SELECT ONE OF THE FOLLOWING GMIB RIDER OPTIONS:
GMIB - Maximum Anniversary Value (MAV); or
GMIB - 6% Rising Floor.
GMIB - MAV
GMIB BENEFIT BASE:
If the GMIB - MAV is elected at contract issue, the GMIB benefit base is the
greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the MAV.
MAV is a value we calculate on the first contract anniversary as the highest of:
(a) your current contract value, or (b) total purchase payments and purchase
payment credits minus adjusted partial withdrawals. There is no MAV prior to the
first contact anniversary. Every contract anniversary after that through age 80,
we compare the previous anniversary's MAV (plus any purchase payments and
purchase payment credits since that anniversary minus adjusted partial
withdrawals since that anniversary) to the current contract value and we reset
the MAV to the highest value. We stop resetting the MAV after you or
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 41
the annuitant reach age 81. However, we continue to add subsequent purchase
payments and purchase payment credits and subtract adjusted partial withdrawals
from the MAV.
Keep in mind, the MAV is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payment
and purchase payment credits made in the five years before you exercise the
GMIB - MAV. We would do so only if such payments and credit total $50,000 or
more or if they are 25% or more of total contract payments and credits. If we
exercise this right, we subtract each payment and purchase payment credit
adjusted for market value from the contract value and the MAV.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value and the MAV as:
PMT X CVG
---------
ECV
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB - MAV.
CVG = current contract value at the time you exercise the GMIB - MAV.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
EXERCISING THE GMIB - MAV:
you may only exercise the GMIB - MAV within 30 days after any contract
anniversary following the expiration of a seven-year waiting period from the
rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
You may change the annuitant for the payouts.
When you exercise your GMIB-MAV, you may select a fixed or variable annuity
payout plan. Fixed annuity payouts are calculated using the annuity purchase
rates based on the "1983 Individual Annuitant Mortality Table A" with 100%
Projection Scale G and an interest rate of 3%. Your annuity payouts remain fixed
for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - MAV benchmarks the contract growth at each anniversary against
several comparison values and sets the GMIB benefit base equal to the largest
value of the MAV, purchase payments and purchase payment credits minus adjusted
partial withdrawals or the contract value. The GMIB benefit base, less any
applicable premium tax, is the value we apply to the GMIB - MAV annuity purchase
described above. If the GMIB benefit base is greater than the contract value,
the GMIB - MAV may provide a higher annuity payout level than is otherwise
available. However, the GMIB - MAV uses guaranteed annuity purchase rates which
may result in annuity payouts that are less than those using the annuity
purchase rates that we will apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the GMIB - MAV may be
less than the income the contract otherwise provided. If the annuity payouts
through the standard contract provisions are more favorable than the payouts
available through the GMIB - MAV, you will receive the higher standard payout.
The GMIB - MAV does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
42 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
TERMINATING THE GMIB - MAV:
You may terminate the GMIB - MAV within 30 days after the first rider
anniversary.
You may terminate the GMIB - MAV any time after the seventh rider anniversary.
The GMIB - MAV will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - MAV will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and we add a $1,000 purchase payment credit to your contract. You
allocate all your purchase payments and purchase payment credits to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS MAV BENEFIT BASE
1 $107,000 $101,000 $107,000
2 125,000 101,000 125,000
3 132,000 101,000 132,000
4 150,000 101,000 150,000
5 85,000 101,000 150,000
6 120,000 101,000 150,000
7 138,000 101,000 150,000 $150,000
8 152,000 101,000 152,000 152,000
9 139,000 101,000 152,000 152,000
10 126,000 101,000 152,000 152,000
11 138,000 101,000 152,000 152,000
12 147,000 101,000 152,000 152,000
13 163,000 101,000 163,000 163,000
14 159,000 101,000 163,000 163,000
15 215,000 101,000 215,000 215,000
NOTE: The MAV value is limited at age 81, but, the GMIB benefit base may
increase if the contract value increases. However, you should keep in mind that
you are always entitled to annuitize using the contract value without exercising
the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $152,000 (MAV) $ 784.32 $ 763.04 $627.76
15 215,000 (Contract Value = MAV) 1,268.50 1,210.45 982.55
The payouts above are based on the "1983 Individual Annuitant Mortality Table A"
with 100% Projection Scale G and an interest rate of 3%. Payouts under the
standard provisions of this contract will be based on our annuity rates in
effect at
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 43
annuitization and are guaranteed to be greater than or equal to the guaranteed
annuity rates stated in Table B of the contract. The fixed annuity payout
available under the standard provisions of this contract would be at least as
great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 215,000 1,268.50 1,210.45 982.55
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - MAV payout is less than the payout available under the standard
provisions of the contract, you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
GMIB - 6% RISING FLOOR
GMIB BENEFIT BASE:
If the GMIB - 6% Rising Floor is elected at contract issue, the GMIB benefit
base is the greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the 6% variable account rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments allocated to the subaccounts increased by 6%,
plus any subsequent amounts allocated to the subaccounts, and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% then adding any subsequent amounts allocated to the subaccounts and
subtracting any adjusted transfers or partial withdrawals from the subaccounts.
We stop resetting the variable account floor after you or the annuitant reach
age 81. However, we continue to add subsequent amounts you allocate to the
subaccounts and subtract adjusted transfers or partial withdrawals from the
subaccounts. We calculate adjusted transfers or partial withdrawals for the 6%
rising floor using the same formula as adjusted transfers or partial withdrawals
for the 5% rising floor.
Keep in mind that the 6% rising floor is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments total $50,000 or more or if they are
25% or more of total contract payments and credits. If we exercise this right,
we:
subtract each payment adjusted for market value from the contract value.
subtract each payment from the 6% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 6% for the number of full contract years they
have been in the contract before we subtract them from the 6% rising floor.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, the GPAs and the one-year fixed account value
of the 6% rising floor as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
--------------------------------------------------------------------------------
44 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
For each payment, we calculate the 6% increase of payments allocated to the
subaccounts as:
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB - 6% RISING FLOOR:
you may only exercise the GMIB - 6% Rising Floor within 30 days after any
contract anniversary following the expiration of a seven-year waiting period
from the rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
You may change the annuitant for the payouts.
When you exercise your GMIB - 6% Rising Floor, you may select a fixed or
variable annuity payout plan. Fixed annuity payouts are calculated using the
annuity purchase rates based on the "1983 Individual Annuitant Mortality Table
A" with 100% Projection Scale G and an interest rate of 2.5%. Your annuity
payouts remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - 6% Rising Floor benchmarks the contract growth at each anniversary
against several comparison values and sets the GMIB benefit base equal to the
largest value of the 6% rising floor, ROP or contract value. The GMIB benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates we use in the 2.5% Table to calculate the minimum annuity
payouts you will receive if you exercise the GMIB - 6% Rising Floor. If the GMIB
benefit base is greater than the contract value, the GMIB - 6% Rising Floor may
provide a higher annuity payout level than is otherwise available. However, the
GMIB - 6% Rising Floor uses annuity purchase rates that may be more conservative
than the annuity purchase rates than we will apply at annuitization under the
standard contract provisions. Therefore, the level of income provided by the
GMIB - 6% Rising Floor may be less than the income the contract otherwise
provided. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB - 6% Rising Floor,
you will receive the higher standard payout. The GMIB - 6% Rising Floor does not
create contract value or guarantee the performance of any investment option.
TERMINATING THE GMIB - 6% RISING FLOOR:
You may terminate the GMIB - 6% Rising Floor within 30 days after the first
rider anniversary.
You may terminate the GMIB - 6% Rising Floor any time after the seventh rider
anniversary.
The GMIB - 6% Rising Floor will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - 6% Rising Floor will terminate* 30 days following the contract
anniversary after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 45
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all of your purchase payment to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS 6% RISING FLOOR BENEFIT BASE
1 $107,000 $100,000 $106,000
2 125,000 100,000 112,360
3 132,000 100,000 119,102
4 150,000 100,000 126,248
5 85,000 100,000 133,823
6 120,000 100,000 141,852
7 138,000 100,000 150,363 $150,363
8 152,000 100,000 159,388 159,388
9 139,000 100,000 168,948 168,948
10 126,000 100,000 179,085 179,085
11 138,000 100,000 189,830 189,830
12 147,000 100,000 201,220 201,220
13 215,000 100,000 213,293 215,000
14 234,000 100,000 226,090 234,000
15 240,000 100,000 239,655 240,000
NOTE: The 6% Rising Floor value is limited at age 81, but the GMIB benefit base
may increase if the contract value increases. However, you should keep in mind
that you are always entitled to annuitize using the contract value without
exercising the GMIB - 6% Rising Floor.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $179,085 (6% Rising Floor) $ 872.14 $ 850.65 $ 691.27
15 240,000 (Contract Value) 1,346.40 1,286.40 1,034.40
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the guaranteed annuity rates stated in Table B of the contract.
The fixed annuity payout available under the standard provisions of this
contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $ 520.38
15 240,000 1,416.00 1,351.20 1,096.80
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - 6% Rising Floor payout is less than the payout available under the
standard provisions of the contract, you will receive the higher standard
payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
--------------------------------------------------------------------------------
46 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the tenth rider anniversary (see below). This
is an optional benefit you may select for an additional charge (see "Charges").
The PCR does not provide any additional benefit before the tenth rider
anniversary and it may not be appropriate for issue ages 75 or older due to this
required holding period. Be sure to discuss with your investment professional
whether or not the PCR is appropriate for your situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot add the PCR if you select either GMIB rider
option.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments and purchase
payment credits.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource Variable Portfolio - Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
and purchase payment credits minus the target value adjusted partial withdrawals
accumulated at an annual effective rate of 7.2%. Every rider anniversary after
that, we recalculate the target value by accumulating the prior anniversary's
target value and any additional purchase payments and purchase payment credits
minus the target value adjusted partial withdrawals at an annual effective rate
of 7.2%.
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS PW X TV
--------
= CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXERCISING THE PCR: We will inform you if your contract value did not meet or
exceed the target value after your tenth rider anniversary. If your contract
value is less than the target value on the tenth rider anniversary you can
choose either of the following benefits:
OPTION A) You may choose to accept a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount
of any partial withdrawal attributable to purchase payments received
five or more years before the target value is calculated (on the tenth
year rider anniversary). For a more detailed description of the PCR
adjusted partial withdrawal please see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five
years.
We apply the PCR credit to your contract on the tenth rider
anniversary and allocate it among the GPAs, the one-year fixed account
and subaccounts according to your current asset allocation.
OPTION B) You may choose to begin receiving annuity payouts (only with lifetime
income plans; you may not choose Annuity Payout Plan E) within 60 days
of the tenth rider anniversary and receive an additional 5% PCR credit
(for a total PCR credit of 10%) as calculated in (a).
We will assume that you elected PCR Option A unless we receive your request to
begin a lifetime annuity payout plan within 60 days after the tenth rider
anniversary.
If you select PCR Option A, we will restart the ten-year calculation period for
the PCR on the tenth rider anniversary and every ten years after that while you
own the contract. We use the contract value (including any credits) on that
anniversary as your first contract year's payments for calculating the target
value and any applicable PCR credit. We may then apply additional PCR credits to
your contract at the end of each ten-year period as described above.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 47
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments and credits for the calculating the target value and any
applicable PCR credit. If you select PCR Option A, the next ten-year calculation
period for the PCR will restart at the end of this new ten-year period. We must
receive your request to restart the PCR calculation period within 30 days after
a contract anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first rider
anniversary.
You may terminate the PCR within 30 days following the later of the tenth
rider anniversary or the last rider reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract,
- that a death benefit is payable, or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $1,000
purchase payment credit to the contract
There are no additional purchase payments and no partial withdrawals
On the tenth contract anniversary the contract value is $200,000
We determine the target value on the tenth contract anniversary as our
purchase payments and credits accumulated at an annual effective rate of 7.2%
= $101,000 x (1.072)(10) = $101,000 x 2.00423 = $202,427.
Your contract value ($200,000) is less than the target value ($202,427).
Assuming you select PCR Option A, we add a PCR credit to your contract
calculated as follows:
5% x (PP - PCRPW - PP5) = 0.05 x ($101,000 - 0 - 0) = $5,050.
After application of the PCR credit, your total contract value would be
$205,050.
During the eleventh contract year, the contract value grows to $210,000 and
you choose to begin receiving annuity payouts under a lifetime income plan. We
would now add another PCR credit to your contract. Because you have not made
any additional purchase payments or partial withdrawals the amount of this new
credit is the same as the PCR credit we added to your contract on the tenth
contract anniversary ($5,050). After adding this new PCR credit to your
contract, your total contract value would be $215,050 and we would use this
amount to determine your monthly annuity payout amount.
If on Feb. 1, 2014 you had elected not to receive annuity payouts, the PCR
ten-year calculation period would restart on the tenth contract anniversary
with the target values first year's payments equal to $205,050. We would make
the next PCR credit determination on the twentieth contract anniversary.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
Benefit Protector is not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary, plus:
the applicable death benefit,
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
--------------------------------------------------------------------------------
48 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV death benefit equals the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charges. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether, we will
withdraw $50,000 and pay you $47,235. We calculate purchase payments not
previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of
the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
-------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 49
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Benefit Protector Plus is
not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum
distributions. Be sure to discuss with your investment professional and tax
advisor whether or not the Benefit Protector Plus is appropriate for your
situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
50 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death"), plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000
of the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 51
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit paid during the third contract year.
The reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
--------------------------------------------------------------------------------
52 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 53
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
--------------------------------------------------------------------------------
54 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 55
the exchange and subsequent withdrawal. As a result, there may be unexpected tax
consequences. You should consult your tax advisor before taking any withdrawal
from either contract during the 180-day period following a partial exchange.
Different IRS limitations on withdrawals apply to partial exchanges completed
prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
--------------------------------------------------------------------------------
56 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S tax status: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 57
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.00% as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
--------------------------------------------------------------------------------
58 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K,
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 59
quarterly reports on Form 10-Q and current reports on Form 8-K filed with the
SEC under the 1934 Act. To access this document, see "SEC Filings" under
"Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
60 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE:
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question minus the RPA adjusted partial withdrawals
for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and purchase payment credits as there are
no previous withdrawals to subtract.
RPA ADJUSTED PARTIAL WITHDRAWALS PW X RPA
--------
= CV
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP TWO:
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question AND prior to the five year exclusion period
minus EPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and purchase payment credits made before
the five year exclusion period as there are no previous withdrawals to
subtract. Also note that EPA/RPA will always be less than or equal to one.
EPA ADJUSTED PARTIAL WITHDRAWALS EPA
PW X EPA
-------- ---
= X
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the
partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP THREE:
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include purchase payment credits.
You purchase the contract with an initial purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 61
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT
DURATION TOTAL PURCHASE
IN YEARS PAYMENTS CONTRACT VALUE
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on
the third contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal
= total purchase =
payments made prior to the $10,000 x $100,000
partial withdrawal minus the RPA
adjusted partial withdrawals for $120,000 = $8,333
all previous partial withdrawals
= $100,000 - 0 = $100,000
For the second partial withdrawal on
the eighth contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal
= total purchase =
payments made prior to the $10,000 x $191,667
partial withdrawal minus the RPA
adjusted partial withdrawals for $235,000 = $8,156
all previous partial withdrawals
= $200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal on
the third contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000 x $100,000 = $8,333
partial withdrawal AND the five-
year exclusion period minus the $120,000 $100,000
EPA adjusted partial withdrawals
for all previous partial
withdrawals = $100,000 - 0 =
$100,000
For the second partial withdrawal on
the eighth contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $91,667 x _$91,667_ = $1,866
partial withdrawal AND the five-
year exclusion period minus the $235,000 $191,667
EPA adjusted partial withdrawals
for all previous partial
withdrawals = $100,000 - $8,333 =
$91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 =
$10,199
--------------------------------------------------------------------------------
62 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit value at end of period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 341 576 492 720 1,135 646 695 691 813 697
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04 $1.00
Accumulation unit value at end of period $1.44 $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 317 645 713 743 1,355 1,120 1,133 1,115 572 63
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78 $1.00
Accumulation unit value at end of period $1.48 $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 130 223 356 367 455 367 326 294 140 26
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit value at beginning of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 126 203 307 325 354 377 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85 $1.00
Accumulation unit value at end of period $1.98 $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 212 350 628 721 821 841 769 737 543 94
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01 $1.16
Accumulation unit value at end of period $1.54 $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01
Number of accumulation units outstanding at end
of period (000 omitted) 716 1,184 1,983 2,405 3,218 3,435 3,555 3,640 2,566 753
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76 $1.00
Accumulation unit value at end of period $0.91 $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 297 468 748 743 806 813 843 909 623 113
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79 $1.00
Accumulation unit value at end of period $1.58 $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 76 117 205 221 249 248 220 170 121 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80 $1.00
Accumulation unit value at end of period $1.08 $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 117 210 300 325 392 419 350 360 178 33
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.60 $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 35 45 62 68 80 78 77 86 54 21
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.72 $1.49 $1.30 $2.25 $1.98 $1.63 $1.42 $1.21 $0.93 $1.00
Accumulation unit value at end of period $1.48 $1.72 $1.49 $1.30 $2.25 $1.98 $1.63 $1.42 $1.21 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 140 192 237 227 294 327 333 336 225 31
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $2.03 $1.71 $1.20 $1.68 $1.52 $1.45 $1.41 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.89 $2.03 $1.71 $1.20 $1.68 $1.52 $1.45 $1.41 $1.33 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 241 292 314 348 449 462 480 368 237 86
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 63
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 504 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.28 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.21 $1.28 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 51 65 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 214 350 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.00 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.00 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 299 469 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 298 303 1,258 372 137 91 70 179 55
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02
Number of accumulation units outstanding at end of
period (000 omitted) 167 264 3,966 3,519 3,241 547 165 169 63
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44 $1.00
Accumulation unit value at end of period $1.81 $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 465 559 2,165 1,880 1,267 1,033 512 31 9
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 $1.00 --
Accumulation unit value at end of period $1.03 $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 --
Number of accumulation units outstanding at end of
period (000 omitted) 589 890 1,020 1,054 1,103 1,183 1,307 818 --
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38 $1.00
Accumulation unit value at end of period $2.20 $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38
Number of accumulation units outstanding at end of
period (000 omitted) 170 239 607 861 608 488 330 213 143
----------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25 $1.00
Accumulation unit value at end of period $1.44 $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25
Number of accumulation units outstanding at end of
period (000 omitted) 131 188 279 398 502 611 526 516 349
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35 $1.00
Accumulation unit value at end of period $1.14 $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35
Number of accumulation units outstanding at end of
period (000 omitted) 75 113 132 148 151 164 179 110 27
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44 $1.00
Accumulation unit value at end of period $1.87 $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 21 22 32 35 40 30 40 33 29
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34 $1.00
Accumulation unit value at end of period $1.33 $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 20 29 33 44 47 53 51 54 41
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40 $1.00
Accumulation unit value at end of period $1.94 $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 330 415 510 605 687 648 720 337 3
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
64 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.80 $1.57 $1.38 $2.42 $2.15 $1.78 $1.57 $1.34 $1.00
Accumulation unit value at end of period $1.53 $1.80 $1.57 $1.38 $2.42 $2.15 $1.78 $1.57 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 52 61 64 67 87 78 64 45 28
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.00 $1.71 $1.21 $1.70 $1.55 $1.49 $1.47 $1.40 $1.00
Accumulation unit value at end of period $1.86 $2.00 $1.71 $1.21 $1.70 $1.55 $1.49 $1.47 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 388 514 77 95 133 142 154 113 29
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 69 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.59 $1.28 $0.86 $1.49 $1.33 $1.10 $1.06 $1.00 --
Accumulation unit value at end of period $1.49 $1.59 $1.28 $0.86 $1.49 $1.33 $1.10 $1.06 --
Number of accumulation units outstanding at end of
period (000 omitted) 31 35 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 39 67 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.21 $1.10 $1.10 $1.05 $1.03 $1.03 $1.00 --
Accumulation unit value at end of period $1.35 $1.27 $1.21 $1.10 $1.10 $1.05 $1.03 $1.03 --
Number of accumulation units outstanding at end of
period (000 omitted) 658 917 1,060 1,033 1,552 3,395 1,455 623 --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS 65
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
66 EVERGREEN ESSENTIAL VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45276 T (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
NEW SOLUTIONS VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
This contract provides for purchase payment credits to eligible contract owners,
which we may reverse under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits"). Expense charges for contracts with
purchase payment credits may be higher than expenses for contracts without such
credits. The amount of the credit may be more than offset by any additional fees
and charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 12
FINANCIAL STATEMENTS......................... 12
THE VARIABLE ACCOUNT AND THE FUNDS........... 12
GUARANTEE PERIOD ACCOUNTS (GPAS)............. 18
THE ONE-YEAR FIXED ACCOUNT................... 20
BUYING YOUR CONTRACT......................... 21
CHARGES...................................... 24
VALUING YOUR INVESTMENT...................... 29
MAKING THE MOST OF YOUR CONTRACT............. 30
WITHDRAWALS.................................. 36
TSA -- SPECIAL PROVISIONS.................... 37
CHANGING OWNERSHIP........................... 37
BENEFITS IN CASE OF DEATH.................... 38
OPTIONAL BENEFITS............................ 42
THE ANNUITY PAYOUT PERIOD.................... 54
TAXES........................................ 56
VOTING RIGHTS................................ 60
SUBSTITUTION OF INVESTMENTS.................. 60
ABOUT THE SERVICE PROVIDERS.................. 60
ADDITIONAL INFORMATION....................... 61
APPENDIX A: PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL................ 63
APPENDIX B: CONDENSED FINANCIAL
INFORMATION (UNAUDITED).................... 65
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 71
--------------------------------------------------------------------------------
2 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
restrictions. Purchase payment amounts and purchase payment timing may vary by
state and be limited under the terms of your contract. (See "Buying Your
Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to further limit transfers to the GPAs and the one-year fixed account if the
interest rate we are then crediting to the GPAs or one-year fixed account is
equal to the minimum interest rate stated in the contract. (See "Making the Most
of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
The following tables describe the fees and expenses that you will pay when
buying, owning and making a withdrawal from the contract. The first table
describes the fees and expenses that you paid at the time that you bought the
contract and will pay when you make a withdrawal from the contract. State
premium taxes also may be deducted.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal schedule at the time of
application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
ASSUMED INVESTMENT RATE
SEVEN-YEAR SCHEDULE 3.50% 5.00%
Qualified discount rate 4.86% 6.36%
Nonqualified discount rate 5.11% 6.61%
ASSUMED INVESTMENT RATE
FIVE-YEAR SCHEDULE 3.50% 5.00%
Qualified discount rate 5.16% 6.66%
Nonqualified discount rate 5.41% 6.91%
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP death benefit 0.85% 0.15% 1.00%
MAV death benefit(1),(2) 1.05 0.15 1.20
EDB(1) 1.15 0.15 1.30
NONQUALIFIED ANNUITIES
ROP death benefit 1.10 0.15 1.25
MAV death benefit(1),(2) 1.30 0.15 1.45
EDB(1) 1.40 0.15 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP death benefit 1.15 0.15 1.30
MAV death benefit(1),(2) 1.35 0.15 1.50
EDB(1) 1.45 0.15 1.60
NONQUALIFIED ANNUITIES
ROP Payment death benefit 1.40 0.15 1.55
MAV death benefit(1),(2) 1.60 0.15 1.75
EDB(1) 1.70 0.15 1.85
(1) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(2) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GMIB - MAV 0.55%(1),(2)
GMIB - 6% RISING FLOOR 0.75%(1),(2)
(As a percentage of the adjusted contract value charged annually on the contract
anniversary.)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following current annual
rider changes apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
--------------------------------------------------------------------------------
8 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 1.40%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75% 0.25% 0.19% --% 1.19%
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(2)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(3)
Invesco Van Kampen V.I. Growth and Income Fund, Series II 0.56 0.25 0.28 -- 1.09(3)
Shares
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(4)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(5)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF U.S. Real Estate Portfolio, Class I 0.80 -- 0.29 -- 1.09
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(6)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(7)
Service Shares
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Global Health Care Fund - Class IB Shares 0.63% 0.25% 0.21% --% 1.09%
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(8)
3)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(9)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(9)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(10)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(9)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(9)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3) and 1.005% for Columbia Variable
Portfolio - Mid Cap Growth Opportunity Fund (Class 3).
(2) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(3) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(5) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(6) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(7) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(8) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(9) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
(10) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
10 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV death benefit, GMIB - 6% Rising Floor
and Benefit Protector Plus. Although your actual costs may be lower, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NON-QUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,250 $2,055 $2,868 $4,590 $450 $1,355 $2,268 $4,590
Five-year
withdrawal charge
schedule 1,280 2,042 2,608 4,840 480 1,442 2,408 4,840
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,224 $1,981 $2,750 $4,377 $424 $1,281 $2,150 $4,377
Five-year
withdrawal charge
schedule 1,255 1,969 2,492 4,633 455 1,369 2,292 4,633
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NON-QUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,030 $1,404 $1,801 $2,547 $230 $704 $1,201 $2,547
Five-year
withdrawal charge
schedule 1,060 1,397 1,556 2,860 260 797 1,356 2,860
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,004 $1,327 $1,670 $2,279 $204 $627 $1,070 $2,279
Five-year
withdrawal charge
schedule 1,035 1,320 1,427 2,600 235 720 1,227 2,600
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates (see "Revenue we
receive from the funds may create conflicts of interest"). These relationships
may influence recommendations your investment professional
--------------------------------------------------------------------------------
12 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
makes regarding whether you should invest in the contract, and whether you
should allocate purchase payments or contract values to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 13
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital and Invesco Advisers, Inc.
Kampen V.I. income.
Growth and Income
Fund, Series II
Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide above average current Morgan Stanley
UIF U.S. Real income and long-term capital appreciation Investment Management
Estate Portfolio, by investing primarily in equity securities Inc.
Class I Shares of companies in the U.S. real estate
industry, including real estate investment
trusts.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 17
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
--------------------------------------------------------------------------------
18 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 19
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 7%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to
--------------------------------------------------------------------------------
20 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses.
BUYING YOUR CONTRACT
New contracts are currently not being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. Generally, you can
own a nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(1);
how you want to make purchase payments;
the optional MAV death benefit(2);
the optional EDB(2);
the optional GMIB - MAV rider(3);
the optional GMIB - 6% Rising Floor rider(3);
the optional PCR(3);
the optional Benefit Protector(R) Death Benefit(4);
the optional Benefit Protector(R) Plus Death Benefit(4);
the length of the withdrawal charge schedule (5 or 7 years)(5); and
a beneficiary.
(1) GPAs are not available under contracts issued in Maryland, Oregon,
Pennsylvania,or Washington and may not be available in other states.
(2) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector(R) or Benefit
Protector(R) Plus. May not be available in all states.
(3) If you select the PCR, you cannot add a GMIB rider. The GMIB is available if
the annuitant is 75 or younger at contract issue. The GMIB is not available
with ROP death benefit. May not be available in all states.
(4) Available if you and the annuitant are 75 or younger at contract issue. Not
available with EDB. May not be available in all states.
(5) The five-year withdrawal charge schedule may not be available in all states.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 minimum for the GPAs.
The following restrictions on allocation of purchase payments to the GPAs and
the one-year fixed account will apply:
FOR CONTRACTS WITH No restrictions on the amount of purchase payments
APPLICATIONS SIGNED PRIOR TO allocated to the GPAs or the one-year fixed
JUNE 16, 2003: account (if available).
FOR CONTRACTS WITH The amount of any purchase payment allocated to
APPLICATIONS SIGNED ON OR the GPAs and the one-year fixed account in total
AFTER JUNE 16 THROUGH DEC. cannot exceed 30% of the purchase payment.
4, 2003:
This 30% limit will not apply if you establish a
dollar cost averaging arrangement with respect to
the purchase payment according to procedures
currently in effect, or you are participating
according to the rules of an asset allocation
model portfolio program available under the
contract, if any.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 21
FOR CONTRACTS WITH In certain states where we offer GPAs that do not
APPLICATIONS SIGNED ON OR require payment of a statutory minimum guaranteed
AFTER DEC. 5, 2003: interest rate, the amount of any purchase payment
allocated to one-year fixed account cannot exceed
30% of the purchase payment. The amount of any
purchase payment allocated to the GPAs is not
subject to this 30% limit. Please consult your
investment professional to see if these
restrictions apply in your state. In all other
states, the amount of any purchase payment
allocated to the GPAs and the one-year fixed
account in total cannot exceed 30% of the purchase
payment. We reserve the right to further limit
purchase payment allocations to the one-year fixed
account and/or GPAs if the interest rate we are
then crediting on new purchase payments allocated
to the one-year fixed account is equal to the
minimum interest rate stated in the contract.
In all states, the 30% limit will not apply if you
establish an automated dollar cost averaging
arrangement with respect to the purchase payment
according to procedures currently in effect, or
you are participating according to the rules of an
asset allocation model portfolio program available
under the contract, if any.
There are no restrictions on allocations of purchase payments to the
subaccounts.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age for
nonqualified annuities and Roth IRAs and for qualified annuities the date
specified below. You can also select a date within the maximum limits. Your
selected date can align with your actual retirement from a job, or it can be a
different date, depending on your needs and goals and on certain restrictions.
You also can change the retirement date, provided you send us written
instructions at least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
--------------------------------------------------------------------------------
22 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with any payment you make to your
contract that brings your total net payment (total payments less total
withdrawals) to $100,000 or more.(1)
For applications signed on or after Nov. 6, 2003, only contracts with a seven-
year withdrawal charge schedule are eligible for a credit. If you make any
additional payments that cause the contract to be eligible for the credit, we
will add credits to your prior purchase payments (less total withdrawals). We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account, special DCA account and the subaccounts in the same proportions
as your purchase payment.
We fund the credit from our general account. Credits are not considered to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available because of lower distribution and other expenses
associated with larger sized contracts and through revenue from higher
withdrawal charges and contract administrative charges than would otherwise be
charged. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credit. We use all the revenue from these
higher charges to pay for the cost of the credits. However, we could profit from
the higher charges if market appreciation is higher than expected or if contract
owners hold their contracts for longer than expected.
(1) For applications signed on or after Nov. 6, 2003 and if your state has
approved this restriction, purchase payment credits are not available for
contracts with a five-year withdrawal charge schedule.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 23
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contact is fully withdrawn. We prorate this charge among the GPAs, the one-year
fixed account, and the subaccounts in the same proportion your interest in each
account bears to your total contract value. Some states also limit any contract
charge allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the death benefit guarantee, whether the contract is a
qualified annuity or a nonqualified annuity and the withdrawal charge schedule
that applies to your contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP death benefit 0.85% 1.10%
MAV death benefit(1)(2) 1.05 1.30
EDB 1.15 1.40
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP death benefit 1.15 1.40
MAV death benefit(1)(2) 1.35 1.60
EDB 1.45 1.70
(1) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. May not be available in all states.
(2) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
--------------------------------------------------------------------------------
24 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than six or eight years before the date of withdrawal, depending on the
withdrawal charge schedule you select. (In addition, amounts withdrawn from a
GPA more than 30 days before the end of the applicable guarantee period will be
subject to a MVA. (See "The Guarantee Period Accounts -- Market Value Adjustment
(MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you select a seven-year withdrawal charge schedule, during the first
two years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the seventh year after it is made is 3%. At the beginning of the
eighth year after that purchase payment is made, and thereafter, there is no
withdrawal charge as to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next, we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ----------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 25
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn, depending on the withdrawal charge schedule you
selected:
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE(1)
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
(1) The five-year withdrawal charge schedule may not be available in all states.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with a SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the seventh contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
560 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
7% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a 7%
withdrawal charge.
----
$980
--------------------------------------------------------------------------------
26 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
Under the same scenario, the withdrawal charge on a contract with a FIVE-YEAR
WITHDRAWAL CHARGE SCHEDULE would be calculated:
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received six or more years before
withdrawal and is withdrawn without withdrawal charge; and
320 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
4% withdrawal charge; and
360 $6,000 purchase payment is in its third year from receipt withdrawn with a 6%
withdrawal charge.
----
$680
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan unless an annuity payout Plan E
is later fully withdrawn;
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge an annual fee for this optional feature only if you select it. There
are two GMIB rider options available under your contract (see "Guaranteed
Minimum Income Benefit Rider"). The fee for GMIB - MAV is 0.55% of the adjusted
contract value(1). The fee for GMIB - 6% Rising Floor is 0.75% of the adjusted
contract value. Depending on the GMIB rider option
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 27
you choose, we deduct the appropriate fee from the contract value on your
contract anniversary at the end of each contract year. We prorate this fee among
the GPAs, one-year fixed account and the subaccounts in the same proportion your
interest in each account bears to your total contract value.
(1) For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the appropriate GMIB fee from the proceeds payable adjusted for the
number of calendar days coverage was in place. We cannot increase either GMIB
fee after the rider effective date and it does not apply after annuity payouts
begin or the GMIB terminates.
We calculate the fee as follows:
GMIB - MAV 0.55% x (CV + ST - FAV)
GMIB - 6% RISING FLOOR 0.75% x (CV + ST - FAV)
CV = contract value on the contract anniversary
ST = transfers from the subaccounts to the GPAs or the one-year fixed account
made during the six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account on the contract
anniversary.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts and not on the GPAs and the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
The GMIB fee for:
GMIB - MAV IS 0.55%; AND
GMIB - 6% RISING FLOOR IS 0.75%.
We calculate the charge as follows:
Contract value on the contract anniversary: $73,250
plus transfers from the subaccounts to the one-year fixed account in the
six months before the contract anniversary: +15,000
minus the value of the one-year fixed account on the contract
anniversary: -15,250
-------
$73,000
The GMIB fee charged to you:
GMIB - MAV (0.55% x $73,000) = $401.50
GMIB - 6% RISING FLOOR (0.75% x $73,000) = $547.50
PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.15% of your contract value for this optional feature if you
select it. If selected, we deduct the fee from your contract value on your
contract anniversary at the end of each contract year. We prorate this fee among
the GPAs, the one-year fixed account and the subaccounts in the same proportion
as your interest bears to your total contract value. If you select the PCR, you
cannot add a GMIB rider.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot
--------------------------------------------------------------------------------
28 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
increase this annual charge after the rider effective date and it does not apply
after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocate to the GPAs and the one-year fixed account
directly in dollars. The value of the GPAs and the one-year fixed account
equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs
and the one-year fixed account (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and one-year fixed
account;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 29
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider - MAV;
- Guaranteed Minimum Income Benefit rider - 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
30 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Special DCA program. There is no charge for the Special DCA program.
Under the Special DCA program, you can allocate a new purchase payment and any
applicable purchase payment credit to a six-month or twelve-month Special DCA
account.
You may only allocate a new purchase payment of at least $10,000 to a Special
DCA account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, one-year fixed account and/or the subaccounts you select
over the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Special DCA account at the beginning of the six or twelve-month period.
Therefore, you may receive less total interest than you would have if all your
purchase payments and purchase payment credits were in the Special DCA account
from the beginning. If we receive any of your multiple payments after the six or
twelve-month period ends, you can either allocate those payments to a new
Special DCA account (if available) or to any other accounts available under your
contract.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 31
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify, subject to the 30%
limitation rule (see "Transfer policies"). Similarly, if we cannot accept any
additional purchase payments into the Special DCA program, we will allocate the
purchase payments to the other accounts you selected for your DCA transfers or
in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA Program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for
--------------------------------------------------------------------------------
32 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
six months following that transfer. We reserve the right to further limit
purchase payment allocations to the GPAs and the one-year fixed account if the
interest rate we are then crediting to the one-year fixed account is equal to
the minimum interest rate stated in the contract.
You may transfer contract value from the one-year fixed account to the
subaccounts or the GPAs according to the following transfer policies:
FOR CONTRACTS WITH APPLICATIONS It is our general policy to allow you to
SIGNED PRIOR TO JUNE 16, 2003: transfer contract values from the one-year
fixed account to the subaccounts or the
GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums).
Currently, we have removed this restriction
and you may transfer contract values from
the one-year fixed account to the
subaccounts at any time. We will inform you
at least 30 days in advance of the day we
intend to reimpose this restriction.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER JUNE 16 THROUGH one-year fixed account to the subaccounts
DEC. 4, 2003: or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
GPAs or the one-year fixed account cannot
result in the value of the GPAs and the
one-year fixed account in total being
greater than 30% of the contract value.
Total transfers out of the GPAs and one-
year fixed account in any contract year are
limited to 30% of the total value of the
GPAs and one-year fixed account at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER DEC. 5, 2003: one-year fixed account to the subaccounts
or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
one-year fixed account cannot result in the
value of the one-year fixed account in
total being greater than 30% of the
contract value. We reserve the right to
further limit transfers to the one-year
fixed account and/or GPAs if the interest
rate we are then crediting on new purchase
payments allocated to the one-year fixed
account is equal to the minimum interest
rate stated in the contract. Total
transfers out of the one-year fixed account
in any contract year are limited to 30% of
the one-year fixed account value at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
Transfers from the one-year fixed account are not subject to an MVA.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable annuity payout, once annuity payouts begin, you may
make transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 33
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
--------------------------------------------------------------------------------
34 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 35
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
--------------------------------------------------------------------------------
36 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 37
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payments death benefit (ROP);
Maximum Anniversary Value death benefit (MAV); and
Enhanced Death Benefit (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select a GMIB, you must elect either the MAV death
benefit or the EDB. Once you elect a death benefit option, you cannot change it.
We show the option that applies in your contract. The combination of the
contract, withdrawal charge schedule and death benefit option you select
determines the mortality and expense risk fee that is assessed against the
subaccounts. (See "Charges -- Mortality and Expense Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments plus purchase payments credits applied to the
contract minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = ------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
--------------------------------------------------------------------------------
38 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000 ----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. This is an optional benefit
that you may select for an additional charge (see "Charges"). The MAV death
benefit does not provide any additional benefit before the first contract
anniversary and it may not be appropriate for issue ages 75 to 79 because the
benefit values may be limited at age 81. Be sure to discuss with your investment
professional whether or not the MAV death benefit is appropriate for your
situation.
If the MAV death benefit is available in your state and both you and the
annuitant are age 79 or younger at contract issue, you may choose to add the MAV
death benefit to your contract at the time of purchase. Once you select the MAV
death benefit, you may not cancel it. If you choose to add a GMIB rider to your
contract, you must elect either the MAV death benefit or the EDB.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values amounts less any purchase payment credits subject
to reversal, minus any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments and purchase payment credits applied to the contract
since that anniversary minus adjusted partial withdrawals since that
anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value we calculate on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV to the highest value. We stop
resetting the MAV when you or the annuitant reach age 81. However, we continue
to add subsequent purchase payments and purchase payment credits and subtract
adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $20,000.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $20,000 = -1,363.64
$22,000 ----------
for a death benefit of: $18,636.36
----------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 39
The MAV immediately preceding the date of death plus any payments made since that
anniversary minus adjusted partial withdrawals:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000 ----------
for a death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$22,363.64
ENHANCED DEATH BENEFIT
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow.
This is an optional benefit that you may select for an additional charge (see
"Charges"). The EDB does not provide any additional benefit before the first
contract anniversary and it may not be appropriate for issue ages 75 to 79
because the benefit values may be limited at age 81. Benefit Protector and
Benefit Protector Plus are not available with EDB. Be sure to discuss with your
investment professional whether or not the EDB is appropriate for your
situation.
If the EDB is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB rider to your contract
at the time of purchase. If you choose to add a GMIB rider to your contract, you
must elect either the MAV death benefit or the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values less any purchase payment credits subject to reversal, minus
any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals;
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments and purchase payment credits applied to the contract
since that anniversary minus adjusted partial withdrawals since that
anniversary; or
4. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------
SV
PWT = the amount by which the contract is reduced as a result of the partial
withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200.
--------------------------------------------------------------------------------
40 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $22,800.
The death benefit is calculated as follows:
Contract value at death: $22,800.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a return of purchase payments death benefit of: $23,456.79
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a MAV death benefit of: $23,456.79
----------
THE 5% RISING FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the subaccounts,
calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000 ----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
5% rising floor (value of the GPAs, one-year fixed account and the variable
account floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 41
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
There are two GMIB rider options available under your contract. Both GMIB riders
are intended to provide you with a guaranteed minimum lifetime income regardless
of the volatility inherent in the investments in the subaccounts. If you select
either GMIB rider option:
you must hold the GMIB for 7 years,
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday,
you can only exercise the GMIB within 30 days after a contract anniversary,
and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If either GMIB rider is available in your state and the annuitant is 75 or
younger at contract issue, you may choose to add this optional benefit at the
time you purchase your contract for an additional charge. If the annuitant is
between age 73 and age 75
--------------------------------------------------------------------------------
42 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
at contract issue, you should consider whether a GMIB rider is appropriate for
your situation. Be sure to discuss with your investment professional whether
either GMIB rider option is appropriate for your situation.
The amount of the fee is determined by the GMIB rider option you select (see
"Charges -- GMIB Rider Fee"). If you select a GMIB rider, you must also elect
the MAV death benefit or the EDB at the time you purchase your contract. The PCR
rider is not available with either GMIB rider. The effective date of the GMIB
rider will be the contract issue date.
In some instances, we may allow you to add a GMIB rider to your contract at a
later date if it was not available when you initially purchased your contract.
In these instances, we would add the GMIB rider on the next contract anniversary
and this would become the rider effective date. For purposes of calculating the
GMIB benefit base under these circumstances, we consider the contract value on
the rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION: Under either GMIB rider, you may allocate your purchase
payments and purchase payment credits or transfers to any of the subaccounts,
the GPAs or the one-year fixed account. However, we reserve the right to limit
the amount you allocate to subaccounts investing in RiverSource Variable
Portfolio - Cash Management Fund to 10% of the total amount in the subaccounts.
If we are required to activate this restriction, and you have more than 10% of
your subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB rider if you have not satisfied the limitation
after 60 days.
YOU MAY SELECT ONE OF THE FOLLOWING GMIB RIDER OPTIONS:
GMIB - Maximum Anniversary Value (MAV); or
GMIB - 6% Rising Floor.
GMIB - MAV
GMIB BENEFIT BASE:
If the GMIB - MAV is elected at contract issue, the GMIB benefit base is the
greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the Maximum Anniversary Value (MAV) at the last contract anniversary plus any
payments and purchase payment credits since that anniversary minus adjusted
partial withdrawals since that anniversary.
MAV is a value we calculate on the first contract anniversary as the highest of:
(a) your current contract value, or (b) total purchase payments and purchase
payment credits minus adjusted partial withdrawals. There is no MAV prior to the
first contact anniversary. Every contract anniversary after that through age 80,
we compare the previous anniversary's MAV (plus any purchase payments and
purchase payment credits since that anniversary minus adjusted partial
withdrawals since that anniversary) to the current contract value and we reset
the MAV to the highest value. We stop resetting the MAV after you or the
annuitant reach age 81. However, we continue to add subsequent purchase payments
and purchase payment credits and subtract adjusted partial withdrawals from the
MAV.
Keep in mind, the MAV is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payment
and purchase payment credits made in the five years before you exercise the
GMIB - MAV. We would do so only if such payments and credit total $50,000 or
more or if they are 25% or more of total contract payments and credits. If we
exercise this right, we subtract each payment and purchase payment credit
adjusted for market value from the contract value and the MAV.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value and the MAV as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the
GMIB - MAV.
CVG = current contract value at the time you exercise the GMIB - MAV.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
EXERCISING THE GMIB - MAV:
you may only exercise the GMIB - MAV within 30 days after any contract
anniversary following the expiration of a seven-year waiting period from the
rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 43
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
You may change the annuitant for the payouts.
When you exercise your GMIB-MAV, you may select a fixed or variable annuity
payout plan. Fixed annuity payouts are calculated using the annuity purchase
rates based on the "1983 Individual Annuitant Mortality Table A" with 100%
Projection Scale G and an interest rate of 3%. Your annuity payouts remain fixed
for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.35
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - MAV benchmarks the contract growth at each anniversary against
several comparison values and sets the GMIB benefit base equal to the largest
value of the MAV, purchase payments and purchase payment credits minus adjusted
partial withdrawals or the contract value. The GMIB benefit base, less any
applicable premium tax, is the value we apply to the GMIB - MAV annuity purchase
described above. If the GMIB benefit base is greater than the contract value,
the GMIB - MAV may provide a higher annuity payout level than is otherwise
available. However, the GMIB - MAV uses guaranteed annuity purchase rates which
may result in annuity payouts that are less than those using the annuity
purchase rates that we will apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the GMIB - MAV may be
less than the income the contract otherwise provided. If the annuity payouts
through the standard contract provisions are more favorable than the payouts
available through the GMIB - MAV, you will receive the higher standard payout.
The GMIB - MAV does not create contract value or guarantee the performance of
any investment option.
TERMINATING THE GMIB - MAV:
You may terminate the GMIB - MAV within 30 days after the first rider
anniversary.
You may terminate the GMIB - MAV any time after the seventh rider anniversary.
The GMIB - MAV will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - MAV will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and we add a $1,000 purchase payment credit to your contract. You
allocate all your purchase payments and purchase payment credits to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
44 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS MAV BENEFIT BASE
1 $107,000 $101,000 $107,000
2 125,000 101,000 125,000
3 132,000 101,000 132,000
4 150,000 101,000 150,000
5 85,000 101,000 150,000
6 120,000 101,000 150,000
7 138,000 101,000 150,000 $150,000
8 152,000 101,000 152,000 152,000
9 139,000 101,000 152,000 152,000
10 126,000 101,000 152,000 152,000
11 138,000 101,000 152,000 152,000
12 147,000 101,000 152,000 152,000
13 163,000 101,000 163,000 163,000
14 159,000 101,000 163,000 163,000
15 215,000 101,000 215,000 215,000
NOTE: The MAV value is limited at age 81, but, the GMIB benefit base may
increase if the contract value increases. However, you should keep in mind that
you are always entitled to annuitize using the contract value without exercising
the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM
GUARANTEED
MONTHLY INCOME
CONTRACT PLAN A - PLAN B -
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN
10 $152,000 (MAV) $ 784.32 $ 763.04
15 215,000 (Contract Value = MAV) 1,268.50 1,210.45
MINIMUM GUARANTEED
MONTHLY INCOME
CONTRACT PLAN D - JOINT AND
ANNIVERSARY LAST SURVIVOR LIFE
AT EXERCISE ANNUITY -- NO REFUND
10 $627.76
15 982.55
The payouts above are based on the "1983 Individual Annuitant Mortality Table A"
with 100% Projection Scale G and an interest rate of 3%. Payouts under the
standard provisions of this contract will be based on our annuity rates in
effect at annuitization and are guaranteed to be greater than or equal to the
guaranteed annuity rates stated in Table B of the contract. The fixed annuity
payout available under the standard provisions of this contract would be at
least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 215,000 1,268.50 1,210.45 982.55
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - MAV payout is less than the payout available under the standard
provisions of the contract, you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 45
GMIB - 6% RISING FLOOR
GMIB BENEFIT BASE:
If the GMIB - 6% Rising Floor is elected at contract issue, the GMIB benefit
base is the greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the 6% rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments and purchase payment credits allocated to the
subaccounts increased by 6%,
plus any subsequent amounts allocated to the subaccounts, and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% then adding any subsequent amounts allocated to the subaccounts and
subtracting any adjusted transfers or partial withdrawals from the subaccounts.
We stop resetting the variable account floor after you or the annuitant reach
age 81. However, we continue to add subsequent amounts you allocate to the
subaccounts and subtract adjusted transfers or partial withdrawals from the
subaccounts. We calculate adjusted transfers or partial withdrawals for the 6%
rising floor using the same formula as adjusted transfers or partial withdrawals
for the 5% rising floor.
Keep in mind that the 6% rising floor is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments total $50,000 or more or if they are
25% or more of total contract payments and credits. If we exercise this right,
we:
subtract each payment adjusted for market value from the contract value.
subtract each payment from the 6% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 6% for the number of full contract years they
have been in the contract before we subtract them from the 6% rising floor.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, the GPAs and the one-year fixed account value
of the 6% rising floor as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
For each payment, we calculate the 6% increase of payments allocated to the
subaccounts as:
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB - 6% RISING FLOOR:
you may only exercise the GMIB - 6% Rising Floor within 30 days after any
contract anniversary following the expiration of a seven-year waiting period
from the rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
You may change the annuitant for the payouts.
When you exercise your GMIB - 6% Rising Floor, you may select a fixed or
variable annuity payout plan. Fixed annuity payouts are calculated using the
annuity purchase rates based on the "1983 Individual Annuitant Mortality Table
A" with
--------------------------------------------------------------------------------
46 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
100% Projection Scale G and an interest rate of 2.5%. Your annuity payouts
remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.35
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - 6% Rising Floor benchmarks the contract growth at each anniversary
against several comparison values and sets the GMIB benefit base equal to the
largest value of the 6% rising floor, ROP or contract value. The GMIB benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates we use in the 2.5% Table to calculate the minimum annuity
payouts you will receive if you exercise the GMIB - 6% Rising Floor. If the GMIB
benefit base is greater than the contract value, the GMIB - 6% Rising Floor may
provide a higher annuity payout level than is otherwise available. However, the
GMIB - 6% Rising Floor uses annuity purchase rates that may be more conservative
than the annuity purchase rates than we will apply at annuitization under the
standard contract provisions. Therefore, the level of income provided by the
GMIB - 6% Rising Floor may be less than the income the contract otherwise
provided. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB - 6% Rising Floor,
you will receive the higher standard payout. The GMIB - 6% Rising Floor does not
create contract value or guarantee the performance of any investment option.
TERMINATING THE GMIB - 6% RISING FLOOR:
You may terminate the GMIB - 6% Rising Floor within 30 days after the first
rider anniversary.
You may terminate the GMIB - 6% Rising Floor any time after the seventh rider
anniversary.
The GMIB - 6% Rising Floor will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - 6% Rising Floor will terminate* 30 days following the contract
anniversary after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all of your purchase payment to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 47
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS 6% RISING FLOOR BENEFIT BASE
1 $107,000 $100,000 $106,000
2 125,000 100,000 112,360
3 132,000 100,000 119,102
4 150,000 100,000 126,248
5 85,000 100,000 133,823
6 120,000 100,000 141,852
7 138,000 100,000 150,363 $150,363
8 152,000 100,000 159,388 159,388
9 139,000 100,000 168,948 168,948
10 126,000 100,000 179,085 179,085
11 138,000 100,000 189,830 189,830
12 147,000 100,000 201,220 201,220
13 215,000 100,000 213,293 215,000
14 234,000 100,000 226,090 234,000
15 240,000 100,000 239,655 240,000
NOTE: The 6% Rising Floor value is limited at age 81, but the GMIB benefit base
may increase if the contract value increases. However, you should keep in mind
that you are always entitled to annuitize using the contract value without
exercising the GMIB - 6% Rising Floor.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $179,085 (6% Rising Floor) $ 872.14 $ 850.65 $ 691.27
15 240,000 (Contract Value) 1,346.40 1,286.40 1,034.40
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the guaranteed annuity rates stated in Table B of the contract.
The fixed annuity payout available under the standard provisions of this
contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $ 520.38
15 240,000 1,416.00 1,351.20 1,096.80
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - 6% Rising Floor payout is less than the payout available under the
standard provisions of the contract, you will receive the higher standard
payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the tenth rider anniversary (see below). This
is an optional benefit you may select for an additional charge (see "Charges").
The PCR does not provide any additional benefit before the tenth rider
anniversary and it may not be appropriate for issue ages 75 or older
--------------------------------------------------------------------------------
48 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
due to this required holding period. Be sure to discuss with your investment
professional whether or not the PCR is appropriate for your situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot add the PCR if you select either GMIB rider
option.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments and purchase
payment credits.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource Variable Portfolio -- Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
and purchase payment credits minus the target value adjusted partial withdrawals
accumulated at an annual effective rate of 7.2%. Every rider anniversary after
that, we recalculate the target value by accumulating the prior anniversary's
target value and any additional purchase payments and purchase payment credits
minus the target value adjusted partial withdrawals at an annual effective rate
of 7.2%.
PW x TV
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = ------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXERCISING THE PCR: We will inform you if your contract value did not meet or
exceed the target value after your tenth rider anniversary. If your contract
value is less than the target value on the tenth rider anniversary you can
choose either of the following benefits:
OPTION A) You may choose to accept a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount of any
partial withdrawal attributable to purchase payments received five or more
years before the target value is calculated (on the tenth year rider
anniversary). For a more detailed description of the PCR adjusted partial
withdrawal please see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five
years.
We apply the PCR credit to your contract on the tenth rider anniversary and
allocate it among the GPAs, the one-year fixed account and subaccounts according
to your current asset allocation.
OPTION B) You may choose to begin receiving annuity payouts (only with lifetime
income plans; you may not choose Annuity Payout Plan E) within 60 days
of the tenth rider anniversary and receive an additional 5% PCR credit
(for a total PCR credit of 10%) as calculated in (a).
We will assume that you elected PCR Option A unless we receive your request to
begin a lifetime annuity payout plan within 60 days after the tenth rider
anniversary.
If you select PCR Option A, we will restart the ten-year calculation period for
the PCR on the tenth rider anniversary and every ten years after that while you
own the contract. We use the contract value (including any credits) on that
anniversary as your first contract year's payments for calculating the target
value and any applicable PCR credit. We may then apply additional PCR credits to
your contract at the end of each ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 49
payments and credits for the calculating the target value and any applicable PCR
credit. If you select PCR Option A, the next ten-year calculation period for the
PCR will restart at the end of this new ten-year period. We must receive your
request to restart the PCR calculation period within 30 days after a contract
anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first rider
anniversary.
You may terminate the PCR within 30 days following the later of the tenth
rider anniversary or the last rider reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract,
- that a death benefit is payable, or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $1,000
purchase payment credit to the contract
There are no additional purchase payments and no partial withdrawals
On the tenth contract anniversary the contract value is $200,000
We determine the target value on the tenth contract anniversary as our
purchase payments and credits accumulated at an annual effective rate of 7.2%
= $101,000 x (1.072)(10) = $101,000 x 2.00423 = $202,427.
Your contract value ($200,000) is less than the target value ($202,427).
Assuming you select PCR Option A, we add a PCR credit to your contract
calculated as follows:
5% x (PP - PCRPW - PP5) = 0.05 x ($101,000 - 0 - 0) = $5,050.
After application of the PCR credit, your total contract value would be
$205,050.
During the eleventh contract year the contract value grows to $210,000 and you
choose to begin receiving annuity payouts under a lifetime income plan. We
would now add another PCR credit to your contract. Because you have not made
any additional purchase payments or partial withdrawals the amount of this new
credit is the same as the PCR credit we added to your contract on the tenth
contract anniversary ($5,050). After adding this new PCR credit to your
contract, your total contract value would be $215,050 and we would use this
amount to determine your monthly annuity payout amount.
If you had elected not to receive annuity payouts, the PCR ten-year
calculation period would restart on the tenth contract anniversary with the
target values first year's payments equal to $205,050. We would make the next
PCR credit determination on the twentieth contract anniversary.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
Benefit Protector is not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary, plus:
the applicable death benefit,
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
--------------------------------------------------------------------------------
50 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV death benefit equals the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charges. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether, we will
withdraw $50,000 and pay you $47,235. We calculate purchase payments not
previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of
the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
-------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 51
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Benefit Protector Plus is
not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum
distributions. Be sure to discuss with your investment professional and tax
advisor whether or not the Benefit Protector Plus is appropriate for your
situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
52 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death"), plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000
of the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 53
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit paid during the third contract year.
The reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
--------------------------------------------------------------------------------
54 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 55
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
--------------------------------------------------------------------------------
56 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 57
the exchange and subsequent withdrawal. As a result, there may be unexpected tax
consequences. You should consult your tax advisor before taking any withdrawal
from either contract during the 180-day period following a partial exchange.
Different IRS limitations on withdrawals apply to partial exchanges completed
prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
--------------------------------------------------------------------------------
58 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 59
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.00% as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
--------------------------------------------------------------------------------
60 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K,
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 61
quarterly reports on Form 10-Q and current reports on Form 8-K filed with the
SEC under the 1934 Act. To access this document, see "SEC Filings" under
"Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
62 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE:
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question minus the RPA adjusted partial withdrawals
for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and purchase payment credits as there are
no previous withdrawals to subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = --------
CV
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP TWO:
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question AND prior to the five year exclusion period
minus EPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and purchase payment credits made before
the five year exclusion period as there are no previous withdrawals to
subtract. Also note that EPA/RPA will always be less than or equal to one.
PW X EPA EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = ------- X ---
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the
partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP THREE:
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include purchase payment credits.
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT
DURATION
IN YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 63
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on
the third contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000
partial withdrawal minus the RPA -------------------- = $8,333
adjusted partial withdrawals for $120,000
all previous partial withdrawals
= $100,000 - 0 = $100,000
For the second partial withdrawal on
the eighth contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $191,667
partial withdrawal minus the RPA -------------------- = $8,156
adjusted partial withdrawals for $235,000
all previous partial withdrawals
= $200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal on
the third contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000 $100,000
partial withdrawal AND the five- ------------------ x -------- = $8,333
year exclusion period minus the $120,000 $100,000
EPA adjusted partial withdrawals
for all previous partial
withdrawals = $100,000 - 0 =
$100,000
For the second partial withdrawal on
the eighth contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $91,667 $91,667
partial withdrawal AND the five- ------------------ x -------- = $1,866
year exclusion period minus the $235,000 $191,667
EPA adjusted partial withdrawals
for all previous partial
withdrawals = $100,000 - $8,333 =
$91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 = $10,199
--------------------------------------------------------------------------------
64 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30 $0.51
Accumulation unit value at end of period $0.40 $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30
Number of accumulation units outstanding at end
of period (000 omitted) 89 80 126 156 276 482 552 588 655 372
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74 $0.97
Accumulation unit value at end of period $1.09 $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 295 416 688 1,006 1,348 1,482 1,471 1,573 1,510 1,341
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45 $0.65
Accumulation unit value at end of period $0.62 $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45
Number of accumulation units outstanding at end
of period (000 omitted) 128 210 363 517 863 934 882 881 893 1,003
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit value at end of period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 341 576 492 720 1,135 646 695 691 813 697
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04 $1.00
Accumulation unit value at end of period $1.44 $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 317 645 713 743 1,355 1,120 1,133 1,115 572 63
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78 $1.00
Accumulation unit value at end of period $1.48 $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 130 223 356 367 455 367 326 294 140 26
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit value at beginning of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 126 203 307 325 354 377 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit value at beginning of period $1.79 $1.43 $0.89 $1.62 $1.44 $1.46 $1.33 $1.24 $1.02 $1.00
Accumulation unit value at end of period $1.51 $1.79 $1.43 $0.89 $1.62 $1.44 $1.46 $1.33 $1.24 $1.02
Number of accumulation units outstanding at end
of period (000 omitted) 1 1 1 1 1 1 1 1 1 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17 $1.11
Accumulation unit value at end of period $1.30 $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 158 313 373 561 759 861 873 916 849 645
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86 $1.00
Accumulation unit value at end of period $1.57 $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86
Number of accumulation units outstanding at end
of period (000 omitted) 447 873 1,505 1,719 1,897 2,032 2,013 1,844 1,212 209
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75 $1.00
Accumulation unit value at end of period $1.11 $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 37 48 79 113 149 130 135 139 127 18
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85 $1.00
Accumulation unit value at end of period $1.98 $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 212 350 628 721 821 841 769 737 543 94
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 65
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80 $1.00
Accumulation unit value at end of period $1.58 $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 88 114 219 285 324 313 315 231 169 24
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01 $1.16
Accumulation unit value at end of period $1.54 $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01
Number of accumulation units outstanding at end
of period (000 omitted) 716 1,184 1,983 2,405 3,218 3,435 3,555 3,640 2,566 753
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68 $0.85
Accumulation unit value at end of period $1.20 $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 170 251 583 835 1,046 1,146 1,113 1,058 734 513
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of period $1.26 $1.10 $0.92 $1.62 $1.47 $1.40 $1.30 $1.24 $0.97 $1.00
Accumulation unit value at end of period $1.14 $1.26 $1.10 $0.92 $1.62 $1.47 $1.40 $1.30 $1.24 $0.97
Number of accumulation units outstanding at end
of period (000 omitted) 6 6 6 6 15 11 11 11 12 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/21/2002)
Accumulation unit value at beginning of period $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 42 72 64 58 59 56 51 62 30
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.57 $1.37 $1.08 $1.69 $1.75 $1.52 $1.48 $1.27 $0.98 $1.00
Accumulation unit value at end of period $1.52 $1.57 $1.37 $1.08 $1.69 $1.75 $1.52 $1.48 $1.27 $0.98
Number of accumulation units outstanding at end
of period (000 omitted) 29 77 120 113 111 125 144 139 57 1
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.59 $1.44 $1.17 $1.74 $1.72 $1.49 $1.38 $1.22 $0.96 $1.00
Accumulation unit value at end of period $1.54 $1.59 $1.44 $1.17 $1.74 $1.72 $1.49 $1.38 $1.22 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 13 216 263 304 334 329 325 275 74 2
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76 $1.00
Accumulation unit value at end of period $0.91 $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 297 468 748 743 806 813 843 909 623 113
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64 $0.95
Accumulation unit value at end of period $1.20 $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64
Number of accumulation units outstanding at end
of period (000 omitted) 54 137 197 204 314 454 474 495 388 165
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04 $1.10
Accumulation unit value at end of period $1.48 $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 662 1,080 1,849 2,581 3,209 3,243 3,188 2,934 2,457 1,585
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/21/2002)
Accumulation unit value at beginning of period $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87 $1.00
Accumulation unit value at end of period $2.74 $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 18 23 33 60 136 124 98 53 40 --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (08/30/2002)
Accumulation unit value at beginning of period $2.31 $1.80 $1.41 $2.30 $2.80 $2.05 $1.77 $1.31 $0.96 $1.00
Accumulation unit value at end of period $2.42 $2.31 $1.80 $1.41 $2.30 $2.80 $2.05 $1.77 $1.31 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 3 4 4 4 27 39 45 22 18 --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78 $1.00
Accumulation unit value at end of period $1.08 $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 64 217 274 315 318 339 399 377 130 9
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.49 $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 57 110 210 287 384 376 391 303 154 25
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
66 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04 $1.00
Accumulation unit value at end of period $1.69 $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 365 704 1,221 1,572 1,717 1,600 1,586 1,442 995 38
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79 $1.00
Accumulation unit value at end of period $1.58 $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 76 117 205 221 249 248 220 170 121 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.41 $1.39 $1.12 $1.36 $1.38 $1.36 $1.21 $1.14 $0.98 $1.00
Accumulation unit value at end of period $1.38 $1.41 $1.39 $1.12 $1.36 $1.38 $1.36 $1.21 $1.14 $0.98
Number of accumulation units outstanding at end
of period (000 omitted) 3 3 8 8 18 27 28 22 20 --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit value at beginning of period $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79 $0.99
Accumulation unit value at end of period $1.02 $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 88 163 212 278 376 343 383 455 530 379
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80 $1.00
Accumulation unit value at end of period $1.08 $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 117 210 300 325 392 419 350 360 178 33
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.60 $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 35 45 62 68 80 78 77 86 54 21
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.72 $1.49 $1.30 $2.25 $1.98 $1.63 $1.42 $1.21 $0.93 $1.00
Accumulation unit value at end of period $1.48 $1.72 $1.49 $1.30 $2.25 $1.98 $1.63 $1.42 $1.21 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 140 192 237 227 294 327 333 336 225 31
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $2.03 $1.71 $1.20 $1.68 $1.52 $1.45 $1.41 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.89 $2.03 $1.71 $1.20 $1.68 $1.52 $1.45 $1.41 $1.33 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 241 292 314 348 449 462 480 368 237 86
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 504 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.28 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.21 $1.28 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 51 65 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 214 350 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.00 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.00 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 299 469 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40 $1.00
Accumulation unit value at end of period $1.25 $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 3 12 12 37 64 80 86 87 9
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32 $1.00
Accumulation unit value at end of period $1.39 $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32
Number of accumulation units outstanding at end of
period (000 omitted) 18 24 33 28 31 31 31 30 47
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 67
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24 $1.00
Accumulation unit value at end of period $1.32 $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24
Number of accumulation units outstanding at end of
period (000 omitted) -- -- 12 12 41 19 19 20 3
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 298 303 1,258 372 137 91 70 179 55
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02
Number of accumulation units outstanding at end of
period (000 omitted) 167 264 3,966 3,519 3,241 547 165 169 63
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44 $1.00
Accumulation unit value at end of period $1.81 $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 465 559 2,165 1,880 1,267 1,033 512 31 9
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 $1.00 --
Accumulation unit value at end of period $1.03 $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 --
Number of accumulation units outstanding at end of
period (000 omitted) 589 890 1,020 1,054 1,103 1,183 1,307 818 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.72 $1.38 $0.86 $1.59 $1.43 $1.45 $1.35 $1.26 $1.00
Accumulation unit value at end of period $1.43 $1.72 $1.38 $0.86 $1.59 $1.43 $1.45 $1.35 $1.26
Number of accumulation units outstanding at end of
period (000 omitted) 66 82 98 139 136 158 161 118 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $1.03 $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 264 356 1,118 628 589 641 492 399 234
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30 $1.00
Accumulation unit value at end of period $1.73 $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 909 1,171 1,641 2,452 2,368 2,760 1,602 814 205
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34 $1.00
Accumulation unit value at end of period $1.41 $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 16 18 26 27 27 13 21 7 5
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38 $1.00
Accumulation unit value at end of period $2.20 $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38
Number of accumulation units outstanding at end of
period (000 omitted) 170 239 607 861 608 488 330 213 143
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37 $1.00
Accumulation unit value at end of period $1.93 $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37
Number of accumulation units outstanding at end of
period (000 omitted) 31 64 75 87 91 94 88 85 50
----------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25 $1.00
Accumulation unit value at end of period $1.44 $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25
Number of accumulation units outstanding at end of
period (000 omitted) 131 188 279 398 502 611 526 516 349
----------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34 $1.00
Accumulation unit value at end of period $1.67 $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 54 91 111 158 194 186 154 105 44
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (01/29/2003)
Accumulation unit value at beginning of period $1.24 $1.10 $0.93 $1.65 $1.50 $1.44 $1.35 $1.30 $1.00
Accumulation unit value at end of period $1.12 $1.24 $1.10 $0.93 $1.65 $1.50 $1.44 $1.35 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 5 5 59 68 100 425 51 40 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares
changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
68 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (01/29/2003)
Accumulation unit value at beginning of period $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35 $1.00
Accumulation unit value at end of period $1.56 $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35
Number of accumulation units outstanding at end of
period (000 omitted) 2 14 22 22 32 32 32 33 1
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap
Growth Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.51 $1.33 $1.06 $1.68 $1.75 $1.53 $1.50 $1.30 $1.00
Accumulation unit value at end of period $1.45 $1.51 $1.33 $1.06 $1.68 $1.75 $1.53 $1.50 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 916 1,142 1,790 2,105 1,977 1,995 1,445 538 25
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.59 $1.44 $1.18 $1.78 $1.77 $1.55 $1.44 $1.29 $1.00
Accumulation unit value at end of period $1.52 $1.59 $1.44 $1.18 $1.78 $1.77 $1.55 $1.44 $1.29
Number of accumulation units outstanding at end of
period (000 omitted) 20 21 45 46 50 51 30 17 3
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35 $1.00
Accumulation unit value at end of period $1.14 $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35
Number of accumulation units outstanding at end of
period (000 omitted) 75 113 132 148 151 164 179 110 27
----------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33 $1.00
Accumulation unit value at end of period $1.78 $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33
Number of accumulation units outstanding at end of
period (000 omitted) 2 3 18 22 24 24 22 21 --
----------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17 $1.00
Accumulation unit value at end of period $1.35 $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17
Number of accumulation units outstanding at end of
period (000 omitted) 192 316 370 439 545 531 435 401 240
----------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30 $1.00
Accumulation unit value at end of period $2.83 $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30
Number of accumulation units outstanding at end of
period (000 omitted) 7 13 13 30 73 89 94 97 12
----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (01/29/2003)
Accumulation unit value at beginning of period $2.36 $1.85 $1.47 $2.41 $2.96 $2.18 $1.90 $1.42 $1.00
Accumulation unit value at end of period $2.45 $2.36 $1.85 $1.47 $2.41 $2.96 $2.18 $1.90 $1.42
Number of accumulation units outstanding at end of
period (000 omitted) 4 4 6 6 6 6 -- 12 12
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31 $1.00
Accumulation unit value at end of period $1.30 $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31
Number of accumulation units outstanding at end of
period (000 omitted) 232 257 266 283 299 314 284 126 59
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46 $1.00
Accumulation unit value at end of period $1.87 $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46
Number of accumulation units outstanding at end of
period (000 omitted) 9 33 38 38 41 42 15 12 4
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.41 $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 681 912 3,444 3,043 3,205 2,256 1,716 851 141
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44 $1.00
Accumulation unit value at end of period $1.87 $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44
Number of accumulation units outstanding at end of
period (000 omitted) 21 22 32 35 40 30 40 33 29
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.38 $1.37 $1.11 $1.36 $1.40 $1.38 $1.25 $1.19 $1.00
Accumulation unit value at end of period $1.34 $1.38 $1.37 $1.11 $1.36 $1.40 $1.38 $1.25 $1.19
Number of accumulation units outstanding at end of
period (000 omitted) 24 55 78 100 157 167 158 148 10
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29 $1.00
Accumulation unit value at end of period $1.23 $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29
Number of accumulation units outstanding at end of
period (000 omitted) 2 2 2 2 7 7 2 2 --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 69
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34 $1.00
Accumulation unit value at end of period $1.33 $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 20 29 33 44 47 53 51 54 41
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40 $1.00
Accumulation unit value at end of period $1.94 $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 330 415 510 605 687 648 720 337 3
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.80 $1.57 $1.38 $2.42 $2.15 $1.78 $1.57 $1.34 $1.00
Accumulation unit value at end of period $1.53 $1.80 $1.57 $1.38 $2.42 $2.15 $1.78 $1.57 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 52 61 64 67 87 78 64 45 28
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.00 $1.71 $1.21 $1.70 $1.55 $1.49 $1.47 $1.40 $1.00
Accumulation unit value at end of period $1.86 $2.00 $1.71 $1.21 $1.70 $1.55 $1.49 $1.47 $1.40
Number of accumulation units outstanding at end of
period (000 omitted) 388 514 77 95 133 142 154 113 29
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 69 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.59 $1.28 $0.86 $1.49 $1.33 $1.10 $1.06 $1.00 --
Accumulation unit value at end of period $1.49 $1.59 $1.28 $0.86 $1.49 $1.33 $1.10 $1.06 --
Number of accumulation units outstanding at end of
period (000 omitted) 31 35 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 39 67 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.21 $1.10 $1.10 $1.05 $1.03 $1.03 $1.00 --
Accumulation unit value at end of period $1.35 $1.27 $1.21 $1.10 $1.10 $1.05 $1.03 $1.03 --
Number of accumulation units outstanding at end of
period (000 omitted) 658 917 1,060 1,033 1,552 3,395 1,455 623 --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
70 EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS VARIABLE ANNUITY -- PROSPECTUS 71
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45272 T (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
INNOVATIONS CLASSIC VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc.
(Class B)
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM) - Service Class
Oppenheimer Variable Account Funds - Service Shares
Putnam Variable Trust - Class IB Shares
Please read the prospectuses carefully and keep them for future reference.
This contract provides for purchase payment credits to eligible contract owners,
which we may reverse under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits"). Expense charges for contracts with
purchase payment credits may be higher than expenses for contracts without such
credits. The amount of the credit may be more than offset by any additional fees
and charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 12
FINANCIAL STATEMENTS......................... 12
THE VARIABLE ACCOUNT AND THE FUNDS........... 12
GUARANTEE PERIOD ACCOUNTS (GPAS)............. 18
THE ONE-YEAR FIXED ACCOUNT................... 20
BUYING YOUR CONTRACT......................... 20
CHARGES...................................... 23
VALUING YOUR INVESTMENT...................... 28
MAKING THE MOST OF YOUR CONTRACT............. 30
WITHDRAWALS.................................. 36
TSA -- SPECIAL PROVISIONS.................... 36
CHANGING OWNERSHIP........................... 37
BENEFITS IN CASE OF DEATH.................... 37
OPTIONAL BENEFITS............................ 42
THE ANNUITY PAYOUT PERIOD.................... 54
TAXES........................................ 56
VOTING RIGHTS................................ 60
SUBSTITUTION OF INVESTMENTS.................. 60
ABOUT THE SERVICE PROVIDERS.................. 60
ADDITIONAL INFORMATION....................... 61
APPENDIX A: PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL................ 63
APPENDIX B: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 65
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION..................... 71
--------------------------------------------------------------------------------
2 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Some states may also have time limitations for making additional
payments. (See "Buying Your Contract")
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract. See your contract and/or ask your
investment professional for the actual terms of the contract you purchased.
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to further limit transfers to the GPAs and the one-year fixed account if the
interest rate we are then crediting to the GPAs or one-year fixed account is
equal to the minimum interest rate stated in the contract. (See "Making the Most
of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: These contracts offer optional features that are available
for additional charges if you meet certain criteria. (see "Optional Benefits")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 5
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
The following tables describe the fees and expenses that you will pay when
buying, owning and making a withdrawal from the contract. The first table
describes the fees and expenses that you paid at the time that you bought the
contract and will pay when you make a withdrawal from the contract. State
premium taxes also may be deducted.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose a death benefit guarantee, a qualified or nonqualified contract
and the length of your contract's withdrawal charge schedule. The combination
you choose determines the fees you pay. The table below shows the combinations
available to you and their cost.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP death benefit 0.85% 0.15% 1.00%
MAV death benefit(1),(2) 1.05 0.15 1.20
EDB(1) 1.15 0.15 1.30
NONQUALIFIED ANNUITIES
ROP death benefit 1.10 0.15 1.25
MAV death benefit(1),(2) 1.30 0.15 1.45
EDB(1) 1.40 0.15 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP death benefit 1.15 0.15 1.30
MAV death benefit(1),(2) 1.35 0.15 1.50
EDB(1) 1.45 0.15 1.60
NONQUALIFIED ANNUITIES
ROP Payment death benefit 1.40 0.15 1.55
MAV death benefit(1),(2) 1.60 0.15 1.75
EDB(1) 1.70 0.15 1.85
(1) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(2) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GMIB - MAV 0.55%(1),(2)
GMIB - 6% RISING FLOOR 0.75%(1),(2)
(As a percentage of the adjusted contract value charged annually on the contract
anniversary.)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following current annual
rider changes apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
--------------------------------------------------------------------------------
8 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund -- Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco V.I. Core Equity Fund, Series II Shares 0.61 0.25 0.28 -- 1.14
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(2)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(3)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Oppenheimer Global Securities Fund/VA, Service Shares 0.63% 0.25% 0.13% --% 1.01%
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(4)
Oppenheimer High Income Fund/VA, Service Shares 0.75 0.25 0.23 -- 1.23(5)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(5)
Service Shares
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Putnam VT Research Fund - Class IB Shares 0.56 0.25 0.27 -- 1.08
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(6)
3)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3) and 0.915% for Columbia Variable
Portfolio - Large Cap Growth Fund (Class 3).
(2) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(3) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03% .
(4) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(5) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.00% for Oppenheimer High
Income Fund/VA, Service Shares and 1.05% for Oppenheimer Main Street Small-
& Mid-Cap Fund(R)/VA, Service Shares.
(6) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
--------------------------------------------------------------------------------
10 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV death benefit, GMIB - 6% Rising Floor
and Benefit Protector Plus. Although your actual costs may be lower, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,246 $2,046 $2,854 $4,565 $446 $1,346 $2,254 $4,565
Five-year
withdrawal charge
schedule 1,277 2,034 2,595 4,815 477 1,434 2,395 4,815
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,221 $1,972 $2,736 $4,351 $421 $1,272 $2,136 $4,351
Five-year
withdrawal charge
schedule 1,252 1,961 2,478 4,607 452 1,361 2,278 4,607
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,019 $1,373 $1,749 $2,441 $219 $673 $1,149 $2,441
Five-year
withdrawal charge
schedule 1,050 1,366 1,505 2,757 250 766 1,305 2,757
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $ 994 $1,296 $1,617 $2,170 $194 $596 $1,017 $2,170
Five-year
withdrawal charge
schedule 1,025 1,289 1,375 2,494 225 689 1,175 2,494
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the STI Classic Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. For example, we
may receive compensation from our affiliates in connection with purchase
payments and contract value you allocated to the affiliated funds that exceeds
the range disclosed below for the funds our affiliates do not manage. These
relationships may
--------------------------------------------------------------------------------
12 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
influence recommendations your investment professional makes regarding whether
you should invest in the contract, and whether you should allocate purchase
payments or contract values to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 13
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks to maximize total return consistent AllianceBernstein L.P.
VPS Balanced with AllianceBernstein's determination of
Wealth Strategy reasonable risk.
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Growth Stock Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer High Seeks a high level of current income from OppenheimerFunds, Inc.
Income Fund/VA, investment in high-yield, fixed-income
Service Shares securities.
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
Research Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 17
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
18 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 19
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 7%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
--------------------------------------------------------------------------------
20 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. Generally, you can
own a nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(1);
how you want to make purchase payments;
the optional MAV death benefit(2);
the optional EDB(2);
the optional GMIB - MAV rider(3);
the optional GMIB - 6% Rising Floor rider(3);
the optional PCR(3);
the optional Benefit Protector Death Benefit(4);
the optional Benefit Protector Plus Death Benefit(4);
the length of the withdrawal charge schedule (5 or 7 years)(5); and
a beneficiary.
(1) GPAs are not available under contracts issued in Maryland, Oregon,
Pennsylvania or Washington and may not be available in other states.
(2) Available if both you and the annuitant are 79 or younger at contract issue.
If you select a GMIB rider, you must elect either the MAV death benefit or
the EDB. EDB is not available with Benefit Protector or Benefit Protector
Plus. May not be available in all states.
(3) If you select the PCR, you cannot add a GMIB rider. The GMIB is available if
the annuitant is 75 or younger at contract issue. The GMIB is not available
with ROP death benefit. May not be available in all states.
(4) Available if you and the annuitant are 75 or younger at contract issue. Not
available with EDB. May not be available in all states.
(5) The five-year withdrawal charge schedule may not be available in all states.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 minimum for the GPAs.
The following restrictions on allocation of purchase payments to the GPAs and
the one-year fixed account will apply:
FOR CONTRACTS WITH APPLICATIONS No restrictions on the amount of purchase
SIGNED PRIOR TO JUNE 16, 2003: payments allocated to the GPAs or the one-
year fixed account (if available).
FOR CONTRACTS WITH APPLICATIONS The amount of any purchase payment allocated
SIGNED ON OR AFTER JUNE 16 to the GPAs and the one-year fixed account in
THROUGH DEC. 4, 2003: total cannot exceed 30% of the purchase
payment.
This 30% limit will not apply if you
establish a dollar cost averaging arrangement
with respect to the purchase payment
according to procedures currently in effect,
or you are participating according to the
rules of an asset allocation model portfolio
program available under the contract, if any.
FOR CONTRACTS WITH APPLICATIONS In certain states where we offer GPAs that do
SIGNED ON OR AFTER DEC. 5, 2003: not require payment of a statutory minimum
guaranteed interest rate, the amount of any
purchase payment allocated to one-year fixed
account cannot exceed 30% of the purchase
payment. The amount of any purchase payment
allocated to the GPAs is not subject to this
30% limit. Please consult your investment
professional to see if these restrictions
apply in your state. In all other states, the
amount of any purchase payment allocated to
the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase
payment. We reserve the right to further
limit purchase payment allocations to the
one-year fixed account and/or GPAs if the
interest rate we are then crediting on new
purchase payments allocated to the one-year
fixed account is equal to the minimum
interest rate stated in the contract.
In all states, the 30% limit will not apply
if you establish an automated dollar cost
averaging arrangement with respect to the
purchase payment according to procedures
currently in effect, or you are participating
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 21
according to the rules of an asset allocation
model portfolio program available under the
contract, if any.
There are no restrictions on allocations of purchase payments to the
subaccounts.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment.
You may make monthly payments to your contract under a systematic investment
plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
--------------------------------------------------------------------------------
22 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with any payment you make to your
contract that brings your total net payment (total payments less total
withdrawals) to $100,000 or more.(1)
For applications signed on or after Nov. 6, 2003, only contracts with a seven-
year withdrawal charge schedule are eligible for a credit. If you make any
additional payments that cause the contract to be eligible for the credit, we
will add credits to your prior purchase payments (less total withdrawals). We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account, special DCA account and the subaccounts in the same proportions
as your purchase payment.
We fund the credit from our general account. Credits are not considered to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available because of lower distribution and other expenses
associated with larger sized contracts and through revenue from higher
withdrawal charges and contract administrative charges than would otherwise be
charged. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credit. We use all the revenue from these
higher charges to pay for the cost of the credits. However, we could profit from
the higher charges if market appreciation is higher than expected or if contract
owners hold their contracts for longer than expected.
(1) For applications signed on or after Nov. 6, 2003 and if your state has
approved this restriction, purchase payment credits are not available for
contracts with a five-year withdrawal charge schedule.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 23
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the death benefit guarantee, whether the contract is a
qualified annuity or a nonqualified annuity and the withdrawal charge schedule
that applies to your contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP death benefit 0.85% 1.10%
MAV death benefit(1) 1.05 1.30
EDB 1.15 1.40
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP death benefit 1.15 1.40
MAV death benefit(1) 1.35 1.60
EDB 1.45 1.70
(1) For contracts with applications signed before Nov. 6, 2003, or if your state
has not approved this fee, the MAV death benefit fee is .10% less.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than six or eight years before the date of withdrawal, depending on the
withdrawal charge schedule you select. (In addition, amounts withdrawn from a
GPA more than 30 days before the end of the applicable guarantee period will be
subject to a MVA. (See "The Guarantee Period Accounts -- Market Value Adjustment
(MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you select a seven-year withdrawal charge schedule, during the first
two years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the seventh year after it is made is 3%. At the beginning of the
eighth year after that purchase payment is made, and thereafter, there is no
withdrawal charge as to that payment.
--------------------------------------------------------------------------------
24 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next, we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ----------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn, depending on the withdrawal charge schedule you
selected:
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE(1)
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
(1) The five-year withdrawal charge schedule may not be available in all states.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 25
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with a SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the seventh contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
560 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
7% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a 7%
withdrawal charge.
----
$980
Under the same scenario, the withdrawal charge on a contract with a FIVE-YEAR
WITHDRAWAL CHARGE SCHEDULE would be calculated:
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received six or more years before
withdrawal and is withdrawn without withdrawal charge; and
320 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
4% withdrawal charge; and
360 $6,000 purchase payment is in its third year from receipt withdrawn with a 6%
withdrawal charge.
----
$680
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan unless an annuity payout Plan E
is later fully withdrawn;
--------------------------------------------------------------------------------
26 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge an annual fee for this optional feature only if you select it. There
are two GMIB rider options available under your contract (see "Guaranteed
Minimum Income Benefit Rider"). The fee for GMIB - MAV is 0.55% of the adjusted
contract value(1). The fee for GMIB - 6% Rising Floor is 0.75% of the adjusted
contract value. Depending on the GMIB rider option you choose, we deduct the
appropriate fee from the contract value on your contract anniversary at the end
of each contract year. We prorate this fee among the GPAs, one-year fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value.
(1) For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - MAV -- 0.30% and GMIB -- 6% Rising
Floor -- 0.45%.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the appropriate GMIB fee from the proceeds payable adjusted for the
number of calendar days coverage was in place. We cannot increase either GMIB
fee after the rider effective date and it does not apply after annuity payouts
begin or the GMIB terminates.
We calculate the fee as follows:
GMIB - MAV 0.55% x (CV + ST - FAV)
GMIB - 6% RISING FLOOR 0.75% x (CV + ST - FAV)
CV = contract value on the contract anniversary
ST = transfers from the subaccounts to the GPAs or the one-year fixed account
made during the six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account on the contract
anniversary.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts and not on the GPAs and the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 27
The GMIB fee for:
GMIB - MAV IS 0.55%; AND
GMIB - 6% RISING FLOOR IS 0.75%.
We calculate the charge as follows:
Contract value on the contract anniversary: $73,250
plus transfers from the subaccounts to the one-year fixed account in the
six months before the contract anniversary: +15,000
minus the value of the one-year fixed account on the contract
anniversary: -15,250
-------
$73,000
The GMIB fee charged to you:
GMIB - MAV (0.55% x $73,000) = $401.50
GMIB - 6% RISING FLOOR (0.75% x $73,000) = $547.50
PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.15% of your contract value for this optional feature if you
select it. If selected, we deduct the fee from your contract value on your
contract anniversary at the end of each contract year. We prorate this fee among
the GPAs, the one-year fixed account and the subaccounts in the same proportion
as your interest bears to your total contract value. If you select the PCR, you
cannot add a GMIB rider.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocate to the GPAs and the one-year fixed account
directly in dollars. The value of the GPAs and the one-year fixed account
equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs
and the one-year fixed account (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and one-year fixed
account;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
--------------------------------------------------------------------------------
28 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider -- MAV;
- Guaranteed Minimum Income Benefit rider -- 6% Rising Floor;
- Performance Credit rider;
- Benefit Protector rider; and/or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 29
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
--------------------------------------------------------------------------------
30 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Special DCA program. There is no charge for the Special DCA program.
Under the Special DCA program, you can allocate a new purchase payment and any
applicable purchase payment credit to a six-month or twelve-month Special DCA
account.
You may only allocate a new purchase payment of at least $10,000 to a Special
DCA account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, one-year fixed account and/or the subaccounts you select
over the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Special DCA account at the beginning of the six or twelve-month period.
Therefore, you may receive less total interest than you would have if all your
purchase payments and purchase payment credits were in the Special DCA account
from the beginning. If we receive any of your multiple payments after the six or
twelve-month period ends, you can either allocate those payments to a new
Special DCA account (if available) or to any other accounts available under your
contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify, subject to the 30%
limitation rule (see "Transfer policies"). Similarly, if we cannot accept any
additional purchase payments into the Special DCA program, we will allocate the
purchase payments to the other accounts you selected for your DCA transfers or
in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA Program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 31
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit purchase payment
allocations to the GPAs and the one-year fixed account if the interest rate we
are then crediting to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
You may transfer contract value from the one-year fixed account to the
subaccounts or the GPAs according to the following transfer policies:
FOR CONTRACTS WITH APPLICATIONS It is our general policy to allow you to
SIGNED PRIOR TO JUNE 16, 2003: transfer contract values from the one-year
fixed account to the subaccounts or the
GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums).
Currently, we have removed this restriction
and you may transfer contract values from
the one-year fixed account to the
subaccounts at any time. We will inform you
at least 30 days in advance of the day we
intend to reimpose this restriction.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER JUNE 16 THROUGH one-year fixed account to the subaccounts
DEC. 4, 2003: or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
GPAs or the one-year fixed account cannot
result in the value of the GPAs and the
one-year fixed account in total being
greater than 30% of the
--------------------------------------------------------------------------------
32 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
contract value. Total transfers out of the
GPAs and one-year fixed account in any
contract year are limited to 30% of the
total value of the GPAs and one-year fixed
account at the beginning of the contract
year or $10,000, whichever is greater.
Because of this limitation, it may take you
several years to transfer all your contract
value from the one-year fixed account. You
should carefully consider whether the one-
year fixed account meets your investment
criteria before you invest.
FOR CONTRACTS WITH APPLICATIONS You may transfer contract values from the
SIGNED ON OR AFTER DEC. 5, 2003: one-year fixed account to the subaccounts
or GPAs once a year on or within 30 days
before or after the contract anniversary
(except for automated transfers, which can
be set up at any time for certain transfer
periods subject to certain minimums). The
amount of contract value transferred to the
one-year fixed account cannot result in the
value of the one-year fixed account in
total being greater than 30% of the
contract value. We reserve the right to
further limit transfers to the one-year
fixed account and/or GPAs if the interest
rate we are then crediting on new purchase
payments allocated to the one-year fixed
account is equal to the minimum interest
rate stated in the contract. Total
transfers out of the one-year fixed account
in any contract year are limited to 30% of
the one-year fixed account value at the
beginning of the contract year or $10,000,
whichever is greater. Because of this
limitation, it may take you several years
to transfer all your contract value from
the one-year fixed account. You should
carefully consider whether the one-year
fixed account meets your investment
criteria before you invest.
Transfers from the one-year fixed account are not subject to an MVA.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable annuity payout, once annuity payouts begin, you may
make transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
*) Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 33
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
--------------------------------------------------------------------------------
34 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 35
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the
--------------------------------------------------------------------------------
36 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
employer either by affirmative election or inadvertent action causes
contributions under a plan that is subject to ERISA to be made to this contract,
we will not be responsible for any obligations and requirements under ERISA and
the regulations thereunder, unless we have prior written agreement with the
employer. You should consult with your employer to determine whether your 403(b)
plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payments death benefit (ROP);
Maximum Anniversary Value death benefit (MAV); and
Enhanced Death Benefit (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 37
you select a GMIB, you must elect either the MAV death benefit or the EDB. Once
you elect a death benefit option, you cannot change it. We show the option that
applies in your contract. The combination of the contract, withdrawal charge
schedule and death benefit option you select determines the mortality and
expense risk fee that is assessed against the subaccounts. (See
"Charges -- Mortality and Expense Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments plus purchase payments credits applied to the
contract minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = ------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000 ----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. This is an optional benefit
that you may select for an additional charge (see "Charges"). The MAV death
benefit does not provide any additional benefit before the first contract
anniversary and it may not be appropriate for issue ages 75 to 79 because the
benefit values may be limited at age 81. Be sure to discuss with your investment
professional whether or not the MAV death benefit is appropriate for your
situation.
If the MAV death benefit is available in your state and both you and the
annuitant are age 79 or younger at contract issue, you may choose to add the MAV
death benefit to your contract at the time of purchase. Once you select the MAV
death benefit, you may not cancel it. If you choose to add a GMIB rider to your
contract, you must elect either the MAV death benefit or the EDB.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values amounts less any purchase payment credits subject
to reversal, minus any applicable rider charges:
1. contract value;
--------------------------------------------------------------------------------
38 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value we calculate on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV to the highest value. We stop
resetting the MAV when you or the annuitant reach age 81. However, we continue
to add subsequent purchase payments and purchase payment credits and subtract
adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $20,000.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
for a death benefit of: $18,636.36
----------
The MAV immediately preceding the date of death:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000
for a death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$22,363.64
ENHANCED DEATH BENEFIT
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. This is an optional benefit that you
may select for an additional charge (see "Charges"). The EDB does not provide
any additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited at
age 81. Benefit Protector and Benefit Protector Plus are not available with EDB.
Be sure to discuss with your investment professional whether or not the EDB is
appropriate for your situation.
If the EDB is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB rider to your contract
at the time of purchase. If you choose to add a GMIB to your contract, you must
elect either the MAV death benefit or the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values, less any purchase payment credits subject to reversal, minus
any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% rising floor.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 39
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200.
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $22,800.
The death benefit is calculated as follows:
Contract value at death: $22,800.00
----------
Purchase payments and purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
for a return of purchase payments death benefit of: $23,456.79
----------
The MAV immediately preceding the date of death:
Greatest of your contract anniversary contract values: $25,000.00
plus purchase payments and purchase payment credits made since the prior
anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary,
calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
for a MAV death benefit of: $23,456.79
----------
--------------------------------------------------------------------------------
40 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
The 5% rising floor:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
5% rising floor (value of the GPAs, one-year fixed account and the
variable account floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 41
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
There are two GMIB rider options available under your contract. Both GMIB riders
are intended to provide you with a guaranteed minimum lifetime income regardless
of the volatility inherent in the investments in the subaccounts. If you select
either GMIB rider option:
you must hold the GMIB for 7 years,
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday,
you can only exercise the GMIB within 30 days after a contract anniversary,
and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If either GMIB rider is available in your state and the annuitant is 75 or
younger at contract issue, you may choose to add this optional benefit at the
time you purchase your contract for an additional charge. If the annuitant is
between age 73 and age 75 at contract issue, you should consider whether a GMIB
rider is appropriate for your situation. Be sure to discuss with your investment
professional whether either GMIB rider option is appropriate for your situation.
The amount of the fee is determined by the GMIB rider option you select (see
"Charges -- GMIB Rider Fee"). If you select a GMIB rider, you must also elect
the MAV death benefit or the EDB at the time you purchase your contract. The PCR
rider is not available with either GMIB rider. The effective date of the GMIB
rider will be the contract issue date.
In some instances, we may allow you to add a GMIB rider to your contract at a
later date if it was not available when you initially purchased your contract.
In these instances, we would add the GMIB rider on the next contract anniversary
and this would become the rider effective date. For purposes of calculating the
GMIB benefit base under these circumstances, we consider the contract value on
the rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION: Under either GMIB rider, you may allocate your purchase
payments and purchase payment credits or transfers to any of the subaccounts,
the GPAs or the one-year fixed account. However, we reserve the right to limit
the amount you allocate to subaccounts investing in RiverSource Variable
Portfolio -- Cash Management Fund to 10% of the total amount in the subaccounts.
If we are required to activate this restriction, and you have more than 10% of
your subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB rider if you have not satisfied the limitation
after 60 days.
--------------------------------------------------------------------------------
42 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
YOU MAY SELECT ONE OF THE FOLLOWING GMIB RIDER OPTIONS:
GMIB - Maximum Anniversary Value (MAV); or
GMIB - 6% Rising Floor.
GMIB - MAV
GMIB BENEFIT BASE:
If the GMIB - MAV is elected at contract issue, the GMIB benefit base is the
greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the MAV.
MAV is a value we calculate on the first contract anniversary as the highest of:
(a) your current contract value, or (b) total purchase payments and purchase
payment credits minus adjusted partial withdrawals. There is no MAV prior to the
first contact anniversary. Every contract anniversary after that through age 80,
we compare the previous anniversary's MAV (plus any purchase payments and
purchase payment credits since that anniversary minus adjusted partial
withdrawals since that anniversary) to the current contract value and we reset
the MAV to the highest value. We stop resetting the MAV after you or the
annuitant reach age 81. However, we continue to add subsequent purchase payments
and purchase payment credits and subtract adjusted partial withdrawals from the
MAV.
Keep in mind, the MAV is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payment
and purchase payment credits made in the five years before you exercise the
GMIB - MAV. We would do so only if such payments and credit total $50,000 or
more or if they are 25% or more of total contract payments and credits. If we
exercise this right, we subtract each payment and purchase payment credit
adjusted for market value from the contract value and the MAV.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value and the MAV as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB - MAV.
CVG = current contract value at the time you exercise the GMIB - MAV.
ECV = the estimated contract value on the anniversary prior to the
payment in question. We assume that all payments, purchase payment
credits and partial withdrawals occur at the beginning of a
contract year.
EXERCISING THE GMIB - MAV:
you may only exercise the GMIB - MAV within 30 days after any contract
anniversary following the expiration of a seven-year waiting period from the
rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity -- no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity -- no refund
You may change the annuitant for the payouts.
When you exercise your GMIB - MAV, you may select a fixed or variable annuity
payout plan. Fixed annuity payouts are calculated using the annuity purchase
rates based on the "1983 Individual Annuitant Mortality Table A" with 100%
Projection Scale G and an interest rate of 3%. Your annuity payouts remain fixed
for the lifetime of the annuity payout period.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 43
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - MAV benchmarks the contract growth at each anniversary against
several comparison values and sets the GMIB benefit base equal to the largest
value of the MAV, purchase payments and purchase payment credits minus adjusted
partial withdrawals or the contract value. The GMIB benefit base, less any
applicable premium tax, is the value we apply to the GMIB - MAV annuity purchase
described above. If the GMIB benefit base is greater than the contract value,
the GMIB - MAV may provide a higher annuity payout level than is otherwise
available. However, the GMIB - MAV uses guaranteed annuity purchase rates which
may result in annuity payouts that are less than those using the annuity
purchase rates that we will apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the GMIB - MAV may be
less than the income the contract otherwise provided. If the annuity payouts
through the standard contract provisions are more favorable than the payouts
available through the GMIB - MAV, you will receive the higher standard payout.
The GMIB - MAV does not create contract value or guarantee the performance of
any investment option.
TERMINATING THE GMIB - MAV:
You may terminate the GMIB - MAV within 30 days after the first rider
anniversary.
You may terminate the GMIB - MAV any time after the seventh rider anniversary.
The GMIB - MAV will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - MAV will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and we add a $1,000 purchase payment credit to your contract. You
allocate all your purchase payments and purchase payment credits to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
44 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS MAV BENEFIT BASE
1 $107,000 $101,000 $107,000
2 125,000 101,000 125,000
3 132,000 101,000 132,000
4 150,000 101,000 150,000
5 85,000 101,000 150,000
6 120,000 101,000 150,000
7 138,000 101,000 150,000 $150,000
8 152,000 101,000 152,000 152,000
9 139,000 101,000 152,000 152,000
10 126,000 101,000 152,000 152,000
11 138,000 101,000 152,000 152,000
12 147,000 101,000 152,000 152,000
13 163,000 101,000 163,000 163,000
14 159,000 101,000 163,000 163,000
15 215,000 101,000 215,000 215,000
NOTE: The MAV value is limited at age 81, but, the GMIB benefit base may
increase if the contract value increases. However, you should keep in mind that
you are always entitled to annuitize using the contract value without exercising
the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $152,000 (MAV) $ 784.32 $ 763.04 $627.76
15 215,000 (Contract Value = MAV) 1,268.50 1,210.45 982.55
The payouts above are based on the "1983 Individual Annuitant Mortality Table A"
with 100% Projection Scale G and interest rate of 3%. Payouts under the standard
provisions of this contract will be based on our annuity rates in effect at
annuitization and are guaranteed to be greater than or equal to the guaranteed
annuity rates stated in Table B of the contract. The fixed annuity payout
available under the standard provisions of this contract would be at least as
great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 215,000 1,268.50 1,210.45 982.55
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - MAV payout is less than the payout available under the standard
provisions of the contract, you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 45
GMIB - 6% RISING FLOOR
GMIB BENEFIT BASE:
If the GMIB - 6% Rising Floor is elected at contract issue, the GMIB benefit
base is the greatest of these three values:
1. contract value;
2. total purchase payments and purchase payment credits minus adjusted partial
withdrawals; or
3. the 6% rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments and purchase payment credits allocated to the
subaccounts increased by 6%;
plus any subsequent amounts allocated to the subaccounts; and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% then adding any subsequent amounts allocated to the subaccounts and
subtracting any adjusted transfers or partial withdrawals from the subaccounts.
We stop resetting the variable account floor after you or the annuitant reach
age 81. However, we continue to add subsequent amounts you allocate to the
subaccounts and subtract adjusted transfers or partial withdrawals from the
subaccounts. We calculate adjusted transfers or partial withdrawals for the 6%
rising floor using the same formula as adjusted transfers or partial withdrawals
for the 5% rising floor.
Keep in mind that the 6% rising floor is limited at age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments total $50,000 or more or if they are
25% or more of total contract payments and credits. If we exercise this right,
we:
subtract each payment adjusted for market value from the contract value.
subtract each payment from the 6% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 6% for the number of full contract years they
have been in the contract before we subtract them from the 6% rising floor.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, the GPAs and the one-year fixed account value
of the 6% rising floor as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the
payment in question. We assume that all payments, purchase payment
credits and partial withdrawals occur at the beginning of a
contract year.
For each payment, we calculate the 6% increase of payments allocated to the
subaccounts as:
PMT X (1.06)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB - 6% RISING FLOOR:
you may only exercise the GMIB - 6% Rising Floor within 30 days after any
contract anniversary following the expiration of a seven-year waiting period
from the rider effective date.
the annuitant must be between 50 and 86 years old on the date the rider is
exercised.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity -- no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity -- no refund
You may change the annuitant for the payouts.
When you exercise your GMIB - 6% Rising Floor, you may select a fixed or
variable annuity payout plan. Fixed annuity payouts are calculated using the
annuity purchase rates based on the "1983 Individual Annuitant Mortality Table
A" with
--------------------------------------------------------------------------------
46 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
100% Projection Scale G and an interest rate of 2.5%. Your annuity payouts
remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB - 6% Rising Floor benchmarks the contract growth at each anniversary
against several comparison values and sets the GMIB benefit base equal to the
largest value of the 6% rising floor, ROP or contract value. The GMIB benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates we use in the 2.5% Table to calculate the minimum annuity
payouts you will receive if you exercise the GMIB - 6% Rising Floor. If the GMIB
benefit base is greater than the contract value, the GMIB - 6% Rising Floor may
provide a higher annuity payout level than is otherwise available. However, the
GMIB - 6% Rising Floor uses annuity purchase rates that may be more conservative
than the annuity purchase rates than we will apply at annuitization under the
standard contract provisions. Therefore, the level of income provided by the
GMIB - 6% Rising Floor may be less than the income the contract otherwise
provided. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB - 6% Rising Floor,
you will receive the higher standard payout. The GMIB - 6% Rising Floor does not
create contract value or guarantee the performance of any investment option.
TERMINATING THE GMIB - 6% RISING FLOOR:
You may terminate the GMIB - 6% Rising Floor within 30 days after the first
rider anniversary.
You may terminate the GMIB - 6% Rising Floor any time after the seventh rider
anniversary.
The GMIB - 6% Rising Floor will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB - 6% Rising Floor will terminate* 30 days following the contract
anniversary after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all of your purchase payment to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 47
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS 6% RISING FLOOR BENEFIT BASE
1 $107,000 $100,000 $106,000
2 125,000 100,000 112,360
3 132,000 100,000 119,102
4 150,000 100,000 126,248
5 85,000 100,000 133,823
6 120,000 100,000 141,852
7 138,000 100,000 150,363 $150,363
8 152,000 100,000 159,388 159,388
9 139,000 100,000 168,948 168,948
10 126,000 100,000 179,085 179,085
11 138,000 100,000 189,830 189,830
12 147,000 100,000 201,220 201,220
13 215,000 100,000 213,293 215,000
14 234,000 100,000 226,090 234,000
15 240,000 100,000 239,655 240,000
NOTE: The 6% Rising Floor value is limited at age 81, but the GMIB benefit base
may increase if the contract value increases. However, you should keep in mind
that you are always entitled to annuitize using the contract value without
exercising the GMIB - 6% Rising Floor.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY AT GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $179,085 (6% Rising Floor) $ 872.14 $ 850.65 $ 691.27
15 240,000 (Contract Value) 1,346.40 1,286.40 1,034.40
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the guaranteed annuity rates stated in Table B of the contract.
The fixed annuity payout available under the standard provisions of this
contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $ 520.38
15 240,000 1,416.00 1,351.20 1,096.80
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract. When the
GMIB - 6% Rising Floor payout is less than the payout available under the
standard provisions of the contract, you will receive the higher standard
payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the tenth rider anniversary (see below). This
is an optional benefit you may select for an additional charge (see "Charges").
The PCR does not provide any additional benefit before the tenth rider
anniversary and it may not be appropriate for issue ages 75 or older
--------------------------------------------------------------------------------
48 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
due to this required holding period. Be sure to discuss with your investment
professional whether or not the PCR is appropriate for your situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot add the PCR if you select either GMIB rider
option.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments and purchase
payment credits.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource Variable Portfolio - Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
and purchase payment credits minus the target value adjusted partial withdrawals
accumulated at an annual effective rate of 7.2%. Every rider anniversary after
that, we recalculate the target value by accumulating the prior anniversary's
target value and any additional purchase payments and purchase payment credits
minus the target value adjusted partial withdrawals at an annual effective rate
of 7.2%.
PW X TV
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = --------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXERCISING THE PCR: We will inform you if your contract value did not meet or
exceed the target value after your tenth rider anniversary. If your contract
value is less than the target value on the tenth rider anniversary you can
choose either of the following benefits:
OPTION A) You may choose to accept a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount
of any partial withdrawal attributable to purchase payments received
five or more years before the target value is calculated (on the tenth
year rider anniversary). For a more detailed description of the PCR
adjusted partial withdrawal please see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five
years.
We apply the PCR credit to your contract on the tenth rider
anniversary and allocate it among the GPAs, the one-year fixed account
and subaccounts according to your current asset allocation.
OPTION B) You may choose to begin receiving annuity payouts (only with lifetime
income plans; you may not choose Annuity Payout Plan E) within 60 days
of the tenth rider anniversary and receive an additional 5% PCR credit
(for a total PCR credit of 10%) as calculated in (a).
We will assume that you elected PCR Option A unless we receive your request to
begin a lifetime annuity payout plan within 60 days after the tenth rider
anniversary.
If you select PCR Option A, we will restart the ten-year calculation period for
the PCR on the tenth rider anniversary and every ten years after that while you
own the contract. We use the contract value (including any credits) on that
anniversary as your first contract year's payments for calculating the target
value and any applicable PCR credit. We may then apply additional PCR credits to
your contract at the end of each ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments and credits for the calculating the target value and any
applicable PCR credit. If you select PCR Option A, the next
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 49
ten-year calculation period for the PCR will restart at the end of this new ten-
year period. We must receive your request to restart the PCR calculation period
within 30 days after a contract anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first rider
anniversary.
You may terminate the PCR within 30 days following the later of the tenth
rider anniversary or the last rider reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract,
- that a death benefit is payable, or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $1,000
purchase payment credit to the contract
There are no additional purchase payments and no partial withdrawals
On the tenth contract anniversary, the contract value is $200,000
We determine the target value on the tenth contract anniversary as our
purchase payments and credits accumulated at an annual effective rate of 7.2%
= $101,000 x (1.072)(10) = $101,000 x 2.00423 = $202,427.
Your contract value ($200,000) is less than the target value ($202,427).
Assuming you select PCR Option A, we add a PCR credit to your contract
calculated as follows:
5% x (PP - PCRPW - PP5) = 0.05 x ($101,000 - 0 - 0) = $5,050.
After application of the PCR credit, your total contract value would be
$205,050.
During the eleventh contract year, the contract value grows to $210,000 and
you choose to begin receiving annuity payouts under a lifetime income plan. We
would now add another PCR credit to your contract. Because you have not made
any additional purchase payments or partial withdrawals the amount of this new
credit is the same as the PCR credit we added to your contract on the tenth
contract anniversary ($5,050). After adding this new PCR credit to your
contract, your total contract value would be $215,050 and we would use this
amount to determine your monthly annuity payout amount.
If you had elected not to receive annuity payouts, the PCR ten-year
calculation period would restart on the tenth contract anniversary with the
target values first year's payments equal to $205,050. We would make the next
PCR credit determination on the twentieth contract anniversary.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
Benefit Protector is not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary, plus:
the applicable death benefit,
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
--------------------------------------------------------------------------------
50 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV death benefit equals the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charges. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether, we will
withdraw $50,000 and pay you $47,235. We calculate purchase payments not
previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of
the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
-------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 51
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Benefit Protector Plus is
not available with the EDB.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum
distributions. Be sure to discuss with your investment professional and tax
advisor whether or not the Benefit Protector Plus is appropriate for your
situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
52 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death"), plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $1,000 purchase payment credit to your contract.
You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, less any
purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000
of the partial withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 53
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit paid during the third contract year.
The reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract value
is now $250,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
--------------------------------------------------------------------------------
54 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 55
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
--------------------------------------------------------------------------------
56 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 57
the exchange and subsequent withdrawal. As a result, there may be unexpected tax
consequences. You should consult your tax advisor before taking any withdrawal
from either contract during the 180-day period following a partial exchange.
Different IRS limitations on withdrawals apply to partial exchanges completed
prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
--------------------------------------------------------------------------------
58 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 59
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.00% as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
--------------------------------------------------------------------------------
60 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K,
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 61
quarterly reports on Form 10-Q and current reports on Form 8-K filed with the
SEC under the 1934 Act. To access this document, see "SEC Filings" under
"Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
62 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE:
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question minus the RPA adjusted partial withdrawals
for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and purchase payment credits as there are
no previous withdrawals to subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
CV = the contract value on the date of (but prior to) the partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP TWO:
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and purchase payment credits made prior to the
partial withdrawal in question AND prior to the five year exclusion period
minus EPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and purchase payment credits made before
the five year exclusion period as there are no previous withdrawals to
subtract. Also note that EPA/RPA will always be less than or equal to one.
EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = PW X EPA X ----
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
CV = the contract value on the date of (but prior to) the partial withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP THREE:
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include purchase payment credits.
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 63
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT DURATION IN
YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
-----------------------------------------------------------------------------------------------------------
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on
the third contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000 -
partial withdrawal minus the RPA $120,000 = $8,333
adjusted partial withdrawals for
all previous partial withdrawals
= $100,000 - 0 = $100,000
For the second partial withdrawal on
the eighth contract anniversary:
RPA before the partial withdrawal RPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $191,667
partial withdrawal minus the RPA -------------------- = $8,156
adjusted partial withdrawals for $235,000
all previous partial withdrawals
= $200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal on
the third contract anniversary
EPA before the partial withdrawal EPA adjusted partial withdrawal =
= total purchase
payments made prior to the $10,000 x $100,000 $100,000
partial withdrawal AND the five- ------------------ x -------- = $8,333
year exclusion period minus the $120,000 $100,000
EPA adjusted partial withdrawals
for all previous partial
withdrawals = $100,000 - 0 =
$100,000
For the second partial withdrawal on
the eighth contract anniversary:
EPA before the partial withdrawal EPA adjusted partial withdrawal =
=
total purchase payments made $10,000 x $91,667 $91,667
prior to the partial withdrawal ------------------ x -------- = $1,866
AND the five-year exclusion $235,000 $191,667
period minus the EPA adjusted
partial withdrawals for all
previous partial withdrawals =
$100,000 - $8,333 = $91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 = $10,199
--------------------------------------------------------------------------------
64 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.11 $1.01 $0.82 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 $1.01 $0.82 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 6 5 17 32 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30 $0.51
Accumulation unit value at end of period $0.40 $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30
Number of accumulation units outstanding at end
of period (000 omitted) 89 80 126 156 276 482 552 588 655 372
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74 $0.97
Accumulation unit value at end of period $1.09 $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 295 416 688 1,006 1,348 1,482 1,471 1,573 1,510 1,341
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45 $0.65
Accumulation unit value at end of period $0.62 $0.65 $0.60 $0.44 $0.74 $0.66 $0.67 $0.59 $0.55 $0.45
Number of accumulation units outstanding at end
of period (000 omitted) 128 210 363 517 863 934 882 881 893 1,003
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit value at end of period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 341 576 492 720 1,135 646 695 691 813 697
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04 $1.00
Accumulation unit value at end of period $1.44 $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 317 645 713 743 1,355 1,120 1,133 1,115 572 63
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78 $1.00
Accumulation unit value at end of period $1.48 $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 130 223 356 367 455 367 326 294 140 26
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit value at beginning of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 126 203 307 325 354 377 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81 $1.00
Accumulation unit value at end of period $1.05 $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 6 6 7 24 30 33 24 28 24 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61 $0.80
Accumulation unit value at end of period $0.93 $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61
Number of accumulation units outstanding at end
of period (000 omitted) 291 404 521 683 746 811 799 771 748 360
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17 $1.11
Accumulation unit value at end of period $1.30 $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 158 313 373 561 759 861 873 916 849 645
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86 $1.00
Accumulation unit value at end of period $1.57 $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86
Number of accumulation units outstanding at end
of period (000 omitted) 447 873 1,505 1,719 1,897 2,032 2,013 1,844 1,212 209
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 65
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75 $1.00
Accumulation unit value at end of period $1.11 $1.12 $0.91 $0.72 $1.38 $1.10 $1.05 $1.00 $0.98 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 37 48 79 113 149 130 135 139 127 18
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85 $1.00
Accumulation unit value at end of period $1.98 $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 212 350 628 721 821 841 769 737 543 94
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75 $1.00
Accumulation unit value at end of period $1.21 $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 62 122 147 189 159 108 64 53 23
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.39 $1.16 $0.98 $1.72 $2.20 $1.84 $1.64 $1.26 $0.93 $1.00
Accumulation unit value at end of period $1.30 $1.39 $1.16 $0.98 $1.72 $2.20 $1.84 $1.64 $1.26 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 44 76 95 90 106 130 125 99 68 14
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80 $1.00
Accumulation unit value at end of period $1.58 $1.66 $1.31 $1.02 $1.54 $1.60 $1.38 $1.28 $1.05 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 88 114 219 285 324 313 315 231 169 24
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53 $0.75
Accumulation unit value at end of period $0.95 $1.00 $0.79 $0.56 $0.98 $0.89 $0.83 $0.80 $0.72 $0.53
Number of accumulation units outstanding at end
of period (000 omitted) 124 284 441 623 769 877 916 978 712 656
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01 $1.16
Accumulation unit value at end of period $1.54 $1.57 $1.43 $1.14 $1.84 $1.79 $1.53 $1.40 $1.25 $1.01
Number of accumulation units outstanding at end
of period (000 omitted) 716 1,184 1,983 2,405 3,218 3,435 3,555 3,640 2,566 753
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (05/30/2000)
Accumulation unit value at beginning of period $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68 $0.85
Accumulation unit value at end of period $1.20 $1.35 $1.26 $0.93 $1.57 $1.38 $1.14 $1.05 $0.89 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 170 251 583 835 1,046 1,146 1,113 1,058 734 513
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/21/2002)
Accumulation unit value at beginning of period $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 42 72 64 58 59 56 51 62 30
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.09 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 2 9 30 19 24 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76 $1.00
Accumulation unit value at end of period $0.91 $0.95 $0.90 $0.61 $1.29 $1.28 $1.15 $1.10 $1.00 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 297 468 748 743 806 813 843 909 623 113
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50 $0.71
Accumulation unit value at end of period $0.76 $0.76 $0.68 $0.50 $0.80 $0.72 $0.68 $0.66 $0.61 $0.50
Number of accumulation units outstanding at end
of period (000 omitted) 65 128 327 449 370 419 500 482 515 421
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64 $0.95
Accumulation unit value at end of period $1.20 $1.36 $1.01 $0.63 $1.05 $1.03 $0.92 $0.89 $0.84 $0.64
Number of accumulation units outstanding at end
of period (000 omitted) 54 137 197 204 314 454 474 495 388 165
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04 $1.10
Accumulation unit value at end of period $1.48 $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 662 1,080 1,849 2,581 3,209 3,243 3,188 2,934 2,457 1,585
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
66 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/21/2002)
Accumulation unit value at beginning of period $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87 $1.00
Accumulation unit value at end of period $2.74 $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 18 23 33 60 136 124 98 53 40 --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78 $1.00
Accumulation unit value at end of period $1.08 $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 64 217 274 315 318 339 399 377 130 9
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.49 $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 57 110 210 287 384 376 391 303 154 25
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04 $1.00
Accumulation unit value at end of period $1.69 $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 365 704 1,221 1,572 1,717 1,600 1,586 1,442 995 38
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER HIGH INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $0.41 $0.36 $0.29 $1.36 $1.38 $1.28 $1.27 $1.18 $0.96 $1.00
Accumulation unit value at end of period $0.39 $0.41 $0.36 $0.29 $1.36 $1.38 $1.28 $1.27 $1.18 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 86 280 539 351 422 402 397 349 301 18
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79 $1.00
Accumulation unit value at end of period $1.58 $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 76 117 205 221 249 248 220 170 121 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (05/30/2000)
Accumulation unit value at beginning of period $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79 $0.99
Accumulation unit value at end of period $1.02 $1.08 $0.96 $0.74 $1.22 $1.32 $1.15 $1.10 $1.00 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 88 163 212 278 376 343 383 455 530 379
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80 $1.00
Accumulation unit value at end of period $1.08 $1.31 $1.20 $0.97 $1.76 $1.64 $1.29 $1.17 $1.01 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 117 210 300 325 392 419 350 360 178 33
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 15 21 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND - CLASS IB SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.13 $0.98 $0.74 $1.22 $1.22 $1.11 $1.07 $1.00 $0.81 $1.00
Accumulation unit value at end of period $1.09 $1.13 $0.98 $0.74 $1.22 $1.22 $1.11 $1.07 $1.00 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 3 3 3 3 3 3 3 6 4 1
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.60 $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 35 45 62 68 80 78 77 86 54 21
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.09 $1.00 $0.82 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.03 $1.09 $1.00 $0.82 -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40 $1.00
Accumulation unit value at end of period $1.25 $1.67 $1.43 $0.95 $1.85 $1.57 $1.47 $1.45 $1.40
Number of accumulation units outstanding at end
of period (000 omitted) 3 12 12 37 64 80 86 87 9
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32 $1.00
Accumulation unit value at end of period $1.39 $1.33 $1.20 $1.02 $1.75 $1.70 $1.48 $1.44 $1.32
Number of accumulation units outstanding at end
of period (000 omitted) 18 24 33 28 31 31 31 30 47
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 67
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (01/29/2003)
Accumulation unit value at beginning of period $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24 $1.00
Accumulation unit value at end of period $1.32 $1.39 $1.29 $0.96 $1.62 $1.45 $1.49 $1.32 $1.24
Number of accumulation units outstanding at end
of period (000 omitted) -- -- 12 12 41 19 19 20 3
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.02 $1.04 $1.04 $1.01 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end
of period (000 omitted) 298 303 1,258 372 137 91 70 179 55
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.11 $1.07 $1.05 $1.05 $1.02
Number of accumulation units outstanding at end
of period (000 omitted) 167 264 3,966 3,519 3,241 547 165 169 63
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44 $1.00
Accumulation unit value at end of period $1.81 $1.94 $1.69 $1.35 $2.32 $2.18 $1.86 $1.67 $1.44
Number of accumulation units outstanding at end
of period (000 omitted) 465 559 2,165 1,880 1,267 1,033 512 31 9
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 $1.00 --
Accumulation unit value at end of period $1.03 $1.00 $0.87 $0.71 $1.25 $1.24 $1.10 $1.05 --
Number of accumulation units outstanding at end
of period (000 omitted) 589 890 1,020 1,054 1,103 1,183 1,307 818 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.83 $1.52 $1.50 $1.38 $1.29 $1.22 $1.00
Accumulation unit value at end of period $1.22 $1.29 $1.12 $0.83 $1.52 $1.50 $1.38 $1.29 $1.22
Number of accumulation units outstanding at end
of period (000 omitted) 2 4 4 60 42 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.43 $1.27 $1.02 $1.66 $1.61 $1.42 $1.39 $1.28 $1.00
Accumulation unit value at end of period $1.42 $1.43 $1.27 $1.02 $1.66 $1.61 $1.42 $1.39 $1.28
Number of accumulation units outstanding at end
of period (000 omitted) 10 11 17 26 26 38 48 30 22
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99 $1.00
Accumulation unit value at end of period $1.03 $1.04 $1.02 $0.99 $1.03 $1.00 $0.98 $0.98 $0.99
Number of accumulation units outstanding at end
of period (000 omitted) 264 356 1,118 628 589 641 492 399 234
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30 $1.00
Accumulation unit value at end of period $1.73 $1.82 $1.58 $1.19 $2.11 $1.84 $1.68 $1.47 $1.30
Number of accumulation units outstanding at end
of period (000 omitted) 909 1,171 1,641 2,452 2,368 2,760 1,602 814 205
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34 $1.00
Accumulation unit value at end of period $1.41 $1.44 $1.18 $0.94 $1.82 $1.47 $1.40 $1.35 $1.34
Number of accumulation units outstanding at end
of period (000 omitted) 16 18 26 27 27 13 21 7 5
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38 $1.00
Accumulation unit value at end of period $2.20 $2.51 $1.99 $1.45 $2.45 $2.16 $1.96 $1.69 $1.38
Number of accumulation units outstanding at end
of period (000 omitted) 170 239 607 861 608 488 330 213 143
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.90 $1.71 $1.38 $2.51 $2.18 $1.89 $1.62 $1.46 $1.00
Accumulation unit value at end of period $1.54 $1.90 $1.71 $1.38 $2.51 $2.18 $1.89 $1.62 $1.46
Number of accumulation units outstanding at end
of period (000 omitted) 222 253 305 341 344 445 418 246 5
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.41 $1.19 $1.02 $1.80 $2.31 $1.96 $1.76 $1.36 $1.00
Accumulation unit value at end of period $1.31 $1.41 $1.19 $1.02 $1.80 $2.31 $1.96 $1.76 $1.36
Number of accumulation units outstanding at end
of period (000 omitted) 74 92 116 121 110 104 114 78 --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37 $1.00
Accumulation unit value at end of period $1.93 $2.05 $1.63 $1.28 $1.95 $2.04 $1.77 $1.66 $1.37
Number of accumulation units outstanding at end
of period (000 omitted) 31 64 75 87 91 94 88 85 50
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.79 $1.43 $1.02 $1.80 $1.65 $1.55 $1.50 $1.37 $1.00
Accumulation unit value at end of period $1.68 $1.79 $1.43 $1.02 $1.80 $1.65 $1.55 $1.50 $1.37
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- 7 -- 5
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
68 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25 $1.00
Accumulation unit value at end of period $1.44 $1.48 $1.36 $1.10 $1.77 $1.75 $1.50 $1.38 $1.25
Number of accumulation units outstanding at end
of period (000 omitted) 131 188 279 398 502 611 526 516 349
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (01/29/2003)
Accumulation unit value at beginning of period $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34 $1.00
Accumulation unit value at end of period $1.67 $1.90 $1.79 $1.33 $2.27 $2.00 $1.68 $1.55 $1.34
Number of accumulation units outstanding at end
of period (000 omitted) 54 91 111 158 194 186 154 105 44
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (01/29/2003)
Accumulation unit value at beginning of period $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35 $1.00
Accumulation unit value at end of period $1.56 $1.71 $1.47 $1.06 $2.03 $1.88 $1.64 $1.53 $1.35
Number of accumulation units outstanding at end
of period (000 omitted) 2 14 22 22 32 32 32 33 1
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.05 $0.98 $0.78 $1.14 $1.08 $1.00 -- -- --
Accumulation unit value at end of period $1.03 $1.05 $0.98 $0.78 $1.14 $1.08 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35 $1.00
Accumulation unit value at end of period $1.14 $1.20 $1.14 $0.79 $1.67 $1.68 $1.52 $1.46 $1.35
Number of accumulation units outstanding at end
of period (000 omitted) 75 113 132 148 151 164 179 110 27
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $1.43 $1.30 $0.95 $1.54 $1.41 $1.34 $1.31 $1.22 $1.00
Accumulation unit value at end of period $1.41 $1.43 $1.30 $0.95 $1.54 $1.41 $1.34 $1.31 $1.22
Number of accumulation units outstanding at end
of period (000 omitted) -- 2 2 2 2 2 2 2 2
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33 $1.00
Accumulation unit value at end of period $1.78 $2.02 $1.51 $0.95 $1.60 $1.59 $1.43 $1.39 $1.33
Number of accumulation units outstanding at end
of period (000 omitted) 2 3 18 22 24 24 22 21 --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17 $1.00
Accumulation unit value at end of period $1.35 $1.36 $1.26 $1.09 $1.43 $1.40 $1.28 $1.27 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 192 316 370 439 545 531 435 401 240
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (01/29/2003)
Accumulation unit value at beginning of period $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30 $1.00
Accumulation unit value at end of period $2.83 $2.71 $2.43 $1.87 $3.06 $2.44 $1.90 $1.66 $1.30
Number of accumulation units outstanding at end
of period (000 omitted) 7 13 13 30 73 89 94 97 12
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31 $1.00
Accumulation unit value at end of period $1.30 $1.34 $1.25 $0.89 $1.66 $1.49 $1.41 $1.37 $1.31
Number of accumulation units outstanding at end
of period (000 omitted) 232 257 266 283 299 314 284 126 59
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46 $1.00
Accumulation unit value at end of period $1.87 $2.08 $1.83 $1.34 $2.28 $2.19 $1.90 $1.70 $1.46
Number of accumulation units outstanding at end
of period (000 omitted) 9 33 38 38 41 42 15 12 4
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.41 $1.42 $1.26 $1.09 $1.30 $1.20 $1.14 $1.14 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) 681 912 3,444 3,043 3,205 2,256 1,716 851 141
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER HIGH INCOME FUND/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $0.36 $0.32 $0.26 $1.24 $1.27 $1.19 $1.19 $1.11 $1.00
Accumulation unit value at end of period $0.35 $0.36 $0.32 $0.26 $1.24 $1.27 $1.19 $1.19 $1.11
Number of accumulation units outstanding at end
of period (000 omitted) 4 5 26 47 51 51 52 51 21
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44 $1.00
Accumulation unit value at end of period $1.87 $1.95 $1.61 $1.20 $1.97 $2.04 $1.81 $1.68 $1.44
Number of accumulation units outstanding at end
of period (000 omitted) 21 22 32 35 40 30 40 33 29
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 69
VARIABLE ACCOUNT CHARGES OF 1.85% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29 $1.00
Accumulation unit value at end of period $1.23 $1.31 $1.17 $0.92 $1.52 $1.65 $1.45 $1.40 $1.29
Number of accumulation units outstanding at end
of period (000 omitted) 2 2 2 2 7 7 2 2 --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34 $1.00
Accumulation unit value at end of period $1.33 $1.64 $1.52 $1.24 $2.25 $2.12 $1.69 $1.53 $1.34
Number of accumulation units outstanding at end
of period (000 omitted) 20 29 33 44 47 53 51 54 41
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 2 -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT RESEARCH FUND - CLASS IB SHARES (01/29/2003)
Accumulation unit value at beginning of period $1.34 $1.17 $0.90 $1.48 $1.50 $1.38 $1.33 $1.26 $1.00
Accumulation unit value at end of period $1.29 $1.34 $1.17 $0.90 $1.48 $1.50 $1.38 $1.33 $1.26
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of period $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40 $1.00
Accumulation unit value at end of period $1.94 $2.07 $1.69 $1.26 $1.88 $2.02 $1.71 $1.64 $1.40
Number of accumulation units outstanding at end
of period (000 omitted) 330 415 510 605 687 648 720 337 3
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
70 RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC VARIABLE ANNUITY -- PROSPECTUS 71
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45281 R (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
FLEXCHOICE VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION
FIXED/VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing in
RiverSource FlexChoice Variable Annuity Contract Option L and Contract Option C.
The information in this prospectus applies to both contracts unless stated
otherwise.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM)
Putnam Variable Trust - Class IB Shares
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE ONE-YEAR FIXED ACCOUNT................... 18
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 20
VALUING YOUR INVESTMENT...................... 23
MAKING THE MOST OF YOUR CONTRACT............. 24
WITHDRAWALS.................................. 30
TSA -- SPECIAL PROVISIONS.................... 30
CHANGING OWNERSHIP........................... 31
BENEFITS IN CASE OF DEATH.................... 31
OPTIONAL BENEFITS............................ 35
THE ANNUITY PAYOUT PERIOD.................... 44
TAXES........................................ 46
VOTING RIGHTS................................ 49
SUBSTITUTION OF INVESTMENTS.................. 50
ABOUT THE SERVICE PROVIDERS.................. 50
ADDITIONAL INFORMATION....................... 51
APPENDIX: CONDENSED
FINANCIAL INFORMATION (UNAUDITED).......... 53
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 57
--------------------------------------------------------------------------------
2 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Contract Option L offers a four year
withdrawal charge schedule and investment options in the GPAs, one-year fixed
account and/or the subaccounts. Contract Option C eliminates the withdrawal
charge schedule in exchange for a higher mortality and expense risk fee and
allows investment in the subaccounts only. Your investment professional can help
you determine which contract is best suited to your needs based on factors such
as your investment goals and how long you intend to invest.
PURPOSE: The purpose of these contracts is to allow you to accumulate money for
retirement or similar long-term goal. You do this by making one or more purchase
payments. For contract Option L, you may allocate your purchase payments to the
GPAs, one-year fixed account and/or subaccounts. For contract Option C, you may
allocate purchase payments to the subaccounts. For both contract Option L and
contract Option C, you risk losing amounts you invest in the subaccounts of the
variable account. These accounts, in turn, may earn returns that increase the
value of a contract. If the contract value goes to zero due to underlying fund's
performance or deduction of fees, the contract will no longer be in force and
the contract (including any death benefit riders) will terminate. Beginning at a
specified time in the future called the retirement date, these contracts provide
lifetime or other forms of payouts of your contract value (less any applicable
premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year
fixed account and/or the subaccounts, depending on the contract option you
select.
If you select contract Option L, you may allocate your purchase payments among
any or all of:
the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (see "The Variable Account and the Funds")
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
If you select contract Option C and your application is signed on or after May
1, 2003, you may allocate purchase payments to the subaccounts only. For
applications dated prior to May 1, 2003, investment in the GPAs and one-year
fixed account is not restricted in most states.
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Some states have
time limitations for making additional payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to limit transfers to the
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 5
GPAs and the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: These contracts offer optional features that are available
for additional charges if you meet certain criteria. (see "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(contingent deferred sales charge as a percentage of the amount withdrawn)
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose either contract Option L or Option C and the death benefit
guarantee provided. The combination you choose determines the fees you pay. The
table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES
Return of Purchase Payment (ROP) death 1.25% 1.40%
benefit 0.15%
Maximum Anniversary Value (MAV) death 1.35 1.50
benefit 0.15
Enhanced Death Benefit (EDB) 0.15 1.55 1.70
IF YOU SELECT CONTRACT OPTION C AND:
ROP death benefit 0.15 1.35 1.50
MAV death benefit 0.15 1.45 1.60
EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
** For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB -- 0.30%.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.60% 1.23%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Balanced Fund (Class 3) 0.64% 0.13% 0.16% --% 0.93%(1)
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Balanced Portfolio Service Class 2 0.41 0.25 0.13 0.02 0.81
Fidelity(R) VIP Growth & Income Portfolio Service Class 2 0.46 0.25 0.13 -- 0.84
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco V.I. Core Equity Fund, Series II Shares 0.61 0.25 0.28 -- 1.14
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(2)
Shares
MFS(R) Investors Trust Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(3)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT Income Fund - Class IB Shares 0.40 0.25 0.18 -- 0.83
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until
--------------------------------------------------------------------------------
8 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
April 30, 2013, unless sooner terminated at the sole discretion of the
Fund's Board of Trustees. Under this agreement, the Fund's net operating
expenses, subject to applicable exclusions, will not exceed the annual rate
of 0.79% for Columbia Variable Portfolio - Balanced Fund (Class 3), 0.585%
for Columbia Variable Portfolio - Cash Management Fund (Class 3), 0.845%
for Columbia Variable Portfolio - High Yield Bond Fund (Class 3) and 1.055%
for Columbia Variable Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(3) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with EDB $1,221 $1,978 $2,133 $4,436 $414 $1,260 $2,133 $4,436
Contract Option C
with EDB 424 1,290 2,182 4,526 424 1,290 2,182 4,526
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with ROP death
benefit $1,065 $1,506 $1,279 $2,705 $245 $751 $1,279 $2,705
Contract Option C
with ROP death
benefit 255 782 1,330 2,809 255 782 1,330 2,809
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 11
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
12 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Balanced through a combination of capital Investment Advisers, LLC
Fund (Class 3) growth and current income.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity and Investment Advisers, LLC
Management Fund (Class stability of principal.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income Columbia Management
Portfolio - Diversifi- while attempting to conserve the value Investment Advisers, LLC
ed Bond Fund (Class 3) of the investment for the longest
period of time.
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income Columbia Management
Portfolio - Diversifi- and, as a secondary goal, steady Investment Advisers, LLC
ed Equity Income Fund growth of capital.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with Columbia Management
Portfolio - High Yield capital growth as a secondary Investment Advisers, LLC
Bond Fund (Class 3) objective.
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Select Investment Advisers, LLC
Smaller-Cap Value Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund (Class government agency securities.
3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks income and capital growth Fidelity Management &
Balanced Portfolio consistent with reasonable risk. Research Company (FMR)
Service Class 2 Invests approximately 60% of assets in is the fund's manager.
stocks and other equity securities and Fidelity Investments
the remainder in bonds and other debt Money Management, Inc.
securities, including lower-quality (FIMM), FMR Co., Inc.
debt securities, when its outlook is (FMRC), and other
neutral. Invests at least 25% of total investment advisers
assets in fixed-income senior serve as sub-advisers
securities (including debt securities for the fund.
and preferred stock). The fund invests
in domestic and foreign issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Growth Seeks high total return through a Fidelity Management &
& Income Portfolio combination of current income and Research Company (FMR)
Service Class 2 capital appreciation. Normally invests is the fund's manager.
a majority of assets in common stocks FMR Co., Inc. (FMRC) and
with a focus on those that pay current other investment
dividends and show potential for advisers serve as sub-
capital appreciation. Invests in advisers for the fund.
domestic and foreign issuers. The Fund
invests in either "growth" stocks or
"value" stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Growth Seeks to achieve capital appreciation. Fidelity Management &
Portfolio Service Normally invests primarily in common Research Company (FMR)
Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies other investment
are often called "growth" stocks). The advisers serve as sub-
Fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Seeks long-term growth of capital. Fidelity Management &
Cap Portfolio Service Normally invests primarily in common Research Company (FMR)
Class 2 stocks. Normally invests at least 80% is the fund's manager.
of assets in securities of companies FMR Co., Inc. (FMRC) and
with medium market capitalizations. other investment
May invest in companies with smaller advisers serve as sub-
or larger market capitalizations. advisers for the fund.
Invests in domestic and foreign
issuers. The Fund invests in either
"growth" or "value" common stocks or
both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Small Seeks long-term total return. The fund Franklin Advisory
Cap Value Securities normally invests at least 80% of its Services, LLC
Fund - Class 2 net assets in investments of small
capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Small- Seeks long-term capital growth. The Franklin Advisers, Inc.
Mid Cap Growth fund normally invests at least 80% of
Securities its net assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Shares Seeks capital appreciation, with Franklin Mutual
Securities income as a secondary goal. The fund Advisers, LLC
Fund - Class 2 normally invests primarily in U.S. and
foreign equity securities that the
manager believes are undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The Templeton Investment
Foreign Securities fund normally invests at least 80% of Counsel, LLC
Fund - Class 2 its net assets in investments of
issuers located outside the U.S.,
including those in emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund, Series II
Shares
----------------------------------------------------------------------------------------
Invesco Van Kampen Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund, Series
II Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Trust Seeks capital appreciation. MFS(R) Investment
Series - Service Class Management
----------------------------------------------------------------------------------------
MFS(R) New Discovery Seeks capital appreciation. MFS(R) Investment
Series - Service Class Management
----------------------------------------------------------------------------------------
MFS(R) Total Return Seeks total return. MFS(R) Investment
Series - Service Class Management
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Class Management
----------------------------------------------------------------------------------------
Putnam VT Growth and Seeks capital growth and current Putnam Investment
Income Fund - Class IB income. Management, LLC
Shares
----------------------------------------------------------------------------------------
Putnam VT Income Seeks high current income consistent Putnam Investment
Fund - Class IB Shares with what Putnam Investment Management, LLC
Management, LLC (Putnam Management)
believes to be prudent risk.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Equity Management, LLC,
Fund - Class IB Shares adviser; Putnam Advisory
Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi-Cap Seeks long-term capital appreciation. Putnam Investment
Growth Fund - Class IB Management, LLC
Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 15
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
Investment in the GPAs is not available under contract Option C(1).
The GPAs may not be available in some states.
(1) For applications dated May 1, 2003 or after, investment in the GPAs for
contract Option C is not allowed in most states. For applications dated
prior to May 1, 2003, investment in the GPAs is not restricted in most
states. Please check with your investment professional to determine which
applies in your state.
For contract Option L, you may allocate purchase payments to one or more of the
GPAs with guarantee periods declared by us. The minimum required investment in
each GPA is $1,000. There are restrictions on the amount you can allocate to
these accounts as well as on transfers from these accounts (see "Buying Your
Contract" and "Transfer policies"). These accounts are not available in all
states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
16 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- )(N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 17
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.")
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge schedule under contract
Option L), unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep Strategy.
THE ONE-YEAR FIXED ACCOUNT
Investment in the one-year fixed account is not available under contract Option
C(1).
For contract Option L, you may allocate purchase payments and transfer
accumulated value to the one-year fixed account. Some states may restrict the
amount you can allocate to this account. We back the principal and interest
guarantees relating to the one-year fixed account. These guarantees are based on
the continued claims-paying ability of the company's general account. You should
be aware that our general account is exposed to the risks normally associated
with a portfolio of fixed-income securities, including interest rate, option,
liquidity and credit risk. The financial statements contained in the SAI include
a further discussion of the risks inherent within the investments of the general
account. The value of the one-year fixed account increases as we credit interest
to the account. Purchase payments and transfers to the one-year fixed account
become part of our general account. We credit and compound interest daily based
on a 365-day year (366 in a leap year) so as to produce the annual effective
rate which we declare. The interest rate we apply to each purchase payment and
transfer to the one-year fixed account is guaranteed for one year. Thereafter we
will change the rates from time-to-time at our discretion. These rates will be
based on various factors including, but not limited to, the interest rate
environment, returns earned on investments backing these annuities, the rates
currently in effect for new and existing RiverSource Life annuities, product
design, competition, and RiverSource Life's revenues and expenses. The
guaranteed minimum interest rate offered may vary by state but will not be lower
than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
(1) For applications dated May 1, 2003 or after, investment in the one-year
fixed account for contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the one-year fixed
account is not restricted in most states. Please check with your investment
professional to determine which applies in your state.
--------------------------------------------------------------------------------
18 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
BUYING YOUR CONTRACT
New contracts are not currently being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
contract Option L or Option C;
a death benefit option(1);
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(4);
how you want to make purchase payments; and
a beneficiary.
(1) If you and the annuitant are 79 or younger at contract issue, you may select
from either the ROP death benefit, MAV death benefit or EDB. If you or the
annuitant are 80 or older at contract issue, the ROP death benefit will
apply. EDB may not be available in all states.
(2) Not available with the EDB. May not be available in all states.
(3) Available at the time you purchase your contract if the annuitant is 75 or
younger at contract issue and you also select the EDB. May not be available
in all states.
(4) For applications dated May 1, 2003 or after. Restriction of investment in
the GPAs and one-year fixed account under contract Option C has been filed
in the various states in which the contract is offered. Please check with
your investment professional to determine whether this restriction applies
to your state. Some states restrict the amount you can allocate to the GPAs
and the one-year fixed account. GPAs are not available under contracts
issued in Maryland, Oregon, Pennsylvania or Washington and may not be
available in other states.
The Contract Option L provides for allocation of purchase payments to the
subaccounts of the variable account, to the GPAs and/or to the one-year fixed
account in even 1% increments subject to the $1,000 minimum required investment
for the GPAs. For contracts with applications signed on or after June 16, 2003,
the amount of any purchase payment allocated to the GPAs and the one-year fixed
account in total cannot exceed 30% of the purchase payment. More than 30% of a
purchase payment may be so allocated if you establish a dollar cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect, or you are participating according to the rules of an asset
allocation model portfolio program available under the contract, if any.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
administrative office. We will credit additional purchase payments you make to
your accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment. If we receive an additional purchase payment at our corporate office at
or after the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the next valuation date after we received the payment.
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 19
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or on such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from your contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP: $50 for additional payments.
If paying by any other method: $100 for additional payments.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85.
$100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary, or earlier if the contract
is withdrawn. We prorate this charge among the subaccounts, the GPAs and the
one-year
--------------------------------------------------------------------------------
20 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
fixed account in the same proportion your interest in each account bears to your
total contract value. Some states limit the amount of any contract charge
allocated to the GPAs and one-year fixed account.
We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees. These fees are based on the contract you
select (either Option L or Option C) and the death benefit that applies to your
contract:
CONTRACT OPTION L CONTRACT OPTION C
ROP death benefit 1.25% 1.35%
MAV death benefit 1.35 1.45
EDB 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
If you select contract Option L and you withdraw all or part of your contract,
you may be subject to a withdrawal charge. A withdrawal charge applies if you
make a withdrawal in the first four contract years. You may withdraw amounts
totaling up to 10% of your prior anniversary's contract value free of charge
during the first four years of your contract. (We consider your initial purchase
payment to be the prior anniversary's contract value during the first contract
year.) We do not assess a withdrawal charge on this amount. The withdrawal
charge percentages that apply to you are shown below and are stated in your
contract. In addition, amounts withdrawn from a GPA more than 30 days before the
end of the applicable Guarantee Period are generally subject to a MVA. (See "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 21
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal
charge of 7%. The total amount we actually deduct from your contract is
$1,075.27. We determine this amount as follows:
AMOUNT REQUESTED $1,000
------------------------ OR ------ = $1,075.27
1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is
$75.27. We pay you the $1,000 you requested. If you make a full withdrawal of
your contract, we also will deduct the applicable contract administrative
charge.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
--------------------------------------------------------------------------------
22 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE*
We deduct a charge (currently 0.70%) based on the GMIB benefit base for this
optional feature only if you select it. If selected, we deduct the charge from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB charge among the subaccounts, the GPAs and the one-
year fixed account in the same proportion your interest in each account bears to
your total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB charge from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB charge after
the rider effective date and it does not apply after annuity payouts begin.
* For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - 0.30%.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider;
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 23
accumulation unit can rise or fall daily depending on the variable account
expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may
change in two ways -- in number and in value. The number of accumulation units
you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following benefits you have selected:
- Benefit Protector rider;
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
24 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY
If you select contract Option L and your net contract value(1) is at least
$10,000, you can choose to participate in the Special DCA program. There is no
charge for the Special DCA program. Under the Special DCA program, you can
allocate a new purchase payment to a six-month or twelve-month Special DCA
account.
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
You may only allocate a new purchase payment of at least $1,000 to a Special DCA
account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, one-year fixed account and/or subaccount you select over
the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Special
DCA account at the beginning of the six or twelve-month period. Therefore, you
may receive less total interest than you would have if all your purchase
payments were in the Special DCA account from the beginning. If we receive any
of your multiple payments after the six or twelve-month period ends, you can
either allocate those payments to a new Special DCA account (if available) or to
any other accounts available under your contract.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 25
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Special DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if
--------------------------------------------------------------------------------
26 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
the interest rate we are then currently crediting to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
For Contract Option L, it is our general policy to allow you to transfer
contract values from the one-year fixed account to the subaccounts or the GPAs
once a year on or within 30 days before or after the contract anniversary
(except for automated transfers, which can be set up at any time for certain
transfer periods subject to certain minimums). Transfers from the one-year
fixed account are not subject to a MVA. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction. For contracts with applications signed on or after June 16, 2003,
the amount of contract value transferred to the GPAs and the one-year fixed
account cannot result in the value of the GPAs and the one-year fixed account
in total being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
For Contract Option C applications dated on or after May 1, 2003, one-year
fixed account and GPAs are not available in most states.
For Contract Option C applications dated prior to May 1, 2003, one-year fixed
account and GPAs are not restricted in most states and our transfer policies
stated above are applicable.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 27
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
28 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 29
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office in good order before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay withdrawal charges if
you selected contract Option L, a contract administrative charge or any
applicable optional rider charges (see "Charges"). Additionally, federal income
taxes and penalties may apply. State and local income taxes may also apply (see
"Taxes"). You cannot make withdrawals after annuity payouts begin except under
Plan E (see "The Annuity Payout Period -- Annuity Payout Plans").
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
--------------------------------------------------------------------------------
30 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payment (ROP) death benefit;
Maximum Anniversary Value (MAV) death benefit; and
Enhanced Death Benefit Rider (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select the GMIB you must elect the EDB. Once you
elect a death benefit, you cannot change it. We show the option that applies in
your contract on your contract's data page. The combination of the contract and
death benefit option you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 31
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP)
The ROP is intended to help protect your beneficiaries financially in that they
will never receive less than your purchase payments adjusted for withdrawals. If
you or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greater of these two values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = -------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV)
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you may choose to add the MAV death benefit to your
contract at the time of purchase. Once you select the MAV death benefit you may
not cancel it.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each
contract anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
greater of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary
--------------------------------------------------------------------------------
32 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
minus adjusted partial withdrawals since that anniversary) to the current
contract value and we reset the MAV to the higher value. We stop resetting the
MAV after you or the annuitant reach age 81. However, we continue to add
subsequent purchase payments and subtract adjusted partial withdrawals from the
MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments $20,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a ROP death benefit of: $18,636.36
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $29,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a MAV death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,022.73
ENHANCED DEATH BENEFIT RIDER (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited
after age 81. Be sure to discuss with your investment professional whether or
not the EDB is appropriate for your situation.
If it is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB to your contract at the
time you purchase your contract. If you select the GMIB you must select the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary; or
4. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 33
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $ 22,800.00
------------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $ 25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
------------
for a ROP death benefit of: $ 23,456.79
------------
The MAV on the anniversary immediately preceding the date of death plus any purchase payments
made since that anniversary minus adjusted partial withdrawals made since that anniversary:
The MAV on the immediately preceding anniversary: $ 25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 -----------
for a MAV death benefit of: $ 23,456.79
------------
The 5% rising floor:
The variable account floor on the first contract anniversary is,
calculated as: $ 21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000 -----------
variable account floor benefit: $ 19,342.11
plus the one-year fixed account value: +5,300.00
------------
5% rising floor (value of the GPAs, one-year fixed account and the
variable account floor): $ 24,642.11
------------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
--------------------------------------------------------------------------------
34 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on contract Option L from that point forward. If you elected
any optional contract features or riders, your spouse and the new annuitant (if
applicable) will be subject to all limitations and/or restrictions of those
features or riders just as if they were purchasing a new contract. The GMIB
rider and Benefit Protector Plus rider, if selected, will terminate. Continuance
of the Benefit Protector rider is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the Code; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract. The GMIB rider and the Benefit
Protector Plus riders, if selected, will terminate. Continuance of the Benefit
Protector rider is optional. (See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 35
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the EDB.
We reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
--------------------------------------------------------------------------------
36 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings).
The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 37
annual charge (see "Charges"). The Benefit Protector Plus provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary
and it does not provide any benefit beyond what is offered under the Benefit
Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange, or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the EDB. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
--------------------------------------------------------------------------------
38 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 39
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV death benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years*,
the GMIB terminates** on the contract anniversary after the annuitant's 86th
birthday,
you can only exercise the GMIB within 30 days after a contract anniversary*,
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81, and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your investment professional.
* Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
** The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday; however, if you exercise the GMIB rider before
this time, your benefits will continue according to the annuity payout plan
you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit to your contract for
an additional annual charge which we describe below. If you select the GMIB, you
must elect the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances, we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate
your purchase payments or transfers to any of the subaccounts, GPAs or the one-
year fixed account. For contract Option C, you may allocate payments to the
subaccounts. We reserve the right to limit the amount you allocate to
subaccounts investing in the Columbia Variable Portfolio -- Cash Management Fund
to 10% of the total amount in the subaccounts. If we are required to activate
this restriction, and you have more than 10% of your subaccount value in this
fund, we will send you a notice and ask that you reallocate your contract value
so that the 10% limitation is satisfied within 60 days. We will terminate the
GMIB if you have not satisfied the limitation after 60 days.
--------------------------------------------------------------------------------
40 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of these four values:
1. contract value;
2. total purchase payments minus adjusted partial withdrawals; or
3. the maximum anniversary value at the last contract anniversary plus any
payments made since that anniversary minus adjusted partial withdrawals since
that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value and
the MAV.
subtract each payment from the 5% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 5% for the number of full contract years they
have been in the contract before we subtract them from the 5% rising floor.
For each payment, we calculate the market value adjustment to the contract
value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor
as:
PMT X CVG
------------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 5% increase of payments allocated to the
subaccounts as:
PMT X (1.05)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a "contingent event" (disability, terminal illness or confinement to a nursing
home or hospital, see "Charges -- Contingent events" for more details.)
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G. Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 41
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the GMIB benefit base for
annuity payouts calculated using the guaranteed annuity purchase rates under any
one of the payout plans listed above as long as the annuitant is between 50 and
86 years old on the retirement date.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base equal to the largest value. The
GMIB benefit base, less any applicable premium tax, is the value we apply to the
guaranteed annuity purchase rates stated in Table B of the contract to calculate
the minimum annuity payouts you will receive if you exercise the GMIB. If the
GMIB benefit base is greater than the contract value, the GMIB may provide a
higher annuity payout level than is otherwise available. However, the GMIB uses
guaranteed annuity purchase rates which may result in annuity payouts that are
less than those using the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB, you will receive the
higher standard payout option. The GMIB does not create contract value or
guarantee the performance of any investment option.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all your purchase payments to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
42 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $105,000
2 125,000 125,000 110,250
3 132,000 132,000 115,763
4 150,000 150,000 121,551
5 85,000 150,000 127,628
6 120,000 150,000 134,010
7 138,000 150,000 140,710
8 152,000 152,000 147,746
9 139,000 152,000 155,133
10 126,000 152,000 162,889 $162,889
11 138,000 152,000 171,034 171,034
12 147,000 152,000 179,586 179,586
13 163,000 163,000 188,565 188,565
14 159,000 163,000 197,993 197,993
15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73
15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B
of the contract. Payouts under the standard provisions of this contract will be
based on our annuity rates in effect at annuitization and are guaranteed to be
greater than or equal to the guaranteed annuity rates stated in Table B of the
contract. The fixed annuity payout available under the standard provisions of
this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the
GMIB as the payout available to you is equal to or less than the payout
available under the standard provisions of the contract. When the GMIB payout is
less than the payout available under the standard provisions of the contract,
you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
This fee currently costs 0.70% of the GMIB benefit base annually and it is taken
in a lump sum from the contract value on each contract anniversary at the end of
each contract year. If the contract is terminated or if annuity payouts begin,
we will
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 43
deduct the fee at that time adjusted for the number of calendar days coverage
was in place. We cannot increase the GMIB fee after the rider effective date and
it does not apply after annuity payouts begin. We calculate the fee as follows:
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs or the one-year
fixed account made in the six months before the contract anniversary
calculated as:
PT X VAT
------------
SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-
year fixed account within six months of the contract anniversary.
VAT = variable account floor on the date of (but prior to) the transfer.
SVT = value of the subaccounts on the date of (but prior to) the transfer.
FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and allocate all of your
payment to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU
1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735
2 150,000 0.70% Contract value = $150,000 1,050
3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
--------------------------------------------------------------------------------
44 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the annuity payout period, you may
make full and partial withdrawals. If you make a full withdrawal, you can
elect to have us determine the present value of any remaining variable payouts
and pay it to you in a lump sum. We determine the present value of the
remaining annuity payouts which are assumed to remain level at the amount of
the payout that would have been made 7 days prior to the date we determine the
present value. If the original contract was an Option L contract, the discount
rate we use in the calculation is 5.17% for the assumed investment return of
3.5% and 6.67% for the assumed investment return of 5.0%. If the original
contract was an Option C contract, the discount rate we use in the calculation
will vary between 5.55% and 7.05% depending on the applicable assumed
investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan
E.") You can also take a portion of the discounted value once a year. If you
do so, your monthly payouts will be reduced by the proportion of your
withdrawal to the full discounted value. A 10% IRS penalty tax could apply if
you take a withdrawal. (See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 45
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is
--------------------------------------------------------------------------------
46 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
taxable as ordinary income to the beneficiary in the year he or she receives the
payments. (See also "Benefits in Case of Death -- If You Die Before the
Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 47
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
--------------------------------------------------------------------------------
48 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 49
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 4.25% each time a purchase
payment is made for contract Option L and 1.00% for contract Option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% (for both contract options) of purchase payments
for a period of time we select. These commissions do not change depending on
which subaccounts you choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
--------------------------------------------------------------------------------
50 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 51
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330. The SEC also maintains an Internet site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC. In addition to this prospectus, the SAI and
information about the contract, information incorporated by reference is
available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
52 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $2.11 $1.90 $1.55 $2.24 $2.24 $1.98 $1.93 $1.79 $1.51 $1.76
Accumulation unit value at end of period $2.13 $2.11 $1.90 $1.55 $2.24 $2.24 $1.98 $1.93 $1.79 $1.51
Number of accumulation units outstanding at
end of period (000 omitted) 777 880 1,036 1,249 1,756 2,335 3,221 4,136 5,043 5,336
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47
Accumulation unit value at end of period $2.04 $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53
Number of accumulation units outstanding at
end of period (000 omitted) 2,171 2,609 9,757 10,453 12,248 8,733 8,279 9,515 7,119 7,272
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09
Accumulation unit value at end of period $1.58 $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 1,827 2,123 9,137 8,505 6,387 5,210 2,698 1,026 605 238
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (08/26/1999)
Accumulation unit value at beginning of period $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93
Accumulation unit value at end of period $1.71 $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 1,146 1,400 1,627 2,018 3,017 4,475 3,380 3,074 2,699 2,403
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.29 $1.03 $0.75 $1.24 $1.31 $1.19 $1.15 $0.99 $0.68 $0.83
Accumulation unit value at end of period $1.17 $1.29 $1.03 $0.75 $1.24 $1.31 $1.19 $1.15 $0.99 $0.68
Number of accumulation units outstanding at
end of period (000 omitted) 75 105 168 175 215 290 323 274 197 173
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.25 $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 803 893 2,339 2,088 2,176 2,281 2,359 2,330 1,256 248
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.38 $1.19 $0.87 $1.34 $1.25 $1.14 $1.10 $1.06 $0.91 $1.00
Accumulation unit value at end of period $1.31 $1.38 $1.19 $0.87 $1.34 $1.25 $1.14 $1.10 $1.06 $0.91
Number of accumulation units outstanding at
end of period (000 omitted) 25 24 40 105 178 81 56 46 13 --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.12 $0.99 $0.79 $1.38 $1.25 $1.12 $1.06 $1.02 $0.85 $1.00
Accumulation unit value at end of period $1.12 $1.12 $0.99 $0.79 $1.38 $1.25 $1.12 $1.06 $1.02 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 9 46 67 67 155 294 312 299 1 --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.06 $0.87 $0.69 $1.32 $1.06 $1.01 $0.97 $0.95 $0.73 $1.00
Accumulation unit value at end of period $1.04 $1.06 $0.87 $0.69 $1.32 $1.06 $1.01 $0.97 $0.95 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) 158 187 260 292 726 815 744 882 256 14
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06
Accumulation unit value at end of period $2.12 $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,103 2,608 3,630 3,308 3,045 2,336 1,901 1,151 250
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 53
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.68 $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 131 165 253 474 771 847 873 749 442 55
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $0.65 $0.52 $0.36 $0.64 $0.59 $0.55 $0.53 $0.48 $0.36 $0.51
Accumulation unit value at end of period $0.61 $0.65 $0.52 $0.36 $0.64 $0.59 $0.55 $0.53 $0.48 $0.36
Number of accumulation units outstanding at
end of period (000 omitted) 750 957 898 1,034 1,786 2,054 2,089 2,279 1,928 967
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of period $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 2,449 3,186 4,141 5,501 9,245 10,913 11,340 11,643 4,692 966
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84 $1.00
Accumulation unit value at end of period $1.42 $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 396 517 595 936 1,425 1,562 1,549 1,200 1,018 286
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of period $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79 $1.00
Accumulation unit value at end of period $0.90 $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 108 113 584 602 874 1,950 234 212 71 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.07 $1.00 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 $1.07 $1.00 $0.79 $1.15 $1.08 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 5 5 5 10 39 6 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.20 $1.10 $0.88 $1.33 $1.23 $1.11 $1.05 $0.96 $0.80 $1.00
Accumulation unit value at end of period $1.15 $1.20 $1.10 $0.88 $1.33 $1.23 $1.11 $1.05 $0.96 $0.80
Number of accumulation units outstanding at
end of period (000 omitted) 111 112 112 167 176 200 184 189 5 --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.51 $1.13 $0.70 $1.18 $1.17 $1.05 $1.01 $0.97 $0.73 $1.00
Accumulation unit value at end of period $1.33 $1.51 $1.13 $0.70 $1.18 $1.17 $1.05 $1.01 $0.97 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) 36 72 75 113 149 175 203 227 180 20
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93 $1.00
Accumulation unit value at end of period $1.28 $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 881 1,125 1,365 2,120 3,307 3,207 3,304 3,221 1,510 11
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85 $1.00
Accumulation unit value at end of period $2.57 $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 74 96 100 106 163 161 159 55 38 6
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (10/05/1998)
Accumulation unit value at beginning of period $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93 $1.16
Accumulation unit value at end of period $1.15 $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,063 1,414 1,861 2,565 3,460 4,185 4,645 5,239 5,706
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.41 $1.30 $0.90 $1.20 $1.16 $1.12 $1.11 $1.08 $1.05 $1.00
Accumulation unit value at end of period $1.46 $1.41 $1.30 $0.90 $1.20 $1.16 $1.12 $1.11 $1.08 $1.05
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- 17 126 77 45 45 82 7
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of period $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93
Accumulation unit value at end of period $0.99 $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76
Number of accumulation units outstanding at
end of period (000 omitted) 947 1,199 1,363 1,487 1,885 2,110 2,185 2,258 2,177 1,856
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 256 347 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
54 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.10 $0.99 $0.81 $1.18 $1.18 $1.05 $1.03 $0.96 $0.82 $1.00
Accumulation unit value at end of period $1.10 $1.10 $0.99 $0.81 $1.18 $1.18 $1.05 $1.03 $0.96 $0.82
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding at end
of period (000 omitted) 653 834 1,528 1,406 472 174 48 24 21 132
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 $1.00
Accumulation unit value at end of period $1.27 $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01
Number of accumulation units outstanding at end
of period (000 omitted) 149 178 2,034 1,850 1,965 638 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 $1.00
Accumulation unit value at end of period $1.39 $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 634 679 1,821 1,767 1,539 1,423 623 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 $1.00 --
Accumulation unit value at end of period $1.34 $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 --
Number of accumulation units outstanding at end
of period (000 omitted) 540 619 709 709 647 681 810 502 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.64 $1.47 $0.97 $1.32 $1.32 $1.21 $1.19 $1.08 $0.92 $1.00
Accumulation unit value at end of period $1.70 $1.64 $1.47 $0.97 $1.32 $1.32 $1.21 $1.19 $1.08 $0.92
Number of accumulation units outstanding at end
of period (000 omitted) 1,573 1,532 530 531 665 974 531 170 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.56 $1.25 $0.91 $1.51 $1.61 $1.47 $1.42 $1.22 $0.84 $1.00
Accumulation unit value at end of period $1.40 $1.56 $1.25 $0.91 $1.51 $1.61 $1.47 $1.42 $1.22 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 $1.00
Accumulation unit value at end of period $1.05 $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02
Number of accumulation units outstanding at end
of period (000 omitted) 135 188 580 530 419 519 197 31 39 --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.30 $1.12 $0.82 $1.28 $1.19 $1.09 $1.05 $1.02 $0.91 $1.00
Accumulation unit value at end of period $1.22 $1.30 $1.12 $0.82 $1.28 $1.19 $1.09 $1.05 $1.02 $0.91
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.08 $0.96 $0.77 $1.35 $1.23 $1.11 $1.05 $1.01 $0.85 $1.00
Accumulation unit value at end of period $1.08 $1.08 $0.96 $0.77 $1.35 $1.23 $1.11 $1.05 $1.01 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.02 $0.84 $0.67 $1.29 $1.03 $0.99 $0.95 $0.94 $0.72 $1.00
Accumulation unit value at end of period $1.00 $1.02 $0.84 $0.67 $1.29 $1.03 $0.99 $0.95 $0.94 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 $1.00
Accumulation unit value at end of period $1.93 $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 159 168 420 542 458 374 196 54 19 --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.61 $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 15 16 16 15 15 22 22 23 20 --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.33 $1.06 $0.75 $1.33 $1.22 $1.14 $1.11 $1.01 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.33 $1.06 $0.75 $1.33 $1.22 $1.14 $1.11 $1.01 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 8 8 8 8 8 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 $1.00
Accumulation unit value at end of period $1.23 $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 8 31 31 47 94 154 -- 138 153 --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.52 $1.43 $1.06 $1.82 $1.60 $1.34 $1.24 $1.07 $0.83 $1.00
Accumulation unit value at end of period $1.34 $1.52 $1.43 $1.06 $1.82 $1.60 $1.34 $1.24 $1.07 $0.83
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of period $0.96 $0.85 $0.72 $1.27 $1.16 $1.11 $1.04 $1.00 $0.79 $1.00
Accumulation unit value at end of period $0.87 $0.96 $0.85 $0.72 $1.27 $1.16 $1.11 $1.04 $1.00 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 23 23 76 94 130 452 79 25 -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES II SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.05 $0.98 $0.78 $1.14 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.03 $1.05 $0.98 $0.78 $1.14 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.16 $1.06 $0.85 $1.30 $1.21 $1.09 $1.04 $0.95 $0.80 $1.00
Accumulation unit value at end of period $1.11 $1.16 $1.06 $0.85 $1.30 $1.21 $1.09 $1.04 $0.95 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.46 $1.09 $0.68 $1.15 $1.14 $1.03 $1.00 $0.96 $0.73 $1.00
Accumulation unit value at end of period $1.28 $1.46 $1.09 $0.68 $1.15 $1.14 $1.03 $1.00 $0.96 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.21 $1.12 $0.97 $1.27 $1.25 $1.14 $1.13 $1.04 $0.92 $1.00
Accumulation unit value at end of period $1.21 $1.21 $1.12 $0.97 $1.27 $1.25 $1.14 $1.13 $1.04 $0.92
Number of accumulation units outstanding at end
of period (000 omitted) 67 65 46 43 49 33 45 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $2.31 $2.07 $1.59 $2.60 $2.07 $1.61 $1.41 $1.10 $0.85 $1.00
Accumulation unit value at end of period $2.41 $2.31 $2.07 $1.59 $2.60 $2.07 $1.61 $1.41 $1.10 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 13 13 3 3 3 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.02 $0.91 $0.71 $1.18 $1.28 $1.12 $1.09 $1.00 $0.81 $1.00
Accumulation unit value at end of period $0.95 $1.02 $0.91 $0.71 $1.18 $1.28 $1.12 $1.09 $1.00 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.30 $1.20 $0.84 $1.12 $1.08 $1.06 $1.05 $1.02 $1.05 $1.00
Accumulation unit value at end of period $1.34 $1.30 $1.20 $0.84 $1.12 $1.08 $1.06 $1.05 $1.02 $1.05
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 $1.00
Accumulation unit value at end of period $1.05 $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 12 12 12 12 12 12 14 14 -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE VARIABLE ANNUITY -- PROSPECTUS 57
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45271 P (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
PRIVILEGE(SM) VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/
VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing in
Evergreen Privilege Variable Annuity Contract Option L and Contract Option C.
The information in this prospectus applies to both contracts unless stated
otherwise.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Invesco Variable Insurance Funds
Oppenheimer Variable Account Funds - Service Shares
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE FIXED ACCOUNT............................ 18
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 21
VALUING YOUR INVESTMENT...................... 24
MAKING THE MOST OF YOUR CONTRACT............. 25
WITHDRAWALS.................................. 30
TSA -- SPECIAL PROVISIONS.................... 31
CHANGING OWNERSHIP........................... 31
BENEFITS IN CASE OF DEATH.................... 32
OPTIONAL BENEFITS............................ 36
THE ANNUITY PAYOUT PERIOD.................... 44
TAXES........................................ 46
VOTING RIGHTS................................ 50
SUBSTITUTION OF INVESTMENTS.................. 50
ABOUT THE SERVICE PROVIDERS.................. 51
ADDITIONAL INFORMATION....................... 52
APPENDIX: CONDENSED FINANCIAL
INFORMATION (UNAUDITED).................... 53
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 56
--------------------------------------------------------------------------------
2 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Contract Option L offers a four year
withdrawal charge schedule and investment options in the GPAs, one-year fixed
account and/or the subaccounts. Contract Option C eliminates the withdrawal
charge schedule in exchange for a higher mortality and expense risk fee and
allows investment in the subaccounts only. Your investment professional can help
you determine which contract is best suited to your needs based on factors such
as your investment goals and how long you intend to invest.
PURPOSE: The purpose of these contracts is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. For contract
Option L, you may allocate your purchase payments to the GPAs, one-year fixed
account and/or subaccounts. For contract Option C, you may allocate purchase
payments to the subaccounts(1). These accounts, in turn, may earn returns that
increase the value of a contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, these contracts provide lifetime or other forms of payouts of your
contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year
fixed account and/or the subaccounts, depending on the contract option you
select.
If you select contract Option L, you may allocate your purchase payments among
any or all of:
the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (see "The Variable Account and the Funds")
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
If you select contract Option C, you may allocate purchase payments to the
subaccounts only.(1)
(1) For applications dated May 1, 2003 or after, investment in the GPAs and one-
year fixed account for contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the GPAs and one-year
fixed account is not restricted in most states. Please check with your
investment professional to determine which applies in your state.
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Purchase payment
amounts and purchase payment timing may vary by state and be limited under the
terms of your contract. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to limit transfers to the
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 5
GPAs and the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer
optional death benefits. Optional benefits vary by state and may have
eligibility requirements. (See "Optional Benefits").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of the amount withdrawn)
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose either contract Option L or Option C and the death benefit
guarantee provided. The combination you choose determines the fees you pay. The
table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES
Return of Purchase Payment (ROP) death 1.25% 1.40%
benefit 0.15%
Maximum Anniversary Value (MAV) death 1.35 1.50
benefit 0.15
Enhanced Death Benefit (EDB) 0.15 1.55 1.70
IF YOU SELECT CONTRACT OPTION C AND:
ROP death benefit 0.15 1.35 1.50
MAV death benefit 0.15 1.45 1.60
EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
** For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB -- 0.30%.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 1.40%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Columbia Variable Portfolio - Cash Management Fund (Class 0.33% 0.13% 0.14% --% 0.60%(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(2)
Service Shares
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(3)
3)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(4)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(4)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(5)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(4)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(4)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585%.
(2)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(3)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(4)The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
--------------------------------------------------------------------------------
8 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
(5)Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with EDB $1,237 $2,025 $2,216 $4,589 $431 $1,311 $2,216 $4,589
Contract Option C
with EDB 442 1,341 2,264 4,679 442 1,341 2,264 4,679
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with ROP death
benefit $1,065 $1,506 $1,279 $2,705 $245 $751 $1,279 $2,705
Contract Option C
with ROP death
benefit 255 782 1,330 2,809 255 782 1,330 2,809
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates (see "Revenue we
receive from the funds may create conflicts of interest"). These relationships
may influence recommendations your
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 11
investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
12 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 15
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
Investment in the GPAs is not available under contract Option C(1).
The GPAs may not be available in some states.
(1) For applications dated May 1, 2003 or after, investment in the GPAs for
contract Option C is not allowed in most states. For applications dated
prior to May 1, 2003, investment in the GPAs is not restricted in most
states. Please check with your investment professional to determine which
applies in your state.
For contract Option L, you may allocate purchase payments to one or more of the
GPAs with guarantee periods declared by us. The minimum required investment in
each GPA is $1,000. There are restrictions on the amount you can allocate to
these accounts as well as on transfers from these accounts (see "Buying Your
Contract" and "Transfer policies"). These accounts are not available in all
states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
16 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- )(N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 17
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.")
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge schedule under contract
Option L), unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep Strategy.
THE FIXED ACCOUNT
The fixed account is our general account. Amounts allocated to the fixed account
become part of our general account. The fixed account includes the one-year
fixed account. We credit interest on amounts you allocate to the fixed account
at rates we determine from time to time in our discretion. These rates will be
based on various factors including, but not limited to, the interest rate
environment, returns we earn on our general account investments, the rates
currently in effect for new and existing RiverSource Life annuities, product
design, competition, and RiverSource Life's revenues and expenses. The
guaranteed minimum interest rate on amounts invested in the fixed account may
vary by state but will not be lower than state law allows. We back the principal
and interest guarantees relating to the fixed account. These guarantees are
based on the continued claims-paying ability of RiverSource Life.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Investment in the one-year fixed account is not available for contract Option
C.(1)
For contract Option L, you may allocate purchase payments or transfer
accumulated value to the one-year fixed account. Some states may restrict the
amount you can allocate to this account. We back the principal and interest
guarantees relating to the one-year fixed account. These guarantees are based on
the continued claims-paying ability of the company's general account. The value
of the one-year fixed account increases as we credit interest to the account.
Purchase payments and transfers to the one-year fixed account become part of our
general account. You should be aware that our general account is exposed to the
risks normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. The interest rate we apply to each purchase
payment or transfer to the one-year fixed account is guaranteed for one year.
--------------------------------------------------------------------------------
18 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account. (see "Making the Most of Your
Contract -- Transfer policies")
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
(1) For applications dated May 1, 2003 or after, investment in the one-year
fixed account for Contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the one-year fixed
account was not restricted in most states. Please check with your investment
professional to determine if this restriction applies to your state.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You can own a qualified
or nonqualified annuity. Generally, you may be able to buy different contracts
with the same underlying funds. These contracts have different mortality and
expense risk fees, withdrawal charges and may offer purchase payment credits.
For information on these contracts, please call us at the telephone number
listed on the first page of this prospectus or ask your investment professional.
You can own a nonqualified annuity in joint tenancy with rights of survivorship
only in spousal situations. You cannot own a qualified annuity in joint tenancy.
You can become an owner if you are 90 or younger. (The age limit may be younger
for qualified annuities in some states.)
When you applied, you selected (if available in your state):
contract Option L or Option C;
a death benefit option(1);
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(4);
how you want to make purchase payments; and
a beneficiary.
(1) If you and the annuitant are 79 or younger at contract issue, you may select
from either the ROP death benefit, MAV death benefit or EDB. If you or the
annuitant are 80 or older at contract issue, the ROP death benefit will
apply. EDB may not be available in all states.
(2) Not available with the EDB. May not be available in all states.
(3) Available at the time you purchase your contract if the annuitant is 75 or
younger at contract issue and you also select the EDB. May not be available
in all states.
(4) For applications dated May 1, 2003 or after, investment in the GPA account
and the one-year fixed account for Contract Option C is not allowed in most
states. For applications dated prior to May 1, 2003, investment in the GPA
account and the one-year fixed account was not restricted in most states.
Please check with your investment professional to determine whether this
restriction applies to your state. GPAs are not available under contracts
issued in Maryland, Oregon, Pennsylvania or Washington and may not be
available in other states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum investment for the GPAs. For
Contract Option L contracts with applications signed on or after June 16, 2003,
the amount of any purchase payment allocated to the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish an automated dollar cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect, or you are participating according to the rules of an asset
allocation model portfolio program available under the contract, if any.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment. If we receive an additional purchase payment at our administrative
office at or after the close of business, we will credit any portion of that
payment allocated to the subaccounts using the accumulation unit value we
calculate on the next valuation date after we received the payment.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 19
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP: $50 for additional payments.
If paying by any other method: $100 for additional payments.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85.
$100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
--------------------------------------------------------------------------------
20 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary, or earlier if the contract
is withdrawn. We prorate this charge among the subaccounts, the GPAs and the
one-year fixed account in the same proportion your interest in each account
bears to your total contract value. Some states limit the amount of any contract
charge allocated to the GPAs and one-year fixed account.
We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees. These fees are based on the contract you
select (either Option L or Option C) and the death benefit that applies to your
contract:
CONTRACT OPTION L CONTRACT OPTION C
ROP death benefit 1.25% 1.35%
MAV death benefit 1.35 1.45
EDB 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 21
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
If you select contract Option L and you withdraw all or part of your contract,
you may be subject to a withdrawal charge. A withdrawal charge applies if you
make a withdrawal in the first four contract years. You may withdraw amounts
totaling up to 10% of your prior anniversary's contract value free of charge
during the first four years of your contract. (We consider your initial purchase
payment to be the prior anniversary's contract value during the first contract
year.) We do not assess a withdrawal charge on this amount. The withdrawal
charge percentages that apply to you are shown below and are stated in your
contract. In addition, amounts withdrawn from a GPA more than 30 days before the
end of the applicable Guarantee Period are generally subject to a MVA. (See "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal
charge of 7%. The total amount we actually deduct from your contract is
$1,075.27. We determine this amount as follows:
AMOUNT REQUESTED $1,000
------------------------ OR ------ = $1,075.27
1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is
$75.27. We pay you the $1,000 you requested. If you make a full withdrawal of
your contract, we also will deduct the applicable contract administrative
charge.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
--------------------------------------------------------------------------------
22 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE*
We deduct a charge (currently 0.70%) based on the GMIB benefit base for this
optional feature only if you select it. If selected, we deduct the charge from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB charge among the subaccounts, the GPAs and the one-
year fixed account in the same proportion your interest in each account bears to
your total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB charge from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB charge after
the rider effective date and it does not apply after annuity payouts begin.
* For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - 0.30%.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 23
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider;
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may
change in two ways -- in number and in value. The number of accumulation units
you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following benefits you have selected:
- Benefit Protector rider;
--------------------------------------------------------------------------------
24 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY
If you select contract Option L and your net contract value(1) is at least
$10,000, you can choose to participate in the Special DCA program. There is no
charge for the Special DCA program. Under the Special DCA program, you can
allocate a new purchase payment to a six-month or twelve-month Special DCA
account.
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
You may only allocate a new purchase payment of at least $1,000 to a Special DCA
account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 25
the time period you select) from the time we receive your first purchase
payment. We make monthly transfers of your total Special DCA account value into
the GPAs, one-year fixed account and/or subaccount you select over the time
period you select (either six or twelve months). If you elect to transfer into a
GPA, you must meet the $1,000 minimum required investment limitation for each
transfer.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Special
DCA account at the beginning of the six or twelve-month period. Therefore, you
may receive less total interest than you would have if all your purchase
payments were in the Special DCA account from the beginning. If we receive any
of your multiple payments after the six or twelve-month period ends, you can
either allocate those payments to a new Special DCA account (if available) or to
any other accounts available under your contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Special DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
--------------------------------------------------------------------------------
26 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
For Contract Option L, it is our general policy to allow you to transfer
contract values from the one-year fixed account to the subaccounts or the GPAs
once a year on or within 30 days before or after the contract anniversary
(except for automated transfers, which can be set up at any time for certain
transfer periods subject to certain minimums). Transfers from the one-year
fixed account are not subject to a MVA. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction. For contracts with applications signed on or after June 16, 2003,
the amount of contract value transferred to the GPAs and the one-year fixed
account cannot result in the value of the GPAs and the one-year fixed account
in total being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
For Contract Option C applications dated on or after May 1, 2003, one-year
fixed account and GPAs are not available in most states.
For Contract Option C applications dated prior to May 1, 2003, one-year fixed
account and GPAs are not restricted in most states and our transfer policies
stated above are applicable.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 27
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING
--------------------------------------------------------------------------------
28 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE
PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE
LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY
NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED
IDENTIFIER, AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE
UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT
ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR
FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE
RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION
FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED
BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS,
INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 29
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office in good order before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay withdrawal charges if
you selected contract Option L, a contract administrative charge or any
applicable optional rider charges (see "Charges"). Additionally, federal income
taxes and penalties may apply. State and local income taxes may also apply (see
"Taxes"). You cannot make withdrawals after annuity payouts begin except under
Plan E (see "The Annuity Payout Period -- Annuity Payout Plans").
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
--------------------------------------------------------------------------------
30 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 31
However, if the owner is a trust or custodian, or an employer acting in a
similar capacity, ownership of the contract may be transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payment (ROP) death benefit;
Maximum Anniversary Value (MAV) death benefit; and
Enhanced Death Benefit Rider (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select the GMIB you must elect the EDB. Once you
elect a death benefit, you cannot change it. We show the option that applies in
your contract on your contract's data page. The combination of the contract and
death benefit option you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP)
The ROP is intended to help protect your beneficiaries financially in that they
will never receive less than your purchase payments adjusted for withdrawals. If
you or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greater of these two values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = -------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
--------------------------------------------------------------------------------
32 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV)
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you may choose to add the MAV death benefit to your
contract at the time of purchase. Once you select the MAV death benefit you may
not cancel it.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each
contract anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
greater of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary minus adjusted partial withdrawals since that
anniversary) to the current contract value and we reset the MAV to the higher
value. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and subtract adjusted
partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments $20,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a ROP death benefit of: $18,636.36
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $29,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a MAV death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,022.73
ENHANCED DEATH BENEFIT RIDER (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 33
ages 75 to 79 because the benefit values may be limited after age 81. Be sure to
discuss with your investment professional whether or not the EDB is appropriate
for your situation.
If it is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB to your contract at the
time you purchase your contract. If you select the GMIB you must select the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary; or
4. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $ 22,800.00
------------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $ 25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
------------
for a ROP death benefit of: $ 23,456.79
------------
--------------------------------------------------------------------------------
34 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
The MAV on the anniversary immediately preceding the date of death plus any purchase payments
made since that anniversary minus adjusted partial withdrawals made since that anniversary:
The MAV on the immediately preceding anniversary: $ 25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 -----------
for a MAV death benefit of: $ 23,456.79
------------
The 5% rising floor:
The variable account floor on the first contract anniversary is,
calculated as: $ 21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000 -----------
variable account floor benefit: $ 19,342.11
plus the one-year fixed account value: +5,300.00
------------
5% rising floor (value of the GPAs, one-year fixed account and the
variable account floor): $ 24,642.11
------------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on contract Option L from that point forward. If you elected
any optional contract features or riders, your spouse and the new annuitant (if
applicable) will be subject to all limitations and/or restrictions of those
features or riders just as if they were purchasing a new contract. The GMIB
rider and Benefit Protector Plus rider, if selected, will terminate. Continuance
of the Benefit Protector rider is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the Code; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 35
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB rider and the Benefit Protector Plus riders, if selected,
will terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the EDB.
We reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
--------------------------------------------------------------------------------
36 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings).
The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 37
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange, or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the EDB. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
38 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 39
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV death benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
--------------------------------------------------------------------------------
40 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL LIVING BENEFITS
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years*,
the GMIB terminates** on the contract anniversary after the annuitant's 86th
birthday,
you can only exercise the GMIB within 30 days after a contract anniversary*,
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81, and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your investment professional.
* Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
** The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday; however, if you exercise the GMIB rider before
this time, your benefits will continue according to the annuity payout plan
you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit to your contract for
an additional annual charge which we describe below. If you select the GMIB, you
must elect the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances, we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate
your purchase payments or transfers to any of the subaccounts, GPAs or the one-
year fixed account. For contract Option C, you may allocate payments to the
subaccounts. We reserve the right to limit the amount you allocate to
subaccounts investing in the Columbia Variable Portfolio -- Cash Management Fund
to 10% of the total amount in the subaccounts. If we are required to activate
this restriction, and you have more than 10% of your subaccount value in this
fund, we will send you a notice and ask that you reallocate your contract value
so that the 10% limitation is satisfied within 60 days. We will terminate the
GMIB if you have not satisfied the limitation after 60 days.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of these four values:
1. contract value;
2. total purchase payments minus adjusted partial withdrawals; or
3. the maximum anniversary value at the last contract anniversary plus any
payments made since that anniversary minus adjusted partial withdrawals since
that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value and
the MAV.
subtract each payment from the 5% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 5% for the number of full contract years they
have been in the contract before we subtract them from the 5% rising floor.
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 41
For each payment, we calculate the market value adjustment to the contract
value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor
as:
PMT X CVG
------------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 5% increase of payments allocated to the
subaccounts as:
PMT X (1.05)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a "contingent event" (disability, terminal illness or confinement to a nursing
home or hospital, see "Charges -- Contingent events" for more details.)
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G. Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the GMIB benefit base for
annuity payouts calculated using the guaranteed annuity purchase rates under any
one of the payout plans listed above as long as the annuitant is between 50 and
86 years old on the retirement date.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base equal to the largest value. The
GMIB benefit base, less any applicable premium tax, is the value we apply to the
guaranteed annuity purchase rates stated in Table B of the contract to calculate
the minimum annuity payouts you will receive if you exercise the GMIB. If the
GMIB benefit base is greater than the contract value, the GMIB may provide a
higher annuity payout level than is otherwise available. However, the GMIB uses
guaranteed annuity purchase rates which may result in annuity payouts that are
less than those using the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts
--------------------------------------------------------------------------------
42 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
available through the GMIB, you will receive the higher standard payout option.
The GMIB does not create contract value or guarantee the performance of any
investment option.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all your purchase payments to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $105,000
2 125,000 125,000 110,250
3 132,000 132,000 115,763
4 150,000 150,000 121,551
5 85,000 150,000 127,628
6 120,000 150,000 134,010
7 138,000 150,000 140,710
8 152,000 152,000 147,746
9 139,000 152,000 155,133
10 126,000 152,000 162,889 $162,889
11 138,000 152,000 171,034 171,034
12 147,000 152,000 179,586 179,586
13 163,000 163,000 188,565 188,565
14 159,000 163,000 197,993 197,993
15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73
15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B
of the contract. Payouts under the standard provisions of this contract will be
based on our annuity rates in effect at annuitization and are guaranteed to be
greater than or
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 43
equal to the guaranteed annuity rates stated in Table B of the contract. The
fixed annuity payout available under the standard provisions of this contract
would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the
GMIB as the payout available to you is equal to or less than the payout
available under the standard provisions of the contract. When the GMIB payout is
less than the payout available under the standard provisions of the contract,
you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
This fee currently costs 0.70% of the GMIB benefit base annually and it is taken
in a lump sum from the contract value on each contract anniversary at the end of
each contract year. If the contract is terminated or if annuity payouts begin,
we will deduct the fee at that time adjusted for the number of calendar days
coverage was in place. We cannot increase the GMIB fee after the rider effective
date and it does not apply after annuity payouts begin. We calculate the fee as
follows:
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs or the one-year
fixed account made in the six months before the contract anniversary
calculated as:
PT X VAT
------------
SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-
year fixed account within six months of the contract anniversary.
VAT = variable account floor on the date of (but prior to) the transfer.
SVT = value of the subaccounts on the date of (but prior to) the transfer.
FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and allocate all of your
payment to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU
1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735
2 150,000 0.70% Contract value = $150,000 1,050
3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below except under annuity payout plan E.
Under both contract Option L and Option C, you also decide whether we will make
annuity payouts on a fixed or variable basis, or a combination of fixed and
variable. The amount available to purchase payouts under the plan you select is
the contract value on your retirement date after any rider charges have been
deducted, plus any positive or negative MVA (less any applicable premium tax).
Additionally, we currently allow you to use part of the amount available to
purchase payouts,
--------------------------------------------------------------------------------
44 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
leaving any remaining contract value to accumulate on a tax-deferred basis. If
you select a variable annuity payout, we reserve the right to limit the number
of subaccounts in which you may invest. The GPAs are not available during this
payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Contract -- Transfer policies."
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the annuity payout period, you may
make full and partial withdrawals. If you make a full withdrawal, you can
elect to have us determine the present value of any remaining variable payouts
and pay it to you in a lump sum. We determine the present value of the
remaining annuity payouts which are assumed to remain level at the amount of
the payout that would have been made 7 days prior to the date we determine the
present value. If the original contract was an Option L contract, the discount
rate we use in the calculation is 5.17% for the assumed investment return of
3.5% and 6.67% for the assumed investment return
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 45
of 5.0%. If the original contract was an Option C contract, the discount rate
we use in the calculation will vary between 5.55% and 7.05% depending on the
applicable assumed investment rate. (See "Charges -- Withdrawal charge under
Annuity Payout Plan E.") You can also take a portion of the discounted value
once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
--------------------------------------------------------------------------------
46 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 47
or contract, there may be tax or other benefits that are given up to gain the
benefits of the new policy or contract. Consider whether the features and
benefits of the new policy or contract outweigh any tax or other benefits of the
old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
--------------------------------------------------------------------------------
48 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 49
state income taxes. We reserve the right to make such a charge in the future if
there is a change in the tax treatment of variable annuities or in our tax
status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
--------------------------------------------------------------------------------
50 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 4.25% each time a purchase
payment is made for contract option L and 1% for contract option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% (for both contract options) of purchase payments
for a period of time we select. These commissions do not change depending on
which subaccounts you choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 51
outcome of any such proceedings could have a material adverse impact on results
of operations in any particular reporting period as the proceedings are
resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
52 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47
Accumulation unit value at end of period $2.04 $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53
Number of accumulation units outstanding at
end of period (000 omitted) 2,171 2,609 9,757 10,453 12,248 8,733 8,279 9,515 7,119 7,272
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09
Accumulation unit value at end of period $1.58 $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 1,827 2,123 9,137 8,505 6,387 5,210 2,698 1,026 605 238
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06
Accumulation unit value at end of period $2.12 $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,103 2,608 3,630 3,308 3,045 2,336 1,901 1,151 250
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of period $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 2,449 3,186 4,141 5,501 9,245 10,913 11,340 11,643 4,692 966
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.15 $1.09 $0.75 $1.58 $1.58 $1.42 $1.37 $1.25 $0.95 $1.00
Accumulation unit value at end of period $1.10 $1.15 $1.09 $0.75 $1.58 $1.58 $1.42 $1.37 $1.25 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 211 315 410 507 677 773 870 898 614 11
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.82 $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 91 140 191 210 307 330 355 322 247 4
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of period $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93
Accumulation unit value at end of period $0.99 $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76
Number of accumulation units outstanding at
end of period (000 omitted) 947 1,199 1,363 1,487 1,885 2,110 2,185 2,258 2,177 1,856
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of period $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.55 $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 1,139 1,364 1,800 2,045 2,297 2,129 2,323 692 192 35
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.43 $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 277 324 434 491 679 717 623 663 493 12
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.82 $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 1,779 2,121 276 333 464 531 573 580 441 13
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 53
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 501 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25 $0.42
Accumulation unit value at end of period $0.58 $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 627 785 586 966 992 1,281 1,363 1,351 1,424 1,243
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 532 655 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19 $1.12
Accumulation unit value at end of period $1.78 $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19
Number of accumulation units outstanding at
end of period (000 omitted) 1,785 2,234 2,406 2,685 3,965 5,543 2,193 622 225 167
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 653 834 1,528 1,406 472 174 48 24 21 132
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 $1.00
Accumulation unit value at end of period $1.27 $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01
Number of accumulation units outstanding at
end of period (000 omitted) 149 178 2,034 1,850 1,965 638 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 $1.00
Accumulation unit value at end of period $1.39 $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80
Number of accumulation units outstanding at
end of period (000 omitted) 634 679 1,821 1,767 1,539 1,423 623 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 $1.00 --
Accumulation unit value at end of period $1.34 $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 --
Number of accumulation units outstanding at
end of period (000 omitted) 540 619 709 709 647 681 810 502 -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 $1.00
Accumulation unit value at end of period $1.93 $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89
Number of accumulation units outstanding at
end of period (000 omitted) 159 168 420 542 458 374 196 54 19 --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 $1.00
Accumulation unit value at end of period $1.23 $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 8 31 31 47 94 154 -- 138 153 --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.11 $1.06 $0.73 $1.55 $1.55 $1.40 $1.35 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.06 $1.11 $1.06 $0.73 $1.55 $1.55 $1.40 $1.35 $1.24 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 37 37 37 51 38 52 63 48 -- --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.83 $1.52 $1.13 $1.85 $1.91 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.76 $1.83 $1.52 $1.13 $1.85 $1.91 $1.70 $1.58 $1.35 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- 16 17 19 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 $1.00
Accumulation unit value at end of period $1.05 $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 12 12 12 12 12 12 14 14 -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (07/31/2002)
Accumulation unit value at beginning of period $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 $1.00
Accumulation unit value at end of period $1.81 $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 509 542 656 739 794 763 746 325 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
54 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93 $1.00
Accumulation unit value at end of period $1.37 $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 8 8 21 19 25 31 25 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96 $1.00
Accumulation unit value at end of period $1.76 $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 503 552 6 8 23 32 31 2 -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 11 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 $1.00 --
Accumulation unit value at end of period $2.36 $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 --
Number of accumulation units outstanding at
end of period (000 omitted) 4 5 4 5 4 5 5 5 -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 $1.00 --
Accumulation unit value at end of period $1.37 $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 --
Number of accumulation units outstanding at
end of period (000 omitted) 428 483 660 649 1,137 1,856 658 206 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS 55
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
56 EVERGREEN PRIVILEGE VARIABLE ANNUITY -- PROSPECTUS
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45277 N (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
PATHWAYS(SM) VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION
FIXED/VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing in
Evergreen Pathways Variable Annuity Contract Option L and Contract Option C. The
information in this prospectus applies to both contracts unless stated
otherwise.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................. 3
THE CONTRACT IN BRIEF...................... 5
EXPENSE SUMMARY............................ 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED).............................. 11
FINANCIAL STATEMENTS....................... 11
THE VARIABLE ACCOUNT AND THE FUNDS......... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)....... 17
THE FIXED ACCOUNT.......................... 19
BUYING YOUR CONTRACT....................... 20
CHARGES.................................... 22
VALUING YOUR INVESTMENT.................... 25
MAKING THE MOST OF YOUR CONTRACT........... 26
WITHDRAWALS................................ 31
TSA -- SPECIAL PROVISIONS.................. 32
CHANGING OWNERSHIP......................... 32
BENEFITS IN CASE OF DEATH.................. 33
OPTIONAL BENEFITS.......................... 37
THE ANNUITY PAYOUT PERIOD.................. 45
TAXES...................................... 47
VOTING RIGHTS.............................. 50
SUBSTITUTION OF INVESTMENTS................ 51
ABOUT THE SERVICE PROVIDERS................ 51
ADDITIONAL INFORMATION..................... 52
APPENDIX: CONDENSED FINANCIAL
INFORMATION (UNAUDITED).................. 54
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION...... 60
--------------------------------------------------------------------------------
2 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Contract Option L offers a four year
withdrawal charge schedule and investment options in the GPAs, one-year fixed
account and/or the subaccounts. Contract Option C eliminates the withdrawal
charge schedule in exchange for a higher mortality and expense risk fee and
allows investment in the subaccounts only. Your investment professional can help
you determine which contract is best suited to your needs based on factors such
as your investment goals and how long you intend to invest.
PURPOSE: The purpose of these contracts is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. For contract
Option L, you may allocate your purchase payments to the GPAs, one-year fixed
account and/or subaccounts. For contract Option C, you may allocate purchase
payments to the subaccounts(1). These accounts, in turn, may earn returns that
increase the value of a contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, these contracts provide lifetime or other forms of payouts of your
contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year
fixed account and/or the subaccounts, depending on the contract option you
select.
If you select contract Option L, you may allocate your purchase payments among
any or all of:
the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (see "The Variable Account and the Funds")
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
If you select contract Option C, you may allocate purchase payments to the
subaccounts only.(1)
(1) For applications dated May 1, 2003 or after investment in the GPAs and one
year fixed account for contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, Investment in the GPAs and one-year
fixed account is not restricted in most states. Please check with your
investment professional to determine which applies in your state.
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future.
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to limit transfers to the
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 5
GPAs and the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
OPTIONAL BENEFITS: These contracts offer optional features that are available
for additional charges if you meet certain criteria. (see "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of the amount withdrawn)
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND THE DEATH BENEFIT
GUARANTEE PROVIDED. THE COMBINATION YOU CHOOSE DETERMINES THE FEES YOU PAY. THE
TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES
Return of Purchase Payment (ROP) death 1.25% 1.40%
benefit 0.15%
Maximum Anniversary Value (MAV) death 1.35 1.50
benefit 0.15
Enhanced Death Benefit (EDB) 0.15 1.55 1.70
IF YOU SELECT CONTRACT OPTION C AND:
ROP death benefit 0.15 1.35 1.50
MAV death benefit 0.15 1.45 1.60
EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
** For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB -- 0.30%.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.60% 1.40%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75% 0.25% 0.19% --% 1.19%
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(2)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(3)
Invesco Van Kampen V.I. Growth and Income Fund, Series II 0.56 0.25 0.28 -- 1.09(3)
Shares
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(4)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(5)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF U.S. Real Estate Portfolio, Class I 0.80 -- 0.29 -- 1.09
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(6)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(7)
Service Shares
--------------------------------------------------------------------------------
8 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Global Health Care Fund - Class IB Shares 0.63% 0.25% 0.21% --% 1.09%
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(8)
3)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(9)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(9)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(10)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(9)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(9)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3) and 1.005% for Columbia Variable
Portfolio - Mid Cap Growth Opportunity Fund (Class 3).
(2)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(3)The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(4)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(5)MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(6)The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(7)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(8)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(9)The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
(10)Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with EDB $1,237 $2,025 $2,216 $4,589 $431 $1,311 $2,216 $4,589
Contract Option C
with EDB 442 1,341 2,264 4,679 442 1,341 2,264 4,679
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with ROP death
benefit $1,065 $1,506 $1,279 $2,705 $245 $751 $1,279 $2,705
Contract Option C
with ROP death
benefit 255 782 1,330 2,809 255 782 1,330 2,809
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates (see "Revenue we
receive from the funds may create conflicts of interest"). These relationships
may influence recommendations your
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 11
investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
12 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital and Invesco Advisers, Inc.
Kampen V.I. income.
Growth and Income
Fund, Series II
Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide above average current Morgan Stanley
UIF U.S. Real income and long-term capital appreciation Investment Management
Estate Portfolio, by investing primarily in equity securities Inc.
Class I Shares of companies in the U.S. real estate
industry, including real estate investment
trusts.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
Investment in the GPAs is not available under contract Option C(1).
The GPAs may not be available in some states.
(1) For applications dated May 1, 2003 or after, investment in the GPAs for
contract Option C is not allowed in most states. For applications dated
prior to May 1, 2003, investment in the GPAs is not restricted in most
states. Please check with your investment professional to determine which
applies in your state.
For contract Option L, you may allocate purchase payments to one or more of the
GPAs with guarantee periods declared by us. The minimum required investment in
each GPA is $1,000. There are restrictions on the amount you can allocate to
these accounts as well as on transfers from these accounts (see "Buying Your
Contract" and "Transfer policies"). These accounts are not available in all
states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 17
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- )(N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
--------------------------------------------------------------------------------
18 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.")
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge schedule under contract
Option L), unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep Strategy.
THE FIXED ACCOUNT
The fixed account is our general account. Amounts allocated to the fixed account
become part of our general account. The fixed account includes the one-year
fixed account. We credit interest on amounts you allocate to the fixed account
at rates we determine from time to time in our discretion. These rates will be
based on various factors including, but not limited to, the interest rate
environment, returns we earn on our general account investments, the rates
currently in effect for new and existing RiverSource Life annuities, product
design, competition, and RiverSource Life's revenues and expenses. The
guaranteed minimum interest rate on amounts invested in the fixed account may
vary by state but will not be lower than state law allows. We back the principal
and interest guarantees relating to the fixed account. These guarantees are
based on the continued claims-paying ability of RiverSource Life.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Investment in the one-year fixed account is not available for contract Option
C.(1)
For contract Option L, you may allocate purchase payments or transfer
accumulated value to the one-year fixed account. Some states may restrict the
amount you can allocate to this account. We back the principal and interest
guarantees relating to the one-year fixed account. These guarantees are based on
the continued claims-paying ability of the company's general account. The value
of the one-year fixed account increases as we credit interest to the account.
Purchase payments and transfers to the
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 19
one-year fixed account become part of our general account. You should be aware
that our general account is exposed to the risks normally associated with a
portfolio of fixed-income securities, including interest rate, option, liquidity
and credit risk. The financial statements contained in the SAI include a further
discussion of the risks inherent within the investments of the general account.
We credit and compound interest daily based on a 365-day year (366 in a leap
year) so as to produce the annual effective rate which we declare. The interest
rate we apply to each purchase payment or transfer to the one-year fixed account
is guaranteed for one year.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account. (see "Making the Most of Your
Contract -- Transfer policies")
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
(1) For applications dated May 1, 2003 or after, investment in the one-year
fixed account for Contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the one-year fixed
account was not restricted in most states. Please check with your investment
professional to determine if this restriction applies to your state.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. Generally, you can own
different contracts with the same underlying funds. These contracts have
different mortality and expense risk fees, withdrawal charges and may offer
purchase payment credits. For information on these contracts, please call us at
the telephone number listed on the first page of this prospectus or ask your
investment professional.
You can own a nonqualified annuity in joint tenancy with rights of survivorship
only in spousal situations. You cannot own a qualified annuity in joint tenancy.
You can become an owner if you are 90 or younger. (The age limit may be younger
for qualified annuities in some states.)
When you applied, you selected (if available in your state):
contract Option L or Option C;
a death benefit option(1);
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(4);
how you want to make purchase payments; and
a beneficiary.
(1) If you and the annuitant are 79 or younger at contract issue, you may select
from either the ROP death benefit, MAV death benefit or EDB. If you or the
annuitant are 80 or older at contract issue, the ROP death benefit will
apply. EDB may not be available in all states.
(2) Not available with the EDB. May not be available in all states.
(3) Available at the time you purchase your contract if the annuitant is 75 or
younger at contract issue and you also select the EDB. May not be available
in all states.
(4) For applications dated May 1, 2003 or after, investment in the GPA account
and the one-year fixed account for Contract Option C is not allowed in most
states. For applications dated prior to May 1, 2003, investment in the GPA
account and the one-year fixed account was not restricted in most states.
Please check with your investment professional to determine whether this
restriction applies to your state. GPAs are not available under contracts
issued in Maryland, Oregon, Pennsylvania, or Washington and may not be
available in other states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum investment for the GPAs. For
Contract Option L contracts with applications signed on or after June 16, 2003,
the amount of any purchase payment allocated to the GPAs and the one-year fixed
account in total cannot exceed 30% of the purchase payment. More than 30% of a
purchase payment may be so allocated if you establish a dollar cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect, or you are participating according to the rules of an asset
allocation model portfolio program available under the contract, if any.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive
--------------------------------------------------------------------------------
20 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
your purchase payment at our administrative office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP: $50 for additional payments.
If paying by any other method: $100 for additional payments.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85.
$100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 21
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary, or earlier if the contract
is withdrawn. We prorate this charge among the subaccounts, the GPAs and the
one-year fixed account in the same proportion your interest in each account
bears to your total contract value. Some states limit the amount of any contract
charge allocated to the GPAs and one-year fixed account.
We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees. These fees are based on the contract you
select (either Option L or Option C) and the death benefit that applies to your
contract:
CONTRACT OPTION L CONTRACT OPTION C
ROP death benefit 1.25% 1.35%
MAV death benefit 1.35 1.45
EDB 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
--------------------------------------------------------------------------------
22 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
If you select contract Option L and you withdraw all or part of your contract,
you may be subject to a withdrawal charge. A withdrawal charge applies if you
make a withdrawal in the first four contract years. You may withdraw amounts
totaling up to 10% of your prior anniversary's contract value free of charge
during the first four years of your contract. (We consider your initial purchase
payment to be the prior anniversary's contract value during the first contract
year.) We do not assess a withdrawal charge on this amount. The withdrawal
charge percentages that apply to you are shown below and are stated in your
contract. In addition, amounts withdrawn from a GPA more than 30 days before the
end of the applicable Guarantee Period are generally subject to a MVA. (See "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal
charge of 7%. The total amount we actually deduct from your contract is
$1,075.27. We determine this amount as follows:
AMOUNT REQUESTED $1,000
------------------------ OR ------ = $1,075.27
1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is
$75.27. We pay you the $1,000 you requested. If you make a full withdrawal of
your contract, we also will deduct the applicable contract administrative
charge.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 23
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE*
We deduct a charge (currently 0.70%) based on the GMIB benefit base for this
optional feature only if you select it. If selected, we deduct the charge from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB charge among the subaccounts, the GPAs and the one-
year fixed account in the same proportion your interest in each account bears to
your total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB charge from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB charge after
the rider effective date and it does not apply after annuity payouts begin.
* For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - 0.30%.
--------------------------------------------------------------------------------
24 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider;
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may
change in two ways -- in number and in value. The number of accumulation units
you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following benefits you have selected:
- Benefit Protector rider;
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 25
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY
If you select contract Option L and your net contract value(1) is at least
$10,000, you can choose to participate in the Special DCA program. There is no
charge for the Special DCA program. Under the Special DCA program, you can
allocate a new purchase payment to a six-month or twelve-month Special DCA
account.
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
You may only allocate a new purchase payment of at least $1,000 to a Special DCA
account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on
--------------------------------------------------------------------------------
26 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
the time period you select) from the time we receive your first purchase
payment. We make monthly transfers of your total Special DCA account value into
the GPAs, one-year fixed account and/or subaccount you select over the time
period you select (either six or twelve months). If you elect to transfer into a
GPA, you must meet the $1,000 minimum required investment limitation for each
transfer.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Special DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Special DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Special
DCA account at the beginning of the six or twelve-month period. Therefore, you
may receive less total interest than you would have if all your purchase
payments were in the Special DCA account from the beginning. If we receive any
of your multiple payments after the six or twelve-month period ends, you can
either allocate those payments to a new Special DCA account (if available) or to
any other accounts available under your contract.
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Special DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 27
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
For Contract Option L, it is our general policy to allow you to transfer
contract values from the one-year fixed account to the subaccounts or the GPAs
once a year on or within 30 days before or after the contract anniversary
(except for automated transfers, which can be set up at any time for certain
transfer periods subject to certain minimums). Transfers from the one-year
fixed account are not subject to a MVA. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction. For contracts with applications signed on or after June 16, 2003,
the amount of contract value transferred to the GPAs and the one-year fixed
account cannot result in the value of the GPAs and the one-year fixed account
in total being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
For Contract Option C applications dated on or after May 1, 2003, one-year
fixed account and GPAs are not available in most states.
For Contract Option C applications dated prior to May 1, 2003, one-year fixed
account and GPAs are not restricted in most states and our transfer policies
stated above are applicable.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
--------------------------------------------------------------------------------
28 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 29
THEIR MARKET TIMING POLICIES AND PROCEDURES TO TRANSACTIONS INVOLVING THE
PURCHASE AND EXCHANGE OF FUND SHARES. THIS ASSISTANCE MAY INCLUDE, BUT NOT BE
LIMITED TO, PROVIDING THE UNDERLYING FUND UPON REQUEST WITH YOUR SOCIAL SECURITY
NUMBER, TAXPAYER IDENTIFICATION NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED
IDENTIFIER, AND THE DETAILS OF YOUR CONTRACT TRANSACTIONS INVOLVING THE
UNDERLYING FUND. AN UNDERLYING FUND, IN ITS SOLE DISCRETION, MAY INSTRUCT US AT
ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER TRANSFERS OF CONTRACT VALUE TO OR
FROM THE UNDERLYING FUND, AND WE MUST FOLLOW THIS INSTRUCTION. WE RESERVE THE
RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN UNDERLYING FUND ANY REDEMPTION
FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED
BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS,
INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
--------------------------------------------------------------------------------
30 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office in good order before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay withdrawal charges if
you selected contract Option L, a contract administrative charge or any
applicable optional rider charges (see "Charges"). Additionally, federal income
taxes and penalties may apply. State and local income taxes may also apply (see
"Taxes"). You cannot make withdrawals after annuity payouts begin except under
Plan E (see "The Annuity Payout Period -- Annuity Payout Plans").
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 31
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code.
--------------------------------------------------------------------------------
32 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
However, if the owner is a trust or custodian, or an employer acting in a
similar capacity, ownership of the contract may be transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payment (ROP) death benefit;
Maximum Anniversary Value (MAV) death benefit; and
Enhanced Death Benefit Rider (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select the GMIB you must elect the EDB. Once you
elect a death benefit, you cannot change it. We show the option that applies in
your contract on your contract's data page. The combination of the contract and
death benefit option you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP)
The ROP is intended to help protect your beneficiaries financially in that they
will never receive less than your purchase payments adjusted for withdrawals. If
you or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greater of these two values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = -------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 33
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV)
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you may choose to add the MAV death benefit to your
contract at the time of purchase. Once you select the MAV death benefit you may
not cancel it.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each
contract anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
greater of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary minus adjusted partial withdrawals since that
anniversary) to the current contract value and we reset the MAV to the higher
value. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and subtract adjusted
partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments $20,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a ROP death benefit of: $18,636.36
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $29,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a MAV death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,022.73
ENHANCED DEATH BENEFIT RIDER (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue
--------------------------------------------------------------------------------
34 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
ages 75 to 79 because the benefit values may be limited after age 81. Be sure to
discuss with your investment professional whether or not the EDB is appropriate
for your situation.
If it is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB to your contract at the
time you purchase your contract. If you select the GMIB you must select the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary; or
4. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $ 22,800.00
------------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $ 25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
------------
for a ROP death benefit of: $ 23,456.79
------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 35
The MAV on the anniversary immediately preceding the date of death plus any purchase payments
made since that anniversary minus adjusted partial withdrawals made since that anniversary:
The MAV on the immediately preceding anniversary: $ 25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 -----------
for a MAV death benefit of: $ 23,456.79
------------
The 5% rising floor:
The variable account floor on the first contract anniversary is,
calculated as: $ 21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000 -----------
variable account floor benefit: $ 19,342.11
plus the one-year fixed account value: +5,300.00
------------
5% rising floor (value of the GPAs, one-year fixed account and the
variable account floor): $ 24,642.11
------------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on contract Option L from that point forward. If you elected
any optional contract features or riders, your spouse and the new annuitant (if
applicable) will be subject to all limitations and/or restrictions of those
features or riders just as if they were purchasing a new contract. The GMIB
rider and Benefit Protector Plus rider, if selected, will terminate. Continuance
of the Benefit Protector rider is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the Code; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or
--------------------------------------------------------------------------------
36 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB rider and the Benefit Protector Plus riders, if selected,
will terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the EDB.
We reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 37
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings).
The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
38 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange, or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the EDB. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 39
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
40 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV death benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years*,
the GMIB terminates** on the contract anniversary after the annuitant's 86th
birthday,
you can only exercise the GMIB within 30 days after a contract anniversary*,
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81, and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your investment professional.
* Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
** The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday; however, if you exercise the GMIB rider before
this time, your benefits will continue according to the annuity payout plan
you have selected.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 41
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit to your contract for
an additional annual charge which we describe below. If you select the GMIB, you
must elect the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances, we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate
your purchase payments or transfers to any of the subaccounts, GPAs or the one-
year fixed account. For contract Option C, you may allocate payments to the
subaccounts. We reserve the right to limit the amount you allocate to
subaccounts investing in the Columbia Variable Portfolio -- Cash Management Fund
to 10% of the total amount in the subaccounts. If we are required to activate
this restriction, and you have more than 10% of your subaccount value in this
fund, we will send you a notice and ask that you reallocate your contract value
so that the 10% limitation is satisfied within 60 days. We will terminate the
GMIB if you have not satisfied the limitation after 60 days.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of these four values:
1. contract value;
2. total purchase payments minus adjusted partial withdrawals; or
3. the maximum anniversary value at the last contract anniversary plus any
payments made since that anniversary minus adjusted partial withdrawals since
that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value and
the MAV.
subtract each payment from the 5% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 5% for the number of full contract years they
have been in the contract before we subtract them from the 5% rising floor.
For each payment, we calculate the market value adjustment to the contract
value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor
as:
PMT X CVG
------------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 5% increase of payments allocated to the
subaccounts as:
PMT X (1.05)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a
--------------------------------------------------------------------------------
42 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
"contingent event" (disability, terminal illness or confinement to a nursing
home or hospital, see "Charges -- Contingent events" for more details.)
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G. Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the GMIB benefit base for
annuity payouts calculated using the guaranteed annuity purchase rates under any
one of the payout plans listed above as long as the annuitant is between 50 and
86 years old on the retirement date.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base equal to the largest value. The
GMIB benefit base, less any applicable premium tax, is the value we apply to the
guaranteed annuity purchase rates stated in Table B of the contract to calculate
the minimum annuity payouts you will receive if you exercise the GMIB. If the
GMIB benefit base is greater than the contract value, the GMIB may provide a
higher annuity payout level than is otherwise available. However, the GMIB uses
guaranteed annuity purchase rates which may result in annuity payouts that are
less than those using the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB, you will receive the
higher standard payout option. The GMIB does not create contract value or
guarantee the performance of any investment option.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 43
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all your purchase payments to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $105,000
2 125,000 125,000 110,250
3 132,000 132,000 115,763
4 150,000 150,000 121,551
5 85,000 150,000 127,628
6 120,000 150,000 134,010
7 138,000 150,000 140,710
8 152,000 152,000 147,746
9 139,000 152,000 155,133
10 126,000 152,000 162,889 $162,889
11 138,000 152,000 171,034 171,034
12 147,000 152,000 179,586 179,586
13 163,000 163,000 188,565 188,565
14 159,000 163,000 197,993 197,993
15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73
15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B
of the contract. Payouts under the standard provisions of this contract will be
based on our annuity rates in effect at annuitization and are guaranteed to be
greater than or equal to the guaranteed annuity rates stated in Table B of the
contract. The fixed annuity payout available under the standard provisions of
this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the
GMIB as the payout available to you is equal to or less than the payout
available under the standard provisions of the contract. When the GMIB payout is
less than the payout available under the standard provisions of the contract,
you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout
--------------------------------------------------------------------------------
44 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
This fee currently costs 0.70% of the GMIB benefit base annually and it is taken
in a lump sum from the contract value on each contract anniversary at the end of
each contract year. If the contract is terminated or if annuity payouts begin,
we will deduct the fee at that time adjusted for the number of calendar days
coverage was in place. We cannot increase the GMIB fee after the rider effective
date and it does not apply after annuity payouts begin. We calculate the fee as
follows:
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs or the one-year
fixed account made in the six months before the contract anniversary
calculated as:
PT X VAT
------------
SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-
year fixed account within six months of the contract anniversary.
VAT = variable account floor on the date of (but prior to) the transfer.
SVT = value of the subaccounts on the date of (but prior to) the transfer.
FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and allocate all of your
payment to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU
1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735
2 150,000 0.70% Contract value = $150,000 1,050
3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 45
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the annuity payout period, you may
make full and partial withdrawals. If you make a full withdrawal, you can
elect to have us determine the present value of any remaining variable payouts
and pay it to you in a lump sum. We determine the present value of the
remaining annuity payouts which are assumed to remain level at the amount of
the payout that would have been made 7 days prior to the date we determine the
present value. If the original contract was an Option L contract, the discount
rate we use in the calculation is 5.17% for the assumed investment return of
3.5% and 6.67% for the assumed investment return of 5.0%. If the original
contract was an Option C contract, the discount rate we use in the calculation
will vary between 5.55% and 7.05% depending on the applicable assumed
investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan
E.") You can also take a portion of the discounted value once a year. If you
do so, your monthly payouts will be reduced by the proportion of your
withdrawal to the full discounted value. A 10% IRS penalty tax could apply if
you take a withdrawal. (See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
--------------------------------------------------------------------------------
46 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 47
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of
--------------------------------------------------------------------------------
48 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 49
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S tax status: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
--------------------------------------------------------------------------------
50 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 4.25% each time a purchase
payment is made for contract Option L and 1% for contract Option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% (for both contract options) of purchase payments
for a period of time we select. These commissions do not change depending on
which subaccounts you choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 51
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
--------------------------------------------------------------------------------
52 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 53
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of period $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46 $0.79
Accumulation unit value at end of period $0.60 $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46
Number of accumulation units outstanding at
end of period (000 omitted) 350 428 503 570 717 914 1,202 1,283 1,451 1,387
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of period $1.29 $1.16 $0.98 $1.68 $1.62 $1.41 $1.36 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.35 $1.29 $1.16 $0.98 $1.68 $1.62 $1.41 $1.36 $1.24 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 118 138 208 358 387 427 407 363 215 2
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of period $0.75 $0.69 $0.51 $0.87 $0.77 $0.79 $0.70 $0.65 $0.54 $0.79
Accumulation unit value at end of period $0.72 $0.75 $0.69 $0.51 $0.87 $0.77 $0.79 $0.70 $0.65 $0.54
Number of accumulation units outstanding at
end of period (000 omitted) 710 877 1,081 1,186 1,619 1,808 2,130 2,021 2,140 2,312
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47
Accumulation unit value at end of period $2.04 $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53
Number of accumulation units outstanding at
end of period (000 omitted) 2,171 2,609 9,757 10,453 12,248 8,733 8,279 9,515 7,119 7,272
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09
Accumulation unit value at end of period $1.58 $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 1,827 2,123 9,137 8,505 6,387 5,210 2,698 1,026 605 238
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit value at beginning of period $1.73 $1.39 $0.86 $1.59 $1.41 $1.44 $1.32 $1.23 $1.02 $1.00
Accumulation unit value at end of period $1.45 $1.73 $1.39 $0.86 $1.59 $1.41 $1.44 $1.32 $1.23 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 906 1,009 1,184 1,418 1,722 2,222 377 159 29 --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.25 $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 803 893 2,339 2,088 2,176 2,281 2,359 2,330 1,256 248
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit value at beginning of period $1.77 $1.54 $1.15 $2.03 $1.76 $1.60 $1.39 $1.23 $0.97 $1.00
Accumulation unit value at end of period $1.70 $1.77 $1.54 $1.15 $2.03 $1.76 $1.60 $1.39 $1.23 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 2,842 3,363 5,125 8,294 9,083 10,127 5,827 3,099 1,289 8
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.06 $0.87 $0.69 $1.32 $1.06 $1.01 $0.97 $0.95 $0.73 $1.00
Accumulation unit value at end of period $1.04 $1.06 $0.87 $0.69 $1.32 $1.06 $1.01 $0.97 $0.95 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) 158 187 260 292 726 815 744 882 256 14
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06
Accumulation unit value at end of period $2.12 $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,103 2,608 3,630 3,308 3,045 2,336 1,901 1,151 250
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
54 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.68 $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 131 165 253 474 771 847 873 749 442 55
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of period $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 2,449 3,186 4,141 5,501 9,245 10,913 11,340 11,643 4,692 966
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84 $1.00
Accumulation unit value at end of period $1.42 $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 396 517 595 936 1,425 1,562 1,549 1,200 1,018 286
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of period $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79 $1.00
Accumulation unit value at end of period $0.90 $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 108 113 584 602 874 1,950 234 212 71 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of period $1.64 $1.40 $1.00 $1.92 $1.76 $1.54 $1.43 $1.25 $0.94 $1.00
Accumulation unit value at end of period $1.50 $1.64 $1.40 $1.00 $1.92 $1.76 $1.54 $1.43 $1.25 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 44 49 68 87 98 101 108 109 86 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.51 $1.33 $1.05 $1.66 $1.72 $1.50 $1.46 $1.26 $0.98 $1.00
Accumulation unit value at end of period $1.46 $1.51 $1.33 $1.05 $1.66 $1.72 $1.50 $1.46 $1.26 $0.98
Number of accumulation units outstanding at
end of period (000 omitted) 2,208 2,626 5,001 6,104 5,949 6,248 3,864 1,094 458 --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.54 $1.39 $1.14 $1.70 $1.69 $1.47 $1.36 $1.21 $0.96 $1.00
Accumulation unit value at end of period $1.49 $1.54 $1.39 $1.14 $1.70 $1.69 $1.47 $1.36 $1.21 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 118 154 170 180 435 454 439 458 215 --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.15 $1.09 $0.75 $1.58 $1.58 $1.42 $1.37 $1.25 $0.95 $1.00
Accumulation unit value at end of period $1.10 $1.15 $1.09 $0.75 $1.58 $1.58 $1.42 $1.37 $1.25 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 211 315 410 507 677 773 870 898 614 11
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.51 $1.13 $0.70 $1.18 $1.17 $1.05 $1.01 $0.97 $0.73 $1.00
Accumulation unit value at end of period $1.33 $1.51 $1.13 $0.70 $1.18 $1.17 $1.05 $1.01 $0.97 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) 36 72 75 113 149 175 203 227 180 20
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93 $1.00
Accumulation unit value at end of period $1.28 $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 881 1,125 1,365 2,120 3,307 3,207 3,304 3,221 1,510 11
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85 $1.00
Accumulation unit value at end of period $2.57 $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 74 96 100 106 163 161 159 55 38 6
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (08/30/2002)
Accumulation unit value at beginning of period $2.24 $1.74 $1.38 $2.25 $2.75 $2.02 $1.75 $1.30 $0.96 $1.00
Accumulation unit value at end of period $2.33 $2.24 $1.74 $1.38 $2.25 $2.75 $2.02 $1.75 $1.30 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 41 47 66 99 111 141 136 149 28 1
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.32 $1.23 $0.86 $1.61 $1.44 $1.35 $1.31 $1.25 $0.97 $1.00
Accumulation unit value at end of period $1.29 $1.32 $1.23 $0.86 $1.61 $1.44 $1.35 $1.31 $1.25 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 56 78 93 180 289 319 300 302 167 --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.45 $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77
Number of accumulation units outstanding at
end of period (000 omitted) 296 371 429 566 864 940 833 690 347 12
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03 $1.00
Accumulation unit value at end of period $1.63 $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 2,158 2,738 9,304 8,701 9,868 6,464 4,642 2,922 1,544 10
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.82 $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 91 140 191 210 307 330 355 322 247 4
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 $1.00
Accumulation unit value at end of period $1.15 $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 71 94 120 136 185 196 167 147 87 12
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (10/05/1998)
Accumulation unit value at beginning of period $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93 $1.16
Accumulation unit value at end of period $1.15 $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,063 1,414 1,861 2,565 3,460 4,185 4,645 5,239 5,706
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of period $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93
Accumulation unit value at end of period $0.99 $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76
Number of accumulation units outstanding at
end of period (000 omitted) 947 1,199 1,363 1,487 1,885 2,110 2,185 2,258 2,177 1,856
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of period $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.55 $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 1,139 1,364 1,800 2,045 2,297 2,129 2,323 692 192 35
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.43 $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 277 324 434 491 679 717 623 663 493 12
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.82 $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 1,779 2,121 276 333 464 531 573 580 441 13
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 501 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25 $0.42
Accumulation unit value at end of period $0.58 $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 627 785 586 966 992 1,281 1,363 1,351 1,424 1,243
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 532 655 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19 $1.12
Accumulation unit value at end of period $1.78 $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19
Number of accumulation units outstanding at
end of period (000 omitted) 1,785 2,234 2,406 2,685 3,965 5,543 2,193 622 225 167
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of period $1.59 $1.36 $0.90 $1.75 $1.49 $1.40 $1.37 $1.33 $0.94 $1.00
Accumulation unit value at end of period $1.19 $1.59 $1.36 $0.90 $1.75 $1.49 $1.40 $1.37 $1.33 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 8 11 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of period $1.24 $1.12 $0.95 $1.63 $1.58 $1.38 $1.34 $1.23 $0.95 $1.00
Accumulation unit value at end of period $1.29 $1.24 $1.12 $0.95 $1.63 $1.58 $1.38 $1.34 $1.23 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 72 74 83 108 72 74 71 10 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of period $1.25 $1.16 $0.86 $1.46 $1.31 $1.34 $1.19 $1.11 $0.92 $1.00
Accumulation unit value at end of period $1.19 $1.25 $1.16 $0.86 $1.46 $1.31 $1.34 $1.19 $1.11 $0.92
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 653 834 1,528 1,406 472 174 48 24 21 132
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01 $1.00
Accumulation unit value at end of period $1.27 $1.21 $1.14 $1.01 $1.10 $1.07 $1.04 $1.04 $1.01 $1.01
Number of accumulation units outstanding at
end of period (000 omitted) 149 178 2,034 1,850 1,965 638 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 $1.00
Accumulation unit value at end of period $1.39 $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80
Number of accumulation units outstanding at
end of period (000 omitted) 634 679 1,821 1,767 1,539 1,423 623 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 $1.00 --
Accumulation unit value at end of period $1.34 $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 --
Number of accumulation units outstanding at
end of period (000 omitted) 540 619 709 709 647 681 810 502 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit value at beginning of period $1.67 $1.35 $0.84 $1.55 $1.39 $1.42 $1.31 $1.22 $1.02 $1.00
Accumulation unit value at end of period $1.40 $1.67 $1.35 $0.84 $1.55 $1.39 $1.42 $1.31 $1.22 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 93 91 108 143 124 136 140 85 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 $1.00
Accumulation unit value at end of period $1.05 $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 135 188 580 530 419 519 197 31 39 --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit value at beginning of period $1.71 $1.49 $1.12 $1.98 $1.72 $1.57 $1.37 $1.21 $0.97 $1.00
Accumulation unit value at end of period $1.63 $1.71 $1.49 $1.12 $1.98 $1.72 $1.57 $1.37 $1.21 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 1,114 1,216 1,544 2,073 2,145 2,526 1,386 524 -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.02 $0.84 $0.67 $1.29 $1.03 $0.99 $0.95 $0.94 $0.72 $1.00
Accumulation unit value at end of period $1.00 $1.02 $0.84 $0.67 $1.29 $1.03 $0.99 $0.95 $0.94 $0.72
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 $1.00
Accumulation unit value at end of period $1.93 $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89
Number of accumulation units outstanding at
end of period (000 omitted) 159 168 420 542 458 374 196 54 19 --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.61 $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 15 16 16 15 15 22 22 23 20 --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 $1.00
Accumulation unit value at end of period $1.23 $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 8 31 31 47 94 154 -- 138 153 --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.52 $1.43 $1.06 $1.82 $1.60 $1.34 $1.24 $1.07 $0.83 $1.00
Accumulation unit value at end of period $1.34 $1.52 $1.43 $1.06 $1.82 $1.60 $1.34 $1.24 $1.07 $0.83
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of period $0.96 $0.85 $0.72 $1.27 $1.16 $1.11 $1.04 $1.00 $0.79 $1.00
Accumulation unit value at end of period $0.87 $0.96 $0.85 $0.72 $1.27 $1.16 $1.11 $1.04 $1.00 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 23 23 76 94 130 452 79 25 -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of period $1.58 $1.36 $0.98 $1.88 $1.73 $1.52 $1.41 $1.25 $0.94 $1.00
Accumulation unit value at end of period $1.44 $1.58 $1.36 $0.98 $1.88 $1.73 $1.52 $1.41 $1.25 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 31 34 37 37 42 42 40 -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.46 $1.29 $1.02 $1.62 $1.69 $1.48 $1.45 $1.26 $0.98 $1.00
Accumulation unit value at end of period $1.41 $1.46 $1.29 $1.02 $1.62 $1.69 $1.48 $1.45 $1.26 $0.98
Number of accumulation units outstanding at
end of period (000 omitted) 1,129 1,222 1,650 1,870 1,946 2,067 1,345 383 8 8
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. GROWTH AND INCOME FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.48 $1.34 $1.10 $1.65 $1.64 $1.44 $1.34 $1.19 $0.96 $1.00
Accumulation unit value at end of period $1.42 $1.48 $1.34 $1.10 $1.65 $1.64 $1.44 $1.34 $1.19 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- 8 9 9 9 -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.11 $1.06 $0.73 $1.55 $1.55 $1.40 $1.35 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.06 $1.11 $1.06 $0.73 $1.55 $1.55 $1.40 $1.35 $1.24 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 37 37 37 51 38 52 63 48 -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.46 $1.09 $0.68 $1.15 $1.14 $1.03 $1.00 $0.96 $0.73 $1.00
Accumulation unit value at end of period $1.28 $1.46 $1.09 $0.68 $1.15 $1.14 $1.03 $1.00 $0.96 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $1.21 $1.12 $0.97 $1.27 $1.25 $1.14 $1.13 $1.04 $0.92 $1.00
Accumulation unit value at end of period $1.21 $1.21 $1.12 $0.97 $1.27 $1.25 $1.14 $1.13 $1.04 $0.92
Number of accumulation units outstanding at
end of period (000 omitted) 67 65 46 43 49 33 45 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of period $2.31 $2.07 $1.59 $2.60 $2.07 $1.61 $1.41 $1.10 $0.85 $1.00
Accumulation unit value at end of period $2.41 $2.31 $2.07 $1.59 $2.60 $2.07 $1.61 $1.41 $1.10 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 13 13 3 3 3 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS I SHARES (08/30/2002)
Accumulation unit value at beginning of period $2.16 $1.69 $1.34 $2.20 $2.70 $1.99 $1.74 $1.29 $0.96 $1.00
Accumulation unit value at end of period $2.25 $2.16 $1.69 $1.34 $2.20 $2.70 $1.99 $1.74 $1.29 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.27 $1.19 $0.84 $1.57 $1.41 $1.33 $1.29 $1.23 $0.96 $1.00
Accumulation unit value at end of period $1.23 $1.27 $1.19 $0.84 $1.57 $1.41 $1.33 $1.29 $1.23 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 170 183 178 209 210 239 206 63 -- --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.86 $1.63 $1.19 $2.04 $1.96 $1.70 $1.51 $1.30 $0.92 $1.00
Accumulation unit value at end of period $1.67 $1.86 $1.63 $1.19 $2.04 $1.96 $1.70 $1.51 $1.30 $0.92
Number of accumulation units outstanding at
end of period (000 omitted) 70 72 74 68 76 62 54 101 83 --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.50 $1.33 $1.14 $1.36 $1.26 $1.20 $1.19 $1.12 $1.04 $1.00
Accumulation unit value at end of period $1.48 $1.50 $1.33 $1.14 $1.36 $1.26 $1.20 $1.19 $1.12 $1.04
Number of accumulation units outstanding at
end of period (000 omitted) 673 772 1,984 1,801 2,174 1,584 1,042 417 -- --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of period $1.83 $1.52 $1.13 $1.85 $1.91 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.76 $1.83 $1.52 $1.13 $1.85 $1.91 $1.70 $1.58 $1.35 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- 16 17 19 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.32 $1.31 $1.06 $1.30 $1.33 $1.32 $1.18 $1.12 $0.97 $1.00
Accumulation unit value at end of period $1.28 $1.32 $1.31 $1.06 $1.30 $1.33 $1.32 $1.18 $1.12 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) -- -- 5 5 5 5 5 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.02 $0.91 $0.71 $1.18 $1.28 $1.12 $1.09 $1.00 $0.81 $1.00
Accumulation unit value at end of period $0.95 $1.02 $0.91 $0.71 $1.18 $1.28 $1.12 $1.09 $1.00 $0.81
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 $1.00
Accumulation unit value at end of period $1.05 $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 12 12 12 12 12 12 14 14 -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (07/31/2002)
Accumulation unit value at beginning of period $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 $1.00
Accumulation unit value at end of period $1.81 $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 509 542 656 739 794 763 746 325 -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93 $1.00
Accumulation unit value at end of period $1.37 $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 8 8 21 19 25 31 25 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96 $1.00
Accumulation unit value at end of period $1.76 $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 503 552 6 8 23 32 31 2 -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 11 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 $1.00 --
Accumulation unit value at end of period $2.36 $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 --
Number of accumulation units outstanding at
end of period (000 omitted) 4 5 4 5 4 5 5 5 -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 $1.00 --
Accumulation unit value at end of period $1.37 $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 --
Number of accumulation units outstanding at
end of period (000 omitted) 428 483 660 649 1,137 1,856 658 206 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS 59
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
60 EVERGREEN PATHWAYS VARIABLE ANNUITY -- PROSPECTUS
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45275 N (4/12)
PROSPECTUS
APRIL 30, 2012
WELLS FARGO
ADVANTAGE CHOICE(SM) VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION
FIXED/VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing in
Wells Fargo Advantage Choice Variable Annuity Contract Option L and Contract
Option C. The information in this prospectus applies to both contracts unless
stated otherwise. Prospectuses are also available for:
Columbia Funds Variable Series Trust II
The Dreyfus Socially Responsible Growth Fund, Inc. - Initial Shares
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM) - Initial Class
Oppenheimer Variable Account Funds - Service Shares
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE ONE-YEAR FIXED ACCOUNT................... 19
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 21
VALUING YOUR INVESTMENT...................... 24
MAKING THE MOST OF YOUR CONTRACT............. 25
WITHDRAWALS.................................. 31
TSA -- SPECIAL PROVISIONS.................... 31
CHANGING OWNERSHIP........................... 32
BENEFITS IN CASE OF DEATH.................... 32
OPTIONAL BENEFITS............................ 36
THE ANNUITY PAYOUT PERIOD.................... 45
TAXES........................................ 47
VOTING RIGHTS................................ 50
SUBSTITUTION OF INVESTMENTS.................. 51
ABOUT THE SERVICE PROVIDERS.................. 51
ADDITIONAL INFORMATION....................... 52
APPENDIX: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 54
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 59
--------------------------------------------------------------------------------
2 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Contract Option L offers a four year
withdrawal charge schedule and investment options in the GPAs, one-year fixed
account and/or the subaccounts. Contract Option C eliminates the withdrawal
charge schedule in exchange for a higher mortality and expense risk fee and
allows investment in the subaccounts only. Your investment professional can help
you determine which contract is best suited to your needs based on factors such
as your investment goals and how long you intend to invest.
PURPOSE: The purpose of these contracts is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. For contract
Option L, you may allocate your purchase payments to the GPAs, one-year fixed
account and/or subaccounts. For contract Option C, you may allocate purchase
payments to the subaccounts(1). These accounts, in turn, may earn returns that
increase the value of a contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, these contracts provide lifetime or other forms of payouts of your
contract value (less any applicable premium tax). It may not be advantageous for
you to purchase these contracts as a replacement for, or in addition to, an
existing annuity or life insurance contract.
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate purchase payments to the GPAs, one-year
fixed account and/or the subaccounts, depending on the contract option you
select.
If you select contract Option L, you may allocate your purchase payments among
any or all of:
the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (see "The Variable Account and the Funds")
the GPAs which earn interest at rates that we declare when you allocate
purchase payments or transfer contract value to these accounts. The required
minimum investment in a GPA is $1,000. These accounts may not be available in
all states. (See "The Guarantee Period Accounts (GPAs)" and "The One-Year
Fixed Account").
the one-year fixed account (if part of your contract), which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract" and "Transfer policies").
If you select contract Option C, you may allocate purchase payments to the
subaccounts only.(1)
(1) For applications dated May 1, 2003 or after, investment in the GPAs and one-
year fixed account for contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the GPAs and one-year
fixed account is not restricted in most states. Please check with your
investment professional to determine which applies in your state.
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Some states have
time limitations for making additional payments. (See "Buying Your Contract")
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 5
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. (We reserve the right to limit transfers to the GPAs and the
one-year fixed account if the interest rate we are then currently crediting is
equal to the minimum interest rate stated in the contract.) (see "Making the
Most of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
OPTIONAL BENEFITS: These contracts offer optional features that are available
for additional charges if you meet certain criteria. (see "Optional Benefits")
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of the amount withdrawn)
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose either contract Option L or Option C and the death benefit
guarantee provided. The combination you choose determines the fees you pay. The
table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES
Return of Purchase Payment (ROP) death 1.25% 1.40%
benefit 0.15%
Maximum Anniversary Value (MAV) death 1.35 1.50
benefit 0.15
Enhanced Death Benefit (EDB) 0.15 1.55 1.70
IF YOU SELECT CONTRACT OPTION C AND:
ROP death benefit 0.15 1.35 1.50
MAV death benefit 0.15 1.45 1.60
EDB 0.15 1.65 1.80
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%**
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
** For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB -- 0.30%.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.60% 1.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Cash Management Fund (Class 0.33% 0.13% 0.14% --% 0.60%(1)
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
The Dreyfus Socially Responsible Growth Fund, Inc., Initial 0.75 -- 0.10 -- 0.85
Shares
Fidelity(R) VIP Dynamic Capital Appreciation Portfolio 0.56 0.25 0.30 -- 1.11
Service Class 2
Fidelity(R) VIP High Income Portfolio Service Class 2 0.57 0.25 0.12 -- 0.94
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86 (2)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(3)
Fund - Institutional Shares
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(4)
Shares
MFS(R) Investors Trust Series - Initial Class 0.75 -- 0.07 -- 0.82
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(5)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(6)
3)
Wells Fargo Advantage VT Index Asset Allocation 0.55 0.25 0.26 -- 1.06(7)
Fund - Class 2
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(8)
2
--------------------------------------------------------------------------------
8 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Wells Fargo Advantage VT Intrinsic Value Fund - Class 2 0.55% 0.25% 0.37% 0.01% 1.18%(8)
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(8)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(9)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(8)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia Variable
Portfolio - High Yield Bond Fund (Class 3) and 1.055% for Columbia Variable
Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(5) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(6) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(7) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(8) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(9) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR
IF YOU WITHDRAW YOUR CONTRACT AT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with EDB $1,234 $2,017 $2,201 $4,562 $428 $1,302 $2,201 $4,562
Contract Option C
with EDB 438 1,332 2,250 4,652 438 1,332 2,250 4,652
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR
IF YOU WITHDRAW YOUR CONTRACT AT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L
with ROP death
benefit $1,065 $1,506 $1,279 $2,705 $245 $751 $1,279 $2,705
Contract Option C
with ROP death
benefit 255 782 1,330 2,809 255 782 1,330 2,809
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. (See "Revenue
we received from the funds may create potential conflicts of interest.") These
relationships may influence recommendations
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 11
your investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
12 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
The Dreyfus Seeks capital growth, with current income The Dreyfus Corporation
Socially as a secondary goal.
Responsible
Growth Fund,
Inc., Initial
Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks capital appreciation. Normally Fidelity Management &
Dynamic Capital invests primarily in common stocks of Research Company (FMR)
Appreciation domestic and foreign issuers. The Fund is the fund's manager.
Portfolio Service invests in either "growth" or "value" FMR Co., Inc. (FMRC) and
Class 2 stocks or both. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks a high level of current income, while Fidelity Management &
High Income also considering growth of capital. Research Company (FMR)
Portfolio Service Normally invests primarily in income- is the fund's manager.
Class 2 producing debt securities, preferred stocks FMR Co., Inc. (FMRC) and
and convertible securities, with an other investment
emphasis on lower-quality debt securities. advisers serve as sub-
May invest in non-income producing advisers for the fund.
securities, including defaulted securities
and common stocks. Invests in companies in
troubled or uncertain financial condition.
The Fund invests in domestic and foreign
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Trust Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term total return, consisting of Wells Fargo Funds
Advantage VT capital appreciation and current income. Management, LLC,
Index Asset adviser; Wells Capital
Allocation Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
Investment in the GPAs is not available under contract Option C(1).
The GPAs may not be available in some states.
(1) For applications dated May 1, 2003 or after, investment in the GPAs for
contract Option C is not allowed in most states. For applications dated
prior to May 1, 2003, investment in the GPAs is not restricted in most
states. Please check with your investment professional to determine which
applies in your state.
For contract Option L, you may allocate purchase payments to one or more of the
GPAs with guarantee periods declared by us. The minimum required investment in
each GPA is $1,000. There are restrictions on the amount you can allocate to
these accounts as well as on transfers from these accounts (see "Buying Your
Contract" and "Transfer policies"). These accounts are not available in all
states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new
--------------------------------------------------------------------------------
16 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
and existing RiverSource Life annuities, product design, competition and
RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 17
compares to the interest rate of a new GPA for the same number of years as the
Guarantee Period remaining on your GPA. This is summarized in the following
table.
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- )(N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- )(84/12) - 1] = $27.61
1 + .025 + .001
--------------------------------------------------------------------------------
18 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6% due to the withdrawal
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge.")
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge schedule under contract
Option L), unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep Strategy.
THE ONE-YEAR FIXED ACCOUNT
Investment in the one-year fixed account is not available for contract Option
C(1).
(1) For applications dated May 1, 2003 or after, investment in the one-year
fixed account for Contract Option C is not allowed in most states. For
applications dated prior to May 1, 2003, investment in the one-year fixed
account was not restricted in most states. Please check with your investment
professional to determine if this restriction applies to your state.
For contract Option L, you may allocate purchase payments or transfer
accumulated value to the one-year fixed account. Some states may restrict the
amount you can allocate to this account. We back the principal and interest
guarantees relating to the one-year fixed account. These guarantees are based on
the continued claims-paying ability of the company's general account. The value
of the one-year fixed account increases as we credit interest to the account.
Purchase payments and transfers to the one-year fixed account become part of our
general account. You should be aware that our general account is exposed to the
risks normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. The interest rate we apply to each purchase
payment or transfer to the one-year fixed account is guaranteed for one year.
Thereafter we will change the rates from time-to-time at our discretion. These
rates will be based on various factors including, but not limited to, the
interest rate environment, returns earned on investments backing these
annuities, the rates currently in effect for new and existing RiverSource Life
annuities, product design, competition, and RiverSource Life's revenues and
expenses. The guaranteed minimum interest rate offered may vary by state but
will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Making the Most
of Your Contract -- Transfer policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
contract Option L or Option C;
a death benefit option(1);
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 19
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the GPAs, the one-year fixed account and/or subaccounts in which you want to
invest(4);
how you want to make purchase payments; and
a beneficiary.
(1) If you and the annuitant are 79 or younger at contract issue, you may select
from either the ROP death benefit, MAV death benefit or EDB. If you or the
annuitant are 80 or older at contract issue, the ROP death benefit will
apply. EDB may not be available in all states.
(2) Not available with the EDB. May not be available in all states.
(3) Available at the time you purchase your contract if the annuitant is 75 or
younger at contract issue and you also select the EDB. May not be available
in all states.
(4) For applications dated May 1, 2003 or after, investment in the GPA account
and the one-year fixed account for Contract Option C is not allowed in most
states. For applications dated prior to May 1, 2003, investment in the GPA
account and the one-year fixed account was not restricted in most states.
Please check with your investment professional to determine whether this
restriction applies to your state. GPAs may not be available in some states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum investment for the GPAs. The
contract provides for allocation of purchase payments to the GPAs, the one-year
fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 minimum for the GPAs. For Contract Option L
contracts with applications signed on or after June 16, 2003, the amount of any
purchase payment allocated to the one-year fixed account in total cannot exceed
30% of the purchase payment. More than 30% of a purchase payment may be so
allocated if you establish a dollar cost averaging arrangement with respect to
the purchase payment according to procedures currently in effect, or you are
participating according to the rules of an asset allocation model portfolio
program available under the contract, if any.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
corporate office. We will credit additional purchase payments you make to your
accounts on the valuation date we receive them. If we receive an additional
purchase payment at our administrative office before the close of business, we
will credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment. If we receive an additional purchase payment at our corporate office at
or after the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the next valuation date after we received the payment.
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
--------------------------------------------------------------------------------
20 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP: $50 for additional payments.
If paying by any other method: $100 for additional payments.
MAXIMUM ALLOWABLE PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85.
$100,000 for issue ages 86 to 90.
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary, or earlier if the contract
is withdrawn. We prorate this charge among the subaccounts, the GPAs and the
one-year fixed account in the same proportion your interest in each account
bears to your total contract value. Some states limit the amount of any contract
charge allocated to the GPAs and one-year fixed account.
We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 21
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees. These fees are based on the contract you
select (either Option L or Option C) and the death benefit that applies to your
contract:
CONTRACT OPTION L CONTRACT OPTION C
ROP death benefit 1.25% 1.35%
MAV death benefit 1.35 1.45
EDB 1.55 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Option C contracts have no withdrawal charge schedule but they carry higher
mortality and expense risk fees than Option L contracts.
If you select contract Option L and you withdraw all or part of your contract,
you may be subject to a withdrawal charge. A withdrawal charge applies if you
make a withdrawal in the first four contract years. You may withdraw amounts
totaling up to 10% of your prior anniversary's contract value free of charge
during the first four years of your contract. (We consider your initial purchase
payment to be the prior anniversary's contract value during the first contract
year.) We do not assess a withdrawal charge on this amount. The withdrawal
charge percentages that apply to you are shown below and are stated in your
contract. In addition, amounts withdrawn from a GPA more than 30 days before the
end of the applicable Guarantee Period are generally subject to a MVA. (See "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA).")
CONTRACT YEAR FOR WITHDRAWAL CHARGE
CONTRACT OPTION L PERCENTAGE
1-2 8%
3 7
4 6
5 and later 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
EXAMPLE: Assume you requested a withdrawal of $1,000 and there is a withdrawal
charge of 7%. The total amount we actually deduct from your contract is
$1,075.27. We determine this amount as follows:
AMOUNT REQUESTED $1,000
------------------------ OR ------ = $1,075.27
1.00 - WITHDRAWAL CHARGE .93
By applying the 7% withdrawal charge to $1,075.27, the withdrawal charge is
$75.27. We pay you the $1,000 you requested. If you make a full withdrawal of
your contract, we also will deduct the applicable contract administrative
charge.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
--------------------------------------------------------------------------------
22 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 23
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE*
We deduct a charge (currently 0.70%) based on the GMIB benefit base for this
optional feature only if you select it. If selected, we deduct the charge from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB charge among the subaccounts, the GPAs and the one-
year fixed account in the same proportion your interest in each account bears to
your total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB charge from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB charge after
the rider effective date and it does not apply after annuity payouts begin.
* For applications signed prior to May 1, 2003, the following current annual
rider charges apply: GMIB - 0.30%.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider;
- Benefit Protector Plus rider; and/or
- Guaranteed Minimum Income Benefit rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
--------------------------------------------------------------------------------
24 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
- Guaranteed Minimum Income Benefit rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 25
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
SPECIAL DOLLAR-COST AVERAGING (SPECIAL DCA) PROGRAM FOR CONTRACT OPTION L ONLY
If you select contract Option L and your net contract value(1) is at least
$10,000, you can choose to participate in the Special DCA program. There is no
charge for the Special DCA program. Under the Special DCA program, you can
allocate a new purchase payment to a six-month or twelve-month Special DCA
account.
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
You may only allocate a new purchase payment of at least $1,000 to a Special DCA
account. You cannot transfer existing contract values into a Special DCA
account. Each Special DCA account lasts for either six or twelve months
(depending on the time period you select) from the time we receive your first
purchase payment. We make monthly transfers of your total Special DCA account
value into the GPAs, one-year fixed account and/or subaccounts you select over
the time period you select (either six or twelve months). If you elect to
transfer into a GPA, you must meet the $1,000 minimum required investment
limitation for each transfer.
We reserve the right to credit a lower interest rate to each Special DCA account
if you select the GPAs or the one-year fixed account as part of your Special DCA
transfers. We will change the interest rate on each Special DCA account from
time to time at our discretion. From time to time, we may credit interest to the
DCA account at promotional rates that are higher than those we credit to the
one-year fixed account. We base these rates on competition and on the interest
rate we are crediting to the one-year fixed account at the time of the change.
Once we credit interest to a particular purchase payment that rate does not
change even if we change the rate we credit on new purchase payments or if your
net contract value changes.
We credit each Special DCA account with current guaranteed annual rate that is
in effect on the date we receive your purchase payment. However, we credit this
annual rate over the six or twelve-month period on the balance remaining in your
Special DCA account. Therefore, the net effective interest rate you receive is
less than the stated annual rate. We do not credit this interest after we
transfer the value out of the Special DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the remainder of the term.
However, you may establish another new Special DCA account and allocate new
purchase payments to it when we change the interest rates we offer on these
accounts. If you are funding a Special DCA account from multiple sources, we
apply each purchase payment to the account and credit interest on that purchase
payment on the date we receive it. This means that all purchase payments may not
be in the Special DCA account at the beginning of the six or twelve-month
period. Therefore, you may receive less total interest than you would have if
all your purchase payments were in the Special DCA account from the beginning.
If we receive any of your multiple payments after the six or twelve-month period
ends, you can either allocate those payments to a new Special DCA account (if
available) or to any other accounts available under your contract.
--------------------------------------------------------------------------------
26 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
You cannot participate in the Special DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Special DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Special DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Special DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Special DCA account balance. We will transfer the remaining balance
from your Special DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Special DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Special DCA program at any time. Any
modifications will not affect any purchase payments that are already in a
Special DCA account. For more information on the Special DCA program, contact
your investment professional.
The Special DCA program does not guarantee that any subaccount will gain in
value nor will it protect against a decline in value if market prices fall.
Because dollar-cost averaging involves continuous investing, your success will
depend upon you willingness to continue to invest regularly through periods of
low price levels. Dollar-cost averaging can be an effective way to help meet
your long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Special
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Special DCA program to match. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 27
the interest rate we are then currently crediting to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
For Contract Option L, it is our general policy to allow you to transfer
contract values from the one-year fixed account to the subaccounts or the GPAs
once a year on or within 30 days before or after the contract anniversary
(except for automated transfers, which can be set up at any time for certain
transfer periods subject to certain minimums). Transfers from the one-year
fixed account are not subject to a MVA. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction. For contracts with applications signed on or after June 16, 2003,
the amount of contract value transferred to the GPAs and the one-year fixed
account cannot result in the value of the GPAs and the one-year fixed account
in total being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
For Contract Option C applications dated on or after May 1, 2003, one-year
fixed account and GPAs are not available in most states.
For Contract Option C applications dated prior to May 1, 2003, one-year fixed
account and GPAs are not restricted in most states and our transfer policies
stated above are applicable.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
28 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 29
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
--------------------------------------------------------------------------------
30 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office in good order before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay withdrawal charges if
you selected contract Option L, a contract administrative charge or any
applicable optional rider charges (see "Charges"). Additionally, federal income
taxes and penalties may apply. State and local income taxes may also apply (see
"Taxes"). You cannot make withdrawals after annuity payouts begin except under
Plan E (see "The Annuity Payout Period -- Annuity Payout Plans").
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 31
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under your contract:
Return of Purchase Payment (ROP) death benefit;
Maximum Anniversary Value (MAV) death benefit; and
Enhanced Death Benefit Rider (EDB).
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If you select the GMIB you must elect the EDB. Once you
elect a death benefit, you cannot change it. We show the option that applies in
your contract on your contract's data page. The combination of the contract and
death benefit option you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
--------------------------------------------------------------------------------
32 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP)
The ROP is intended to help protect your beneficiaries financially in that they
will never receive less than your purchase payments adjusted for withdrawals. If
you or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greater of these two values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = -------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT (MAV)
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you may choose to add the MAV death benefit to your
contract at the time of purchase. Once you select the MAV death benefit you may
not cancel it.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): MAV is a value that we calculate on each
contract anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
greater of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 33
minus adjusted partial withdrawals since that anniversary) to the current
contract value and we reset the MAV to the higher value. We stop resetting the
MAV after you or the annuitant reach age 81. However, we continue to add
subsequent purchase payments and subtract adjusted partial withdrawals from the
MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments $20,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a ROP death benefit of: $18,636.36
----------
The MAV on the anniversary immediately preceding the date of death plus any
purchase payments made since that anniversary minus adjusted partial withdrawals
made since that anniversary:
The MAV on the immediately preceding anniversary: $29,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a MAV death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,022.73
ENHANCED DEATH BENEFIT RIDER (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited
after age 81. Be sure to discuss with your investment professional whether or
not the EDB is appropriate for your situation.
If it is available in your state and both you and the annuitant are 79 or
younger at contract issue, you may choose to add the EDB to your contract at the
time you purchase your contract. If you select the GMIB you must select the EDB.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the maximum anniversary value on the anniversary immediately preceding the
date of death plus any payments since that anniversary minus adjusted partial
withdrawals since that anniversary; or
4. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to
--------------------------------------------------------------------------------
34 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $ 22,800.00
------------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $ 25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
------------
for a ROP death benefit of: $ 23,456.79
------------
The MAV on the anniversary immediately preceding the date of death plus any purchase payments
made since that anniversary minus adjusted partial withdrawals made since that anniversary:
The MAV on the immediately preceding anniversary: $ 25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 -----------
for a MAV death benefit of: $ 23,456.79
------------
The 5% rising floor:
The variable account floor on the first contract anniversary is,
calculated as: $ 21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000 -----------
variable account floor benefit: $ 19,342.11
plus the one-year fixed account value: +5,300.00
------------
5% rising floor (value of the GPAs, one-year fixed account and the
variable account floor): $ 24,642.11
------------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5% RISING
FLOOR: $24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 35
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on contract Option L from that point forward. If you elected
any optional contract features or riders, your spouse and the new annuitant (if
applicable) will be subject to all limitations and/or restrictions of those
features or riders just as if they were purchasing a new contract. The GMIB
rider and Benefit Protector Plus rider, if selected, will terminate. Continuance
of the Benefit Protector rider is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the Code; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract. The GMIB rider and the Benefit
Protector Plus riders, if selected, will terminate. Continuance of the Benefit
Protector rider is optional. (See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
--------------------------------------------------------------------------------
36 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the EDB.
We reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking RMDs (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
investment professional and tax advisor whether or not the Benefit Protector is
appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 37
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings).
The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional
--------------------------------------------------------------------------------
38 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
annual charge (see "Charges"). The Benefit Protector Plus provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary
and it does not provide any benefit beyond what is offered under the Benefit
Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange, or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the EDB. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select an Option L contract with the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 39
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your contract is in its third year of the
withdrawal charge schedule, so we will withdraw $39,500
($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We
calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
--------------------------------------------------------------------------------
40 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV death benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years*,
the GMIB terminates** on the contract anniversary after the annuitant's 86th
birthday,
you can only exercise the GMIB within 30 days after a contract anniversary*,
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81, and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your investment professional.
* Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
** The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday; however, if you exercise the GMIB rider before
this time, your benefits will continue according to the annuity payout plan
you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy RMDs, will reduce the GMIB benefit base
(defined below), which in turn may reduce or eliminate the amount of any annuity
payments available under the rider (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Consult a tax advisor before you
purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit to your contract for
an additional annual charge which we describe below. If you select the GMIB, you
must elect the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances, we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: For contract Option L, you may allocate
your purchase payments or transfers to any of the subaccounts, GPAs or the one-
year fixed account. For contract Option C, you may allocate payments to the
subaccounts. We reserve the right to limit the amount you allocate to
subaccounts investing in the Columbia Variable Portfolio -- Cash Management Fund
to 10% of the total amount in the subaccounts. If we are required to activate
this restriction, and you have more than 10% of your subaccount value in this
fund, we will send you a notice and ask that you reallocate your contract value
so that the 10% limitation is satisfied within 60 days. We will terminate the
GMIB if you have not satisfied the limitation after 60 days.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 41
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of these four values:
1. contract value;
2. total purchase payments minus adjusted partial withdrawals; or
3. the maximum anniversary value at the last contract anniversary plus any
payments made since that anniversary minus adjusted partial withdrawals since
that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value and
the MAV.
subtract each payment from the 5% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 5% for the number of full contract years they
have been in the contract before we subtract them from the 5% rising floor.
For each payment, we calculate the market value adjustment to the contract
value, MAV, the GPAs and the one-year fixed account value of the 5% rising floor
as:
PMT X CVG
------------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 5% increase of payments allocated to the
subaccounts as:
PMT X (1.05)(CY)
CY = the full number of contract years the payment has been in the
contract.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a "contingent event" (disability, terminal illness or confinement to a nursing
home or hospital, see "Charges -- Contingent events" for more details.)
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G. Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
--------------------------------------------------------------------------------
42 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the GMIB benefit base for
annuity payouts calculated using the guaranteed annuity purchase rates under any
one of the payout plans listed above as long as the annuitant is between 50 and
86 years old on the retirement date.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base equal to the largest value. The
GMIB benefit base, less any applicable premium tax, is the value we apply to the
guaranteed annuity purchase rates stated in Table B of the contract to calculate
the minimum annuity payouts you will receive if you exercise the GMIB. If the
GMIB benefit base is greater than the contract value, the GMIB may provide a
higher annuity payout level than is otherwise available. However, the GMIB uses
guaranteed annuity purchase rates which may result in annuity payouts that are
less than those using the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB, you will receive the
higher standard payout option. The GMIB does not create contract value or
guarantee the performance of any investment option.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday; however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all your purchase payments to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 43
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $105,000
2 125,000 125,000 110,250
3 132,000 132,000 115,763
4 150,000 150,000 121,551
5 85,000 150,000 127,628
6 120,000 150,000 134,010
7 138,000 150,000 140,710
8 152,000 152,000 147,746
9 139,000 152,000 155,133
10 126,000 152,000 162,889 $162,889
11 138,000 152,000 171,034 171,034
12 147,000 152,000 179,586 179,586
13 163,000 163,000 188,565 188,565
14 159,000 163,000 197,993 197,993
15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73
15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates of 3% stated in Table B
of the contract. Payouts under the standard provisions of this contract will be
based on our annuity rates in effect at annuitization and are guaranteed to be
greater than or equal to the guaranteed annuity rates stated in Table B of the
contract. The fixed annuity payout available under the standard provisions of
this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 212,000 1,250.80 1,193.56 968.84
At the 15th contract anniversary you would not experience a benefit from the
GMIB as the payout available to you is equal to or less than the payout
available under the standard provisions of the contract. When the GMIB payout is
less than the payout available under the standard provisions of the contract,
you will receive the higher standard payout.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
This fee currently costs 0.70% of the GMIB benefit base annually and it is taken
in a lump sum from the contract value on each contract anniversary at the end of
each contract year. If the contract is terminated or if annuity payouts begin,
we will
--------------------------------------------------------------------------------
44 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
deduct the fee at that time adjusted for the number of calendar days coverage
was in place. We cannot increase the GMIB fee after the rider effective date and
it does not apply after annuity payouts begin. We calculate the fee as follows:
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs or the one-year
fixed account made in the six months before the contract anniversary
calculated as:
PT X VAT
------------
SVT
PT = the amount transferred from the subaccounts to the GPAs or the one-
year fixed account within six months of the contract anniversary.
VAT = variable account floor on the date of (but prior to) the transfer.
SVT = value of the subaccounts on the date of (but prior to) the transfer.
FAV = the value of your GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and allocate all of your
payment to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU
1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735
2 150,000 0.70% Contract value = $150,000 1,050
3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below except under annuity payout plan E.
Under both contract Option L and Option C, you also decide whether we will make
annuity payouts on a fixed or variable basis, or a combination of fixed and
variable. The amount available to purchase payouts under the plan you select is
the contract value on your retirement date after any rider charges have been
deducted, plus any positive or negative MVA (less any applicable premium tax).
Additionally, we currently allow you to use part of the amount available to
purchase payouts, leaving any remaining contract value to accumulate on a tax-
deferred basis. If you select a variable annuity payout, we reserve the right to
limit the number of subaccounts in which you may invest. The GPAs are not
available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin, see "Making the Most of Your Contract -- Transfer policies."
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 45
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the annuity payout period, you may
make full and partial withdrawals. If you make a full withdrawal, you can
elect to have us determine the present value of any remaining variable payouts
and pay it to you in a lump sum. We determine the present value of the
remaining annuity payouts which are assumed to remain level at the amount of
the payout that would have been made 7 days prior to the date we determine the
present value. If the original contract was an Option L contract, the discount
rate we use in the calculation is 5.17% for the assumed investment return of
3.5% and 6.67% for the assumed investment return of 5.0%. If the original
contract was an Option C contract, the discount rate we use in the calculation
will vary between 5.55% and 7.05% depending on the applicable assumed
investment rate. (See "Charges -- Withdrawal charge under Annuity Payout Plan
E.") You can also take a portion of the discounted value once a year. If you
do so, your monthly payouts will be reduced by the proportion of your
withdrawal to the full discounted value. A 10% IRS penalty tax could apply if
you take a withdrawal. (See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
--------------------------------------------------------------------------------
46 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 47
taxable as ordinary income to the beneficiary in the year he or she receives the
payments. (See also "Benefits in Case of Death -- If You Die Before the
Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
--------------------------------------------------------------------------------
48 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 49
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
--------------------------------------------------------------------------------
50 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 4.25% each time a purchase
payment is made for contract Option L and 1% for contract Option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 51
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference
--------------------------------------------------------------------------------
52 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330. The SEC also maintains an Internet site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC. In addition to this prospectus, the SAI and
information about the contract, information incorporated by reference is
available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 53
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at end
of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09
Accumulation unit value at end of period $1.58 $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 1,827 2,123 9,137 8,505 6,387 5,210 2,698 1,026 605 238
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at end
of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (08/26/1999)
Accumulation unit value at beginning of period $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93
Accumulation unit value at end of period $1.71 $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 1,146 1,400 1,627 2,018 3,017 4,475 3,380 3,074 2,699 2,403
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.29 $1.03 $0.75 $1.24 $1.31 $1.19 $1.15 $0.99 $0.68 $0.83
Accumulation unit value at end of period $1.17 $1.29 $1.03 $0.75 $1.24 $1.31 $1.19 $1.15 $0.99 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 75 105 168 175 215 290 323 274 197 173
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.25 $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) 803 893 2,339 2,088 2,176 2,281 2,359 2,330 1,256 248
----------------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (08/26/1999)
Accumulation unit value at beginning of period $0.85 $0.75 $0.57 $0.88 $0.83 $0.77 $0.75 $0.72 $0.58 $0.82
Accumulation unit value at end of period $0.84 $0.85 $0.75 $0.57 $0.88 $0.83 $0.77 $0.75 $0.72 $0.58
Number of accumulation units outstanding at end
of period (000 omitted) 139 139 201 254 372 374 419 461 433 431
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $1.35 $1.16 $0.87 $1.50 $1.43 $1.27 $1.07 $1.07 $0.87 $0.95
Accumulation unit value at end of period $1.30 $1.35 $1.16 $0.87 $1.50 $1.43 $1.27 $1.07 $1.07 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 75 50 73 59 103 95 91 75 59 7
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $1.64 $1.46 $1.03 $1.40 $1.38 $1.26 $1.25 $1.16 $0.93 $0.91
Accumulation unit value at end of period $1.67 $1.64 $1.46 $1.03 $1.40 $1.38 $1.26 $1.25 $1.16 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 73 89 126 167 212 221 208 190 108 24
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of period $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06
Accumulation unit value at end of period $2.12 $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94
Number of accumulation units outstanding at end
of period (000 omitted) 812 1,103 2,608 3,630 3,308 3,045 2,336 1,901 1,151 250
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of period $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34 $1.33
Accumulation unit value at end of period $1.80 $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34
Number of accumulation units outstanding at end
of period (000 omitted) 253 310 433 475 605 706 734 760 676 542
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.74 $1.56 $1.17 $1.69 $1.65 $1.41 $1.41 $1.26 $0.97 $0.99
Accumulation unit value at end of period $1.75 $1.74 $1.56 $1.17 $1.69 $1.65 $1.41 $1.41 $1.26 $0.97
Number of accumulation units outstanding at end
of period (000 omitted) 520 611 767 778 1,317 1,595 1,286 1,054 597 224
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
54 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.68 $1.77 $1.40 $1.10 $1.66 $1.73 $1.50 $1.40 $1.14 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 131 165 253 474 771 847 873 749 442 55
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $0.65 $0.52 $0.36 $0.64 $0.59 $0.55 $0.53 $0.48 $0.36 $0.51
Accumulation unit value at end of period $0.61 $0.65 $0.52 $0.36 $0.64 $0.59 $0.55 $0.53 $0.48 $0.36
Number of accumulation units outstanding at end
of period (000 omitted) 750 957 898 1,034 1,786 2,054 2,089 2,279 1,928 967
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of period $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) 2,449 3,186 4,141 5,501 9,245 10,913 11,340 11,643 4,692 966
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (10/04/1999)
Accumulation unit value at beginning of period $2.69 $2.18 $1.66 $2.68 $2.63 $2.30 $2.06 $1.66 $1.31 $1.40
Accumulation unit value at end of period $2.48 $2.69 $2.18 $1.66 $2.68 $2.63 $2.30 $2.06 $1.66 $1.31
Number of accumulation units outstanding at end
of period (000 omitted) 677 832 1,840 2,222 2,403 2,113 1,230 591 432 423
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (09/22/1999)
Accumulation unit value at beginning of period $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67 $0.87
Accumulation unit value at end of period $0.93 $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67
Number of accumulation units outstanding at end
of period (000 omitted) 244 348 522 746 1,109 1,487 1,581 1,430 1,449 1,109
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (08/26/1999)
Accumulation unit value at beginning of period $0.91 $0.80 $0.67 $1.18 $1.07 $1.02 $0.95 $0.91 $0.71 $0.95
Accumulation unit value at end of period $0.83 $0.91 $0.80 $0.67 $1.18 $1.07 $1.02 $0.95 $0.91 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 702 821 1,009 1,233 1,646 1,879 2,133 2,822 2,936 3,287
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (10/30/1997)
Accumulation unit value at beginning of period $1.45 $1.34 $1.06 $1.54 $1.45 $1.26 $1.21 $1.13 $0.92 $1.10
Accumulation unit value at end of period $1.43 $1.45 $1.34 $1.06 $1.54 $1.45 $1.26 $1.21 $1.13 $0.92
Number of accumulation units outstanding at end
of period (000 omitted) 2,494 2,967 3,385 4,142 5,535 7,315 3,274 4,188 4,903 5,619
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit value at beginning of period $1.01 $0.92 $0.74 $1.12 $1.03 $0.92 $0.87 $0.79 $0.66 $0.84
Accumulation unit value at end of period $0.97 $1.01 $0.92 $0.74 $1.12 $1.03 $0.92 $0.87 $0.79 $0.66
Number of accumulation units outstanding at end
of period (000 omitted) 108 173 195 262 527 652 657 588 505 346
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (09/22/1999)
Accumulation unit value at beginning of period $2.12 $1.89 $1.44 $2.34 $1.85 $1.43 $1.24 $0.97 $0.72 $0.95
Accumulation unit value at end of period $2.23 $2.12 $1.89 $1.44 $2.34 $1.85 $1.43 $1.24 $0.97 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 680 798 879 996 1,393 1,751 1,748 1,935 1,996 2,205
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.45 $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 296 371 429 566 864 940 833 690 347 12
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03 $1.00
Accumulation unit value at end of period $1.63 $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03
Number of accumulation units outstanding at end
of period (000 omitted) 2,158 2,738 9,304 8,701 9,868 6,464 4,642 2,922 1,544 10
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of period $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 $1.00
Accumulation unit value at end of period $1.15 $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 71 94 120 136 185 196 167 147 87 12
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of period $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93
Accumulation unit value at end of period $0.99 $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 947 1,199 1,363 1,487 1,885 2,110 2,185 2,258 2,177 1,856
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 256 347 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of period $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.55 $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 1,139 1,364 1,800 2,045 2,297 2,129 2,323 692 192 35
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.09 $0.98 $0.86 $1.23 $1.15 $1.04 $1.01 $0.94 $0.78 $0.90
Accumulation unit value at end of period $1.14 $1.09 $0.98 $0.86 $1.23 $1.15 $1.04 $1.01 $0.94 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 648 844 989 1,141 1,532 1,765 1,736 1,457 1,313 1,043
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.43 $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 277 324 434 491 679 717 623 663 493 12
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.14 $1.01 $0.88 $1.41 $1.39 $1.19 $1.14 $1.04 $0.84 $1.05
Accumulation unit value at end of period $1.10 $1.14 $1.01 $0.88 $1.41 $1.39 $1.19 $1.14 $1.04 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 995 1,173 1,566 1,247 1,750 1,970 2,186 1,526 1,128 922
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.82 $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 1,779 2,121 276 333 464 531 573 580 441 13
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 501 -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25 $0.42
Accumulation unit value at end of period $0.58 $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25
Number of accumulation units outstanding at end
of period (000 omitted) 627 785 586 966 992 1,281 1,363 1,351 1,424 1,243
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19 $1.12
Accumulation unit value at end of period $1.78 $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19
Number of accumulation units outstanding at end
of period (000 omitted) 1,785 2,234 2,406 2,685 3,965 5,543 2,193 622 225 167
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $0.99 $1.01 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding at end
of period (000 omitted) 653 834 1,528 1,406 472 174 48 24 21 132
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80 $1.00
Accumulation unit value at end of period $1.39 $1.49 $1.29 $1.03 $1.77 $1.67 $1.42 $1.27 $1.10 $0.80
Number of accumulation units outstanding at end
of period (000 omitted) 634 679 1,821 1,767 1,539 1,423 623 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2003)
Accumulation unit value at beginning of period $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 $1.00 --
Accumulation unit value at end of period $1.34 $1.29 $1.12 $0.92 $1.62 $1.60 $1.42 $1.36 $1.31 --
Number of accumulation units outstanding at end
of period (000 omitted) 540 619 709 709 647 681 810 502 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.64 $1.47 $0.97 $1.32 $1.32 $1.21 $1.19 $1.08 $0.92 $1.00
Accumulation unit value at end of period $1.70 $1.64 $1.47 $0.97 $1.32 $1.32 $1.21 $1.19 $1.08 $0.92
Number of accumulation units outstanding at end
of period (000 omitted) 1,573 1,532 530 531 665 974 531 170 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.56 $1.25 $0.91 $1.51 $1.61 $1.47 $1.42 $1.22 $0.84 $1.00
Accumulation unit value at end of period $1.40 $1.56 $1.25 $0.91 $1.51 $1.61 $1.47 $1.42 $1.22 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of period $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02 $1.00
Accumulation unit value at end of period $1.05 $1.06 $1.05 $1.01 $1.05 $1.02 $1.00 $1.00 $1.01 $1.02
Number of accumulation units outstanding at end
of period (000 omitted) 135 188 580 530 419 519 197 31 39 --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2003)
Accumulation unit value at beginning of period $1.48 $1.31 $1.00 $1.55 $1.46 $1.36 $1.34 $1.28 $1.00 --
Accumulation unit value at end of period $1.46 $1.48 $1.31 $1.00 $1.55 $1.46 $1.36 $1.34 $1.28 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.56 $1.35 $1.01 $1.76 $1.68 $1.50 $1.26 $1.27 $1.00 --
Accumulation unit value at end of period $1.49 $1.56 $1.35 $1.01 $1.76 $1.68 $1.50 $1.26 $1.27 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.65 $1.48 $1.05 $1.43 $1.42 $1.30 $1.29 $1.20 $1.00 --
Accumulation unit value at end of period $1.68 $1.65 $1.48 $1.05 $1.43 $1.42 $1.30 $1.29 $1.20 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- 11 11 11 42 33 --
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89 $1.00
Accumulation unit value at end of period $1.93 $2.21 $1.75 $1.27 $2.15 $1.90 $1.72 $1.48 $1.21 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 159 168 420 542 458 374 196 54 19 --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.38 $1.16 $0.99 $1.75 $2.25 $1.90 $1.70 $1.32 $1.00 --
Accumulation unit value at end of period $1.27 $1.38 $1.16 $0.99 $1.75 $2.25 $1.90 $1.70 $1.32 --
Number of accumulation units outstanding at end
of period (000 omitted) 57 58 67 72 63 49 58 102 -- --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.75 $1.58 $1.19 $1.72 $1.69 $1.45 $1.46 $1.30 $1.00 --
Accumulation unit value at end of period $1.76 $1.75 $1.58 $1.19 $1.72 $1.69 $1.45 $1.46 $1.30 --
Number of accumulation units outstanding at end
of period (000 omitted) 116 141 163 211 384 323 299 191 95 --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.61 $1.71 $1.36 $1.07 $1.62 $1.69 $1.47 $1.38 $1.14 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 15 16 16 15 15 22 22 23 20 --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.33 $1.06 $0.75 $1.33 $1.22 $1.14 $1.11 $1.01 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.33 $1.06 $0.75 $1.33 $1.22 $1.14 $1.11 $1.01 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 8 8 8 8 8 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87 $1.00
Accumulation unit value at end of period $1.23 $1.27 $1.16 $0.94 $1.52 $1.50 $1.29 $1.19 $1.07 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 8 31 31 47 94 154 -- 138 153 --
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2003)
Accumulation unit value at beginning of period $2.09 $1.70 $1.30 $2.10 $2.07 $1.82 $1.64 $1.33 $1.00 --
Accumulation unit value at end of period $1.92 $2.09 $1.70 $1.30 $2.10 $2.07 $1.82 $1.64 $1.33 --
Number of accumulation units outstanding at end
of period (000 omitted) 328 351 586 656 751 676 425 165 -- --
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2003)
Accumulation unit value at beginning of period $1.38 $1.24 $1.04 $1.69 $1.75 $1.57 $1.51 $1.33 $1.00 --
Accumulation unit value at end of period $1.41 $1.38 $1.24 $1.04 $1.69 $1.75 $1.57 $1.51 $1.33 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- 54 -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (03/03/2003)
Accumulation unit value at beginning of period $1.29 $1.14 $0.96 $1.69 $1.54 $1.47 $1.38 $1.32 $1.00 --
Accumulation unit value at end of period $1.17 $1.29 $1.14 $0.96 $1.69 $1.54 $1.47 $1.38 $1.32 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- 59 -- --
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.07 $0.99 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 $1.07 $0.99 $0.79 $1.15 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 12 12 12 12 12 12 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2003)
Accumulation unit value at beginning of period $1.55 $1.42 $1.14 $1.73 $1.60 $1.44 $1.37 $1.25 $1.00 --
Accumulation unit value at end of period $1.49 $1.55 $1.42 $1.14 $1.73 $1.60 $1.44 $1.37 $1.25 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.80% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2003)
Accumulation unit value at beginning of period $2.83 $2.53 $1.93 $3.16 $2.51 $1.95 $1.70 $1.33 $1.00 --
Accumulation unit value at end of period $2.96 $2.83 $2.53 $1.93 $3.16 $2.51 $1.95 $1.70 $1.33 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.86 $1.63 $1.19 $2.04 $1.96 $1.70 $1.51 $1.30 $0.92 $1.00
Accumulation unit value at end of period $1.67 $1.86 $1.63 $1.19 $2.04 $1.96 $1.70 $1.51 $1.30 $0.92
Number of accumulation units outstanding at end
of period (000 omitted) 70 72 74 68 76 62 54 101 83 --
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.50 $1.33 $1.14 $1.36 $1.26 $1.20 $1.19 $1.12 $1.04 $1.00
Accumulation unit value at end of period $1.48 $1.50 $1.33 $1.14 $1.36 $1.26 $1.20 $1.19 $1.12 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 673 772 1,984 1,801 2,174 1,584 1,042 417 -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.32 $1.31 $1.06 $1.30 $1.33 $1.32 $1.18 $1.12 $0.97 $1.00
Accumulation unit value at end of period $1.28 $1.32 $1.31 $1.06 $1.30 $1.33 $1.32 $1.18 $1.12 $0.97
Number of accumulation units outstanding at end
of period (000 omitted) -- -- 5 5 5 5 5 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/01/2002)
Accumulation unit value at beginning of period $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84 $1.00
Accumulation unit value at end of period $1.05 $1.29 $1.19 $0.98 $1.77 $1.67 $1.33 $1.20 $1.06 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 12 12 12 12 12 12 14 14 -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (07/31/2002)
Accumulation unit value at beginning of period $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96 $1.00
Accumulation unit value at end of period $1.81 $1.92 $1.57 $1.17 $1.75 $1.87 $1.58 $1.52 $1.29 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 509 542 656 739 794 763 746 325 -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.40 $1.26 $1.11 $1.60 $1.51 $1.37 $1.33 $1.24 $1.00 --
Accumulation unit value at end of period $1.47 $1.40 $1.26 $1.11 $1.60 $1.51 $1.37 $1.33 $1.24 --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- 166 --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93 $1.00
Accumulation unit value at end of period $1.37 $1.60 $1.40 $1.24 $2.15 $1.91 $1.58 $1.39 $1.19 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 8 8 21 19 25 31 25 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.35 $1.21 $1.05 $1.69 $1.67 $1.44 $1.39 $1.27 $1.00 --
Accumulation unit value at end of period $1.30 $1.35 $1.21 $1.05 $1.69 $1.67 $1.44 $1.39 $1.27 --
Number of accumulation units outstanding at end
of period (000 omitted) 392 421 462 406 411 409 465 288 -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of period $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96 $1.00
Accumulation unit value at end of period $1.76 $1.89 $1.61 $1.14 $1.60 $1.46 $1.41 $1.38 $1.32 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 503 552 6 8 23 32 31 2 -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 11 -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 $1.00 --
Accumulation unit value at end of period $2.36 $2.52 $2.02 $1.35 $2.34 $2.10 $1.74 $1.67 $1.49 --
Number of accumulation units outstanding at end
of period (000 omitted) 4 5 4 5 4 5 5 5 -- --
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2003)
Accumulation unit value at beginning of period $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 $1.00 --
Accumulation unit value at end of period $1.37 $1.28 $1.22 $1.11 $1.10 $1.06 $1.04 $1.04 $1.01 --
Number of accumulation units outstanding at end
of period (000 omitted) 428 483 660 649 1,137 1,856 658 206 -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE VARIABLE ANNUITY -- PROSPECTUS 59
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45270 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
SIGNATURE VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc.
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
J.P. Morgan Series Trust II
Lazard Retirement Series, Inc.
Lincoln Variable Insurance Product Trust (LVIP)
MFS(R) Variable Insurance Trust(SM)
Putnam Variable Trust - Class IB Shares
Royce Capital Fund
Third Avenue Variable Series Trust
Wanger Advisors Trust
Please read the prospectuses carefully and keep them for future reference.
This contract provides for contract value credits. The death benefits for
contracts with such credits may be lower than for contracts without such
credits. The amount of the credit may be more than offset by the reduction in
the death benefits provided. The credits may be reversed. (See "Valuing Your
Investment -- Contract Value Credits.")
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 12
FINANCIAL STATEMENTS......................... 12
THE VARIABLE ACCOUNT AND THE FUNDS........... 12
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 18
THE ONE-YEAR FIXED ACCOUNT................... 20
BUYING YOUR CONTRACT......................... 21
CHARGES...................................... 23
VALUING YOUR INVESTMENT...................... 27
MAKING THE MOST OF YOUR CONTRACT............. 28
WITHDRAWALS.................................. 34
TSA -- SPECIAL PROVISIONS.................... 34
CHANGING OWNERSHIP........................... 35
BENEFITS IN CASE OF DEATH.................... 35
OPTIONAL BENEFITS............................ 39
THE ANNUITY PAYOUT PERIOD.................... 45
TAXES........................................ 46
VOTING RIGHTS................................ 50
SUBSTITUTION OF INVESTMENTS.................. 50
ABOUT THE SERVICE PROVIDERS.................. 51
ADDITIONAL INFORMATION....................... 52
APPENDIX A: 8% PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL................ 53
APPENDIX B: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 55
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 59
--------------------------------------------------------------------------------
2 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Some states have
time limitations for making additional payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. (We reserve the right to limit transfers to the GPAs and the
one-year fixed account if the interest rate we are then currently crediting is
equal to the minimum interest rate stated in the contract.) (see "Making the
Most of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (See "Benefits in Case of Death")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 7%
2 7
3 6
4 6
5 5
6 4
7 2
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
Variable account administrative charge 0.15%
Mortality and expense risk fee 1.25
TOTAL ANNUAL VARIABLE ACCOUNT EXPENSES 1.40%
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.35%*
(As a percentage of the adjusted contract value charged annually on the contract
anniversary.)
8% PERFORMANCE CREDIT RIDER (PCR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
* This fee apples only if you elect this optional feature.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 3.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75% 0.25% 0.19% --% 1.19%
(Class B)
AllianceBernstein VPS Intermediate Bond Portfolio (Class B) 0.45 0.25 0.20 -- 0.90
AllianceBernstein VPS Large Cap Growth Portfolio (Class B) 0.75 0.25 0.09 -- 1.09
Columbia Variable Portfolio - Balanced Fund (Class 3) 0.64 0.13 0.16 -- 0.93(1)
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Fidelity(R) VIP Growth & Income Portfolio Service Class 0.46 0.10 0.13 -- 0.69
Fidelity(R) VIP Mid Cap Portfolio Service Class 0.56 0.10 0.10 -- 0.76
Fidelity(R) VIP Overseas Portfolio Service Class 0.71 0.10 0.14 -- 0.95
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Goldman Sachs VIT Strategic Growth Fund - Institutional 0.75 -- 0.10 -- 0.85(2)
Shares
Goldman Sachs VIT Strategic International Equity 0.85 -- 0.19 -- 1.04(3)
Fund - Institutional Shares
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(4)
Fund - Institutional Shares
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(5)
Shares
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series I 0.75 -- 0.33 -- 1.08(6)
Shares
Janus Aspen Series Enterprise Portfolio: Service Shares 0.64 0.25 0.05 -- 0.94
Janus Aspen Series Global Technology Portfolio: Service 0.64 0.25 0.16 -- 1.05
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Janus Aspen Series Overseas Portfolio: Service Shares 0.60 0.25 0.06 -- 0.91
--------------------------------------------------------------------------------
8 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
JPMorgan Insurance Trust U.S. Equity Portfolio - Class 1 0.55% --% 0.24% --% 0.79%
Shares
Lazard Retirement International Equity Portfolio - Service 0.75 0.25 0.12 -- 1.12
Shares
Lazard Retirement U.S. Strategic Equity Portfolio - Service 0.70 0.25 2.42 -- 3.37(7)
Shares
LVIP Baron Growth Opportunities Fund - Service Class 1.00 0.25 0.08 -- 1.33(8)
MFS(R) New Discovery Series - Initial Class 0.90 -- 0.08 -- 0.98
MFS(R) Research Series - Initial Class 0.75 -- 0.13 -- 0.88
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT International Growth Fund - Class IB Shares 0.93 0.25 0.33 -- 1.51(9)
Royce Capital Fund - Micro-Cap Portfolio, Investment Class 1.25 -- 0.07 0.02 1.34
Royce Capital Fund - Small-Cap Portfolio, Investment Class 1.00 -- 0.05 -- 1.05
Third Avenue Value Portfolio 0.90 -- 0.36 -- 1.26(10)
Wanger International 0.89 -- 0.13 -- 1.02(11)
Wanger USA 0.86 -- 0.08 -- 0.94(11)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.79% for Columbia Variable
Portfolio - Balanced Fund (Class 3), 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia Variable
Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia Variable
Portfolio - Large Cap Growth Fund (Class 3) and 1.055% for Columbia
Variable Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.71%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.114%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.83%.
(3) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.81%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.144%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.99%.
(4) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(5) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(6) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(7) The Investment Manager has contractually agreed to waive its fee and, if
necessary, reimburse the Portfolio through April 30, 2013, to the extent
total annual portfolio operating expenses exceed 1.00% of the average daily
net assets, exclusive of taxes, brokerage, interest on borrowings, fees and
expenses of acquired funds and extraordinary expenses. This agreement can
only be amended by agreement of the Fund and the Investment Manager to
lower the net amount shown and will terminate automatically in the event of
termination of the Investment Management Agreement between the Investment
Manager and the Fund, on behalf of the Portfolio.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 9
(8) Lincoln Investment Advisors Corporation (the "adviser") has contractually
agreed to reimburse the Fund to the extent that the total annual fund
operating expenses exceed 1.29% of the average daily net assets. The
agreement will continue at least through April 30, 2013 and cannot be
terminated before that date without the mutual agreement of the Trust's
board of trustees and the adviser.
(9) Putnam Management has a contractual obligation to limit certain fund
expenses through April 30, 2013. This obligation may be modified or
discontinued only with approval of the Board of Trustees. After expense
reimbursements, net expenses would be 1.49%.
(10) The Fund's advisor has contractually agreed, for one year from March 1,
2012, to waive receipt of advisory fees and/or reimburse Fund expenses in
order to limit total annual expenses (exclusive of taxes, interest,
brokerage commissions, acquired fund fees and expenses, and extraordinary
items) to 1.30% of average daily net assets, subject to later reimbursement
in certain circumstances. The Adviser recovered previously waived fees of
0.04% for the portfolio for the year ended December 31, 2011.
(11) Other expenses have been restated to reflect contractual changes to certain
other fees.
--------------------------------------------------------------------------------
10 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. This example assumes the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. It assumes that you select the optional GMIB. Although your actual costs
may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,254 $2,254 $3,243 $5,420 $554 $1,654 $2,743 $5,420
MINIMUM EXPENSES. This example assumes the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. It assumes that you do not select any optional benefits. Although your
actual costs maybe higher, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$935 $1,321 $1,731 $2,615 $235 $721 $1,231 $2,615
(1) In these examples, the contract administrative charge is $30.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
12 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 13
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks to generate income and price AllianceBernstein L.P.
VPS Intermediate appreciation without assuming what
Bond Portfolio AllianceBernstein considers to be undue
(Class B) risk.
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Bala- through a combination of capital growth and Investment Advisers, LLC
nced Fund (Class current income.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks high total return through a Fidelity Management &
Growth & Income combination of current income and capital Research Company (FMR)
Portfolio Service appreciation. Normally invests a majority is the fund's manager.
Class of assets in common stocks with a focus on FMR Co., Inc. (FMRC) and
those that pay current dividends and show other investment
potential for capital appreciation. Invests advisers serve as sub-
in domestic and foreign issuers. The Fund advisers for the fund.
invests in either "growth" stocks or
"value" stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Strategic Growth Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Strategic Management International
International
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series I Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Enterprise LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Global LLC
Technology
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Janus LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Overseas LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
JPMorgan Seeks high total return from a portfolio of J.P. Morgan Investment
Insurance Trust selected equity securities. Management Inc.
U.S. Equity
Portfolio - Class
1 Shares
----------------------------------------------------------------------------------------
Lazard Retirement Seeks long-term capital appreciation. Lazard Asset Management,
International LLC
Equity
Portfolio - Serv-
ice Shares
----------------------------------------------------------------------------------------
Lazard Retirement Seeks long-term capital appreciation. Lazard Asset Management,
U.S. Strategic LLC
Equity
Portfolio - Serv-
ice Shares
----------------------------------------------------------------------------------------
LVIP Baron Growth Seeks capital appreciation through long- Lincoln Investment
Opportunities term investments in securities of small and Advisors Corporation,
Fund - Service mid-sized companies with undervalued assets adviser; BAMCO, Inc.,
Class or favorable growth prospects. sub-adviser.
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Research Seeks capital appreciation. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Seeks long-term capital appreciation. Putnam Investment
International Management, LLC,
Growth adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Royce Capital Seeks long-term growth of capital. Royce & Associates, LLC
Fund - Micro-Cap
Portfolio,
Investment Class
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 17
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Royce Capital Seeks long-term growth of capital. Royce & Associates, LLC
Fund - Small-Cap
Portfolio,
Investment Class
----------------------------------------------------------------------------------------
Third Avenue Seeks long-term capital appreciation by Third Avenue Management
Value Portfolio acquiring common stocks of well-financed LLC
companies (meaning companies with high
quality assets and conservative levels of
liabilities) at a discount to what the
Adviser believes is their intrinsic value.
----------------------------------------------------------------------------------------
Wanger Seeks long-term capital appreciation. Columbia Wanger Asset
International Management, LLC
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The minimum
required investment in each GPA is $1,000. There are restrictions on the amount
you can allocate to these accounts as well as on transfers from these accounts
(see "Buying Your Contract" and "Transfer policies"). These accounts are not
offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine Future
Rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the Guarantee Period without receiving a MVA (see "Market
Value Adjustment (MVA)" below). During this 30 day window you may choose to
start a new Guarantee Period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may
--------------------------------------------------------------------------------
18 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
commit to any particular type of investment. Our investment strategy will
incorporate the use of a variety of debt instruments having price durations
tending to match the applicable guarantee periods. These instruments include,
but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies - Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) - or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 19
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed
--------------------------------------------------------------------------------
20 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
for one year. Thereafter we will change the rates from time-to-time at our
discretion. These rates will be based on various factors including, but not
limited to, the interest rate environment, returns earned on investments backing
these annuities, the rates currently in effect for new and existing RiverSource
Life annuities, product design, competition, and RiverSource Life's revenues and
expenses. The guaranteed minimum interest rate offered may vary by state but
will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
a death benefit option if both you and the annuitant are 79 or younger at
contract issue(1);
the optional Guaranteed Minimum Income Benefit Rider(2);
the optional 8% Performance Credit Rider(2);
the one-year fixed account, GPAs and/or subaccounts in which you want to
invest(3);
how you want to make purchase payments;
the date you want to start receiving annuity payouts (the retirement date);
and
a beneficiary.
(1) If you and the annuitant are 79 or younger at contract issue, you may select
the ROP, MAV or EDB death benefit. The EDB not be available in all states.
If either you or the annuitant are 80 or older at contract issue, the ROP
death benefit will apply.
(2) You may select either the GMIB or the PCR, but not both. Riders may not be
available in all states. The GMIB is only available if the annuitant is 75
or younger at contract issue. If you select the GMIB you must select either
the MAV death benefit or the EDB.
(3) Some states may restrict the amount you can allocate to the GPAs and the
one-year fixed account. GPAs are not available under contracts issued in
Maryland, Oregon, Pennsylvania or Washington and may not be available in
other states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum required investment for the GPAs.
For contracts with applications signed on or after June 16, 2003, the amount of
any purchase payment allocated to the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish a dollar cost averaging arrangement
with respect to the purchase payment according to procedures currently in
effect, or you are participating according to the rules of an asset allocation
model portfolio program available under the contract, if any.
We apply your initial purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a SIP. You must make an
initial purchase payment of at least $5,000 in South Carolina, Texas or
Washington or $2,000 in all other states. Then, to begin the SIP, you will
complete and send a form and your first SIP payment along with your application.
There is no charge for SIP. You can stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 21
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age for
nonqualified annuities and Roth IRAs and for qualified annuities the date
specified below. You can also select a date within the maximum limits. Your
selected date can align with your actual retirement from a job, or it can be a
different date, depending on your needs and goals and on certain restrictions.
You also can change the retirement date, provided you send us written
instructions at least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payments
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85
$100,000 for issue ages 86 to 90
* These limits apply in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase maximum limits. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory
--------------------------------------------------------------------------------
22 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
obligations. Under these circumstances, we may refuse to implement requests for
transfers, withdrawals or death benefits until instructions are received from
the appropriate governmental authority or a court of competent jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee and it totals 1.25% of their average daily net assets on an
annual basis. This fee includes coverage under any of the three death benefit
options. This fee covers the mortality and expense risk that we assume. This fee
does not apply to the GPAs or the one-year fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract, you may be subject to a withdrawal
charge. A withdrawal charge applies if all or part of the withdrawal amount is
from any purchase payment we received less than eight years before the date of
withdrawal. The withdrawal charge percentages that apply to you are shown in
your contract. In addition, amounts withdrawn from a GPA more than 30 days
before the end of the applicable Guarantee Period will be subject to a MVA. (See
"The Fixed Accounts -- Market Value Adjustments (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 7%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
2%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no withdrawal charge as to that payment.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 23
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value; and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment to be the prior anniversary's contract
value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ----------- X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of these payments by the
applicable withdrawal charge percentage, and then totaling the withdrawal
charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn.
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 7%
2 7
3 6
4 6
5 5
6 4
7 2
Thereafter 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
--------------------------------------------------------------------------------
24 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
We receive these payments:
- $10,000 initial;
- $8,000 on the fifth contract anniversary;
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
400 $8,000 purchase payment is in its fifth year from receipt, withdrawn with a
5% withdrawal charge; and
360 $6,000 purchase payment is in its third year from receipt, withdrawn with a
6% withdrawal charge.
----
$760
WAIVER OF WITHDRAWAL CHARGE
We do not assess a withdrawal charge for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent they exceed contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
death benefits;
withdrawals you make under your contract's "Waiver of Withdrawal Charges"
provision. To the extent permitted by state law, your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
We will waive withdrawal charges that we normally assess upon full or partial
withdrawal if you provide proof satisfactory to us that, as of the date you
request the withdrawal, you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. (See your contract for
additional conditions and restrictions on this waiver); and
to the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 25
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge a fee (currently 0.35%) based on the adjusted contract value for this
optional feature only if you select it. If selected, we deduct the fee from the
contract value on your contract anniversary at the end of each contract year. We
prorate the GMIB fee among the subaccounts, GPAs and the one-year fixed account
in the same proportion your interest in each account bears to your total
contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB fee after the
rider effective date and it does not apply after annuity payouts begin.
We calculate the fee as follows: 0.35% X (CV + ST - FAV)
CV = contract value on the contract anniversary.
ST = transfers from the subaccounts to the GPAs or the one-year fixed account
made six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts, and not on the GPAs or the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
The GMIB fee percentage is 0.35%.
We calculate the charge for the GMIB as follows:
Contract value on the contract anniversary: $73,250.00
plus transfers from the subaccounts to the one-year fixed account
in the six months before the contract anniversary: +15,000.00
minus the value of the one-year fixed account on the contract
anniversary: -15,250.00
----------
$73,000.00
The GMIB fee charged to you: 0.35% x $73,000 = $ 255.50
8% PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.25% of your contract value for this optional feature only
if you select it. If selected, we deduct the PCR fee from your contract value on
your contract anniversary date at the end of each contract year. We prorate this
fee among the subaccounts, GPAs and the one-year fixed account in the same
proportion as your interest in each account bears to your total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the PCR fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the PCR fee.
--------------------------------------------------------------------------------
26 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any contract value credits allocated to the GPAs and the one-year fixed
account;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any contract value credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 27
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
CONTRACT VALUE CREDITS
You are eligible to receive a contract value credit if you select the ROP Death
Benefit. Before annuity payouts begin while this contract is in force we will
apply contract value credits to your contract beginning on the eighth contract
anniversary if there are "eligible purchase payments." Generally, we will apply
contract value credits on an annual basis at your contract anniversary. However,
we reserve the right to apply contract value credits on a quarterly or a monthly
basis.
ELIGIBLE PURCHASE PAYMENTS: purchase payments not previously withdrawn that are
no longer subject to a withdrawal charge (i.e., that are eight or more years
old).
ANNUAL CONTRACT VALUE CREDIT FORMULA: 0.50% X (CV X (EPP / TPP))
CV = contract value at the time of the calculation.
EPP = eligible purchase payments at the time of the calculation.
TPP = total purchase payments at the time of the calculation.
If we calculate and apply contract value credits on a quarterly basis, we will
change the percentage we use in the calculation from 0.50% to 0.125%. If we
calculate and apply the credit on a monthly basis, we will change the percentage
we use in the calculation from 0.50% to 0.04167%.
We allocate contract value credits to the fixed accounts and subaccounts
according to the asset allocation instructions that you have in place at the
time we apply the contract value credit. We continue to apply contract value
credits for the life of your contract until total withdrawal or annuity payouts
begin. The contract value credits will be taxable when we distribute contract
value to you.
The contract value credit is available because of lower costs associated with a
reduced death benefit guarantee. Because the guaranteed death benefit is lower
in situations where the contract value credit is paid, there may be
circumstances where you may be worse off for having received the credit than in
other contracts. In particular, if the market were to decline, and a death
benefit became payable, the amount paid might be less.
EXAMPLE
You purchase a contract with a payment of $100,000 and you select the ROP
Death Benefit.
You make an additional payment on the fourth contract anniversary of $60,000.
Your contract value on the eighth contract anniversary grows to $250,000. We
choose to apply contract value credits on an annual basis. Your eligible
purchase payment on the eighth contract anniversary is the original $100,000
payment; the additional $60,000 payment made on the fourth contract
anniversary is still subject to a withdrawal charge. We calculate the contract
value credit as follows:
0.50% x ($250,000 x ($100,000 / $160,000) = $781.25
After application of the contract value credit, your contract value on the
eighth contract anniversary would be $250,781.25.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of
--------------------------------------------------------------------------------
28 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
your choice. If you participate in an Interest Sweep strategy the interest you
earn will be less than the annual interest rate we apply because there will be
no compounding. There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
TIERED DOLLAR-COST AVERAGING (TIERED DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Tiered DCA program. There is no charge for the Tiered DCA program. Under
the Tiered DCA program, you can allocate a new purchase payment to one of two
special Tiered DCA accounts. We determine which Tiered DCA account you are
eligible for as follows:
IF YOUR NET CONTRACT VALUE(1) IS ... WE ALLOCATE YOUR NEW PURCHASE PAYMENTS TO:
$10,000-$49,999 Tier 1 DCA account
$50,000 or more Tier 2 DCA account(2)
(1) "Net contract value" equals your current contract value plus any new
purchase payment you make. If this is a new contract funded by purchase
payments from multiple sources, we determine your net contract value based
on the purchase payments, withdrawal requests and exchange requests
submitted with your application.
(2) You cannot allocate your new purchase payments to a Tier 1 DCA account if
you are eligible to participate in a Tier 2 DCA account.
You may only allocate a new purchase payment of at least $1,000 to the Tiered
DCA account for which you are eligible. You cannot transfer existing contract
values into the Tiered DCA account. Each Tiered DCA account lasts for only six
months from the time we receive your first purchase payment. We make monthly
transfers of your total Tiered DCA account value into the GPAs, the one-year
fixed account and/or subaccounts you select over the six-month period. If you
elect to transfer into a GPA, you must meet the $1,000 minimum required
investment limitation for each transfer.
We reserve the right to credit a lower interest rate to each Tiered DCA account
if you select the GPAs or the one-year fixed account as part of your Tiered DCA
transfers. We credit higher rates on the Tier 2 DCA account than on the Tier 1
DCA account. We will change the interest rate on each Tiered DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Tiered DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment, that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes. We credit each Tiered DCA account with current
guaranteed annual rate that is in effect on the date we receive your purchase
payment. However, we credit this annual rate over the six-month period on the
balance remaining in your Tiered DCA account. Therefore, the net effective
interest rate you receive is less than the stated annual rate. We do not credit
this interest after we transfer the value out of the Tiered DCA account into the
accounts you selected.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 29
If you make additional purchase payments while a Tiered DCA account term is in
progress, the amounts you allocate to an existing Tiered DCA account will be
transferred out of the Tiered DCA account over the remainder of the term. If you
are funding a Tiered DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Tiered
DCA account at the beginning of the six-month period. Therefore, you may receive
less total interest than you would have if all your purchase payments were in
the Tiered DCA account from the beginning. If we receive any of your multiple
payments after the six-month period ends, you can either allocate those payments
to a new Tiered DCA account (if available) or to any other accounts available
under your contract.
You cannot participate in the Tiered DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Tiered DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Tiered DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Tiered DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Tiered DCA account balance. We will transfer the remaining balance
from your Tiered DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Tiered DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Tiered DCA program at any time. Any
modifications will not affect any purchase payments that are already in a Tiered
DCA account. For more information on the Tiered DCA program, contact your
investment professional.
The Tiered DCA program does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Tiered
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Tiered DCA program to match. We will restart the rebalancing period you selected
as of the date we record your change. You also can ask us in writing to stop
rebalancing your contract value. You must allow 30 days for us to change any
instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
--------------------------------------------------------------------------------
30 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. For contracts issued before June 16, 2003, we have
removed this restriction, and you may transfer contract values from the one-
year fixed account to the subaccounts at any time. We will inform you at least
30 days in advance of the day we intend to reimpose this restriction.
For contracts with applications signed on or after June 16, 2003, the amount
of contract value transferred to the GPAs and the one-year fixed account
cannot result in the value of the GPAs and the one-year fixed account in total
being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 31
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
--------------------------------------------------------------------------------
32 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 33
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Plan E. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the
--------------------------------------------------------------------------------
34 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
employer either by affirmative election or inadvertent action causes
contributions under a plan that is subject to ERISA to be made to this contract,
we will not be responsible for any obligations and requirements under ERISA and
the regulations thereunder, unless we have prior written agreement with the
employer. You should consult with your employer to determine whether your 403(b)
plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB rider, the rider will terminate upon transfer of ownership. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are three death benefit options under this contract:
Return of Purchase Payments (ROP) Death Benefit;
Maximum Anniversary Value (MAV) Death Benefit; and
Enhanced Death Benefit (EDB) rider.
If either you or the annuitant are 80 or older at contract issue, the ROP death
benefit will apply. If both you and the annuitant are 79 or younger at contract
issue, you can elect either the ROP death benefit, the MAV death benefit or EDB
death benefit
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 35
rider (if its available in your state) on your application. If you select GMIB
you must select either the MAV death benefit or the EDB death benefit rider.
Once you elect an option, you cannot change it. We show the option that applies
in your contract.
There are no additional charges for any of the death benefit options. However,
if you select ROP death benefit you may be eligible for contract value credits
(see "Valuing Your Investments -- Contract Value Credits").
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you chose when you purchased the contract. If a contract
has more than one person as the owner, we will pay benefits upon the first to
die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT (ROP)
The ROP is intended to help protect your beneficiaries financially in that they
will never receive less than your purchase payments adjusted for withdrawals. If
you or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greater of these two values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = -------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary you make an additional purchase payment of
$5,000.
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal.
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If both you and the annuitant are age 79 or younger at contract issue, you may
choose to add the MAV death benefit to your contract. If you select the
Guaranteed Minimum Income Benefit Rider you must select either the MAV death
benefit or the EDB death benefit rider.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments applied to the contract since that anniversary minus
adjusted partial withdrawals since that anniversary.
--------------------------------------------------------------------------------
36 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary minus adjusted partial withdrawals since that
anniversary) to the current contract value and we reset the MAV to the higher
value. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and subtract adjusted
partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the MAV death benefit as follows:
Contract value at death: $20,500.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $20,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $20,000
$22,000 = -1,363.64
----------
for a death benefit of: $18,636.36
----------
The MAV immediately preceding the date of death plus any payments made since that
anniversary minus adjusted partial withdrawals:
MAV on the prior anniversary: $29,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$27,022.73
ENHANCED DEATH BENEFIT (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited
after age 81. Be sure to discuss with your investment professional whether or
not the EDB is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 79
or younger at contract issue, you may choose to add the EDB to your contract. If
you select the Guaranteed Minimum Income Benefit Rider you must select either
the MAV death benefit or the EDB rider.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%;
plus any subsequent amounts allocated to the subaccounts;
minus adjusted transfers and partial withdrawals from the subaccounts.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 37
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
The death benefit is calculated as follows:
Contract value at death: $ 22,800.00
-----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $ 25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- =
$24,300 -1,543.21
-----------
for a death benefit of: $ 23,456.79
-----------
The 5% rising floor:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x $20,000 = $ 21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- =
$19,000 -$1,657.89
-----------
variable account floor benefit: $ 19,342.11
plus the one-year fixed account value: +5,300.00
-----------
5% rising floor (value of the GPAs, the one-year fixed account and the
variable account floor): $ 24,642.11
-----------
THE EDB DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$24,642.11
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new
--------------------------------------------------------------------------------
38 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
annuitant (if applicable) will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. The
GMIB rider, if selected, will terminate. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payments begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB rider, if selected, will terminate. (See "Optional
Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. You
should consider whether the GMIB rider is appropriate for your situation
because:
you must hold the GMIB for seven years;
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary;
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 39
the 6% rising floor value we use in the GMIB benefit base to calculate annuity
payouts under the GMIB is limited after age 81; and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy required minimum distributions, will reduce the
GMIB benefit base (defined below), which in turn may reduce or eliminate the
amount of any annuity payments available under the rider (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax
advisor before you purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit at the time you
purchase your contract for an additional annual charge (see "Charges"). You
cannot select this rider if you select the 8% Performance Credit Rider. You must
elect the GMIB along with either the MAV death benefit or the EDB death benefit
rider at the time you purchase your contract and your rider effective date will
be the contract issue date. If the annuitant is between age 73 and age 75 at
contract issue, you should consider whether a GMIB rider is appropriate for your
situation. Be sure to discuss with your investment professional whether either
GMIB rider option is appropriate for your situation.
In some instances we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: You may allocate your purchase payments or
transfers to any of the subaccounts, the GPAs or the one-year fixed account.
However, we reserve the right to limit the amount you allocate to subaccounts
investing in the RiverSource Variable Portfolio -- Cash Management Fund to 10%
of the total amount in the subaccounts. If we are required to activate this
restriction, and you have more than 10% of your subaccount value in this fund,
we will send you a notice and ask that you reallocate your contract value so
that the 10% limitation is satisfied within 60 days. We will terminate the GMIB
if you have not satisfied the limitation after 60 days.
EXERCISING THE GMIB:
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a seven-year waiting period from the rider
effective date.
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A - Life Annuity -- no refund
- Plan B - Life Annuity with ten years certain
- Plan D - Joint and last survivor life annuity -- no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G and an interest rate of 2.5%. Your annuity payouts remain fixed for the
lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
--------------------------------------------------------------------------------
40 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base (described below) equal to the
largest value. The GMIB benefit base, less any applicable premium tax, is the
value we apply to the guaranteed annuity purchase rates we use in the 2.5% Table
to calculate the minimum annuity payouts you will receive if you exercise the
GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may
provide a higher annuity payout level than is otherwise available. However, the
GMIB uses guaranteed annuity purchase rates which may result in annuity payouts
that are less than the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB, you will receive the
higher standard payout option. The GMIB does not create contract value or
guarantee the performance of any investment option.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of:
1. contract value;
2. total purchase payments minus adjusted partial withdrawals; or
3. the 6% rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments allocated to the subaccounts increased by 6%;
plus any subsequent amounts allocated to the subaccounts; and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% plus any subsequent amounts allocated to the subaccounts minus adjusted
transfers or partial withdrawals from the subaccounts. We stop resetting the
variable account floor after you or the annuitant reach age 81. However, we
continue to add subsequent amounts you allocate to the subaccounts and subtract
adjusted transfers or partial withdrawals from the subaccounts.
Keep in mind that the 6% rising floor is limited after age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value.
subtract each payment from the 6% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 6% for the number of full contract years they
have been in the contract before we subtract them from the 6% rising floor.
For each payment, we calculate the market value adjustment to the contract
value, the GPAs and the one-year fixed account value of the 6% rising floor as:
PMT X CVG
-------------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 6% increase of payments allocated to the
subaccounts as:
PMT X (1.06)(CY)
CY = the full number of contract years the payment has been in the contract.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 41
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider any time after the seventh rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB rider will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all of your purchase payment to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENTS 6% RISING FLOOR BENEFIT BASE
1 $107,000 $100,000 $106,000
2 125,000 100,000 112,360
3 132,000 100,000 119,102
4 150,000 100,000 126,248
5 85,000 100,000 133,823
6 120,000 100,000 141,852
7 138,000 100,000 150,363 $150,363
8 152,000 100,000 159,388 159,388
9 139,000 100,000 168,948 168,948
10 126,000 100,000 179,085 179,085
11 138,000 100,000 189,830 189,830
12 147,000 100,000 201,220 201,220
13 215,000 100,000 213,293 215,000
14 234,000 100,000 226,090 234,000
15 240,000 100,000 239,655 240,000
NOTE: The 6% rising floor value is limited after age 81, but the GMIB benefit
base may increase if the contract value increases. However, you should keep in
mind that you are always entitled to annuitize using the contract value without
exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE GMIB BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $179,085 (6% Rising Floor) $ 872.14 $ 850.65 $ 691.27
15 240,000 (Contract Value) 1,346.40 1,286.40 1,034.40
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the
--------------------------------------------------------------------------------
42 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
guaranteed annuity rates stated in Table B of the contract. The fixed annuity
payout available under the standard provisions of this contract would be at
least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE GMIB BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $ 520.38
15 240,000 1,416.00 1,351.20 1,096.80
In the example above, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
8% PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the seventh and tenth rider anniversaries (see
below). This is an optional benefit you may select for an additional annual
charge of 0.25% of your contract value. The PCR does not provide any additional
benefit before the seventh rider anniversary and it may not be appropriate for
issue ages 83 or older due to this required holding period. Be sure to discuss
with your investment professional whether or not the PCR is appropriate for your
situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot select the PCR if you select the GMIB.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments or
transfers to any of the subaccounts, GPAs or the one-year fixed account.
However, we reserve the right to limit the aggregate amount in the GPAs and the
one-year fixed account and amounts you allocate to subaccounts investing in the
RiverSource Variable Portfolio -- Cash Management Fund to 10% of your total
contract value. If we are required to activate this restriction, and you have
more than 10% of your contract value in these accounts, we will send you a
notice and ask that you reallocate your contract value so that the 10%
limitation is satisfied within 60 days. We will terminate the PCR if you have
not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
minus the target value adjusted partial withdrawals accumulated at an annual
effective rate of 8%. Every rider anniversary after that, we recalculate the
target value by accumulating the prior anniversary's target value and any
additional purchase payments minus the target value adjusted partial withdrawals
at an annual effective rate of 8%.
PW X TV-
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
YOUR BENEFITS UNDER THE PCR ARE AS FOLLOWS:
(a) If on the seventh rider anniversary your contract value is less than the
target value, we will add a PCR credit to your contract equal to:
3% X (PP - PCRPW - PP5)
PP = total purchase payments.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount
of any partial withdrawal attributable to purchase payments received
five or
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 43
more years before the target value is calculated (on the tenth year
rider anniversary). For a more detailed description of the PCR
adjusted partial withdrawal please see Appendix A.
PP5 = purchase payments made in the prior five years.
We apply the PCR credit to your contract on the seventh rider anniversary and
allocate it among the fixed accounts and subaccounts according to your current
asset allocation.
(b) If on the tenth rider anniversary your contract value is less than the
target value, we will add a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
We restart the calculation period for the PCR on the tenth rider anniversary and
every ten years after that while you own the contract. We use the contract value
(including any credits) on that anniversary as your first contract year's
payments for calculating the target value and any applicable PCR credit. We may
then apply additional PCR credits to your contract at the end of each seven- and
ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments for the calculating the target value and any applicable
PCR credit. The next calculation period for the PCR will restart at the end of
this new ten-year period. We must receive your request to restart the PCR
calculation period within 30 days after a contract anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first contract
anniversary after the PCR rider effective date.
You may terminate the PCR within 30 days following the later of the tenth
contract anniversary after the PCR rider effective date or the last rider
reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract;
- that a death benefit is payable; or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $104,000.
There are no additional purchase payments and no partial withdrawals.
On the seventh contract anniversary, the contract value is $150,000.
We determine the target value on the seventh contract anniversary as your
purchase payments (there are no partial withdrawals to subtract) accumulated
at an annual effective rate of 8% or:
$104,000 x (1.08)(7) = $104,000 x 1.71382 = $178,237.72.
Your contract value ($150,000) is less than the target value ($178,237.72) so
we will add a PCR credit to your contract equal to 3% of your purchase
payments (there are no partial withdrawals or purchase payments made in the
last five years to subtract), which is:
0.03 x $104,000 = $3,120.
After application of the PCR credit, your total contract value would be
$153,120.
On the tenth contract anniversary, the contract value is $220,000.
We determine the target value on the tenth contract anniversary as your
purchase payments (there are no partial withdrawals to subtract) accumulated
at an annual effective rate of 8% or:
$104,000 x (1.08)(10) = $104,000 x 2.158924 = $224,528.20.
Your contract value ($220,000) is less than the target value ($224,528.20) so
we will add a PCR credit to your contract equal to 5% of your purchase
payments (there are no partial withdrawals or purchase payments made in the
last five years to subtract), which is:
0.05 x $104,000 = $5,200.
After application of the PCR credit, your total contract value would be
$225,200.
The PCR calculation period automatically restarts on the tenth contract
anniversary with the target values first year's payments equal to $225,200. We
would make the next PCR credit determination on the twentieth contract
anniversary.
--------------------------------------------------------------------------------
44 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 45
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
Contract values that you allocated to the one-year fixed account will provide
fixed dollar payouts and contract values that you allocated among the
subaccounts will provide variable annuity payouts.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met,
--------------------------------------------------------------------------------
46 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
the annuitized portion and the tax-deferred balance will generally be treated as
two separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 47
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
--------------------------------------------------------------------------------
48 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 49
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
--------------------------------------------------------------------------------
50 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 6.50% as well as
service/trail commissions of up to 0.75% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 51
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
52 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: 8% PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments made prior to the partial withdrawal in question
minus the RPA adjusted partial withdrawals for all previous partial
withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments as there are no previous withdrawals to
subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = ---------
CV
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP TWO
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments made prior to the partial withdrawal in question
AND prior to the five year exclusion period minus EPA adjusted partial
withdrawals for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments made before the five year exclusion period
as there are no previous withdrawals to subtract. Also note that EPA/RPA
will always be less than or equal to one.
PW X EPA EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = --------- X ---
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge
or MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the
partial withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the
partial withdrawal.
STEP THREE
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value).
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 53
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT DURATION IN
YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
-----------------------------------------------------------------------------------------------------------
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on the
third contract anniversary:
RPA before the partial withdrawal = RPA adjusted partial withdrawal =
total purchase
payments made prior to the partial $10,000 x $100,000
withdrawal minus the RPA adjusted ------------------
partial withdrawals for all previous $120,000 = $8,333
partial withdrawals = $100,000 - 0 =
$100,000
For the second partial withdrawal on the
eighth contract anniversary:
RPA before the partial withdrawal = RPA adjusted partial withdrawal =
total purchase
payments made prior to the partial $10,000 x $191,667
withdrawal minus the RPA adjusted ------------------
partial withdrawals for all previous $235,000 = $8,156
partial withdrawals =
$200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we calculate the
EPA:
For the first partial withdrawal on the
third contract anniversary:
EPA before the partial withdrawal = EPA adjusted partial withdrawal =
total purchase
payments made prior to the partial $10,000 x $100,000 = $8,333
withdrawal AND the five-year ------------------
exclusion period minus the EPA $120,000 $100,000
adjusted partial withdrawals for all x -----
previous partial withdrawals = $100,000
$100,000 - 0 = $100,000
For the second partial withdrawal on the
eighth contract anniversary:
EPA before the partial withdrawal = EPA adjusted partial withdrawal =
total purchase
payments made prior to the partial $10,000 x $91,667 = $1,866
withdrawal AND the five-year ------------------
exclusion period minus the EPA $235,000 $91,667
adjusted partial withdrawals for all x --------
previous partial withdrawals = $191,667
$100,000 - $8,333 = $91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 =
$10,199
--------------------------------------------------------------------------------
54 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. The date in which operations commenced in each subaccount is
noted in parentheses. We have not provided this information for subaccounts that
were not available under your contract as of Dec. 31, 2011.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of
period $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46 $0.79
Accumulation unit value at end of period $0.60 $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46
Number of accumulation units outstanding at
end of period (000 omitted) 350 428 503 570 717 914 1,202 1,283 1,451 1,387
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERMEDIATE BOND PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of
period $1.56 $1.45 $1.25 $1.35 $1.31 $1.29 $1.28 $1.25 $1.23 $1.16
Accumulation unit value at end of period $1.64 $1.56 $1.45 $1.25 $1.35 $1.31 $1.29 $1.28 $1.25 $1.23
Number of accumulation units outstanding at
end of period (000 omitted) 395 473 473 704 888 1,058 1,149 1,347 1,392 1,554
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of
period $0.75 $0.69 $0.51 $0.87 $0.77 $0.79 $0.70 $0.65 $0.54 $0.79
Accumulation unit value at end of period $0.72 $0.75 $0.69 $0.51 $0.87 $0.77 $0.79 $0.70 $0.65 $0.54
Number of accumulation units outstanding at
end of period (000 omitted) 710 877 1,081 1,186 1,619 1,808 2,130 2,021 2,140 2,312
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $2.11 $1.90 $1.55 $2.24 $2.24 $1.98 $1.93 $1.79 $1.51 $1.76
Accumulation unit value at end of period $2.13 $2.11 $1.90 $1.55 $2.24 $2.24 $1.98 $1.93 $1.79 $1.51
Number of accumulation units outstanding at
end of period (000 omitted) 777 880 1,036 1,249 1,756 2,335 3,221 4,136 5,043 5,336
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47
Accumulation unit value at end of period $2.04 $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53
Number of accumulation units outstanding at
end of period (000 omitted) 2,171 2,609 9,757 10,453 12,248 8,733 8,279 9,515 7,119 7,272
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/02/2000)
Accumulation unit value at beginning of
period $1.56 $1.36 $1.08 $1.84 $1.72 $1.46 $1.31 $1.12 $0.80 $1.01
Accumulation unit value at end of period $1.46 $1.56 $1.36 $1.08 $1.84 $1.72 $1.46 $1.31 $1.12 $0.80
Number of accumulation units outstanding at
end of period (000 omitted) 273 295 303 421 523 522 532 451 276 182
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (08/26/1999)
Accumulation unit value at beginning of
period $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93
Accumulation unit value at end of period $1.71 $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 1,146 1,400 1,627 2,018 3,017 4,475 3,380 3,074 2,699 2,403
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/02/2000)
Accumulation unit value at beginning of
period $0.48 $0.41 $0.31 $0.56 $0.55 $0.50 $0.47 $0.44 $0.37 $0.50
Accumulation unit value at end of period $0.46 $0.48 $0.41 $0.31 $0.56 $0.55 $0.50 $0.47 $0.44 $0.37
Number of accumulation units outstanding at
end of period (000 omitted) 158 198 308 1,533 1,159 411 413 471 499 270
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (05/02/2000)
Accumulation unit value at beginning of
period $1.42 $1.14 $0.83 $1.36 $1.44 $1.31 $1.27 $1.09 $0.74 $0.91
Accumulation unit value at end of period $1.28 $1.42 $1.14 $0.83 $1.36 $1.44 $1.31 $1.27 $1.09 $0.74
Number of accumulation units outstanding at
end of period (000 omitted) 129 48 55 80 76 83 85 89 178 69
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/02/2000)
Accumulation unit value at beginning of
period $1.25 $1.23 $1.18 $1.23 $1.19 $1.16 $1.16 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.25 $1.25 $1.23 $1.18 $1.23 $1.19 $1.16 $1.16 $1.16 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 168 270 386 453 403 471 469 521 466 520
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (09/22/1999)
Accumulation unit value at beginning of
period $1.00 $0.88 $0.70 $1.22 $1.11 $0.99 $0.94 $0.90 $0.74 $0.90
Accumulation unit value at end of period $1.00 $1.00 $0.88 $0.70 $1.22 $1.11 $0.99 $0.94 $0.90 $0.74
Number of accumulation units outstanding at
end of period (000 omitted) 489 588 702 889 1,172 1,351 1,630 1,820 1,884 1,684
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (09/22/1999)
Accumulation unit value at beginning of
period $3.59 $2.83 $2.05 $3.44 $3.02 $2.72 $2.33 $1.90 $1.39 $1.56
Accumulation unit value at end of period $3.16 $3.59 $2.83 $2.05 $3.44 $3.02 $2.72 $2.33 $1.90 $1.39
Number of accumulation units outstanding at
end of period (000 omitted) 423 509 594 687 1,049 1,401 1,747 1,964 2,236 2,384
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS (09/22/1999)
Accumulation unit value at beginning of
period $1.15 $1.03 $0.83 $1.49 $1.29 $1.11 $0.95 $0.85 $0.60 $0.76
Accumulation unit value at end of period $0.94 $1.15 $1.03 $0.83 $1.49 $1.29 $1.11 $0.95 $0.85 $0.60
Number of accumulation units outstanding at
end of period (000 omitted) 139 162 197 237 372 482 465 499 510 568
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of
period $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34 $1.33
Accumulation unit value at end of period $1.80 $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34
Number of accumulation units outstanding at
end of period (000 omitted) 253 310 433 475 605 706 734 760 676 542
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of
period $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07 $1.23
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.18 $1.91 $1.87 $1.60 $1.47 $1.32 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 2,449 3,186 4,141 5,501 9,245 10,913 11,340 11,643 4,692 966
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of
period $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84 $1.00
Accumulation unit value at end of period $1.42 $1.61 $1.50 $1.11 $1.89 $1.66 $1.39 $1.28 $1.09 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 396 517 595 936 1,425 1,562 1,549 1,200 1,018 286
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC GROWTH FUND - INSTITUTIONAL SHARES (09/22/1999)
Accumulation unit value at beginning of
period $0.93 $0.86 $0.59 $1.02 $0.94 $0.88 $0.87 $0.81 $0.66 $0.88
Accumulation unit value at end of period $0.90 $0.93 $0.86 $0.59 $1.02 $0.94 $0.88 $0.87 $0.81 $0.66
Number of accumulation units outstanding at
end of period (000 omitted) 61 105 118 125 212 341 426 462 442 462
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC INTERNATIONAL EQUITY FUND - INSTITUTIONAL SHARES (09/22/1999)
Accumulation unit value at beginning of
period $1.06 $0.97 $0.77 $1.44 $1.35 $1.12 $1.00 $0.89 $0.67 $0.83
Accumulation unit value at end of period $0.89 $1.06 $0.97 $0.77 $1.44 $1.35 $1.12 $1.00 $0.89 $0.67
Number of accumulation units outstanding at
end of period (000 omitted) 8 37 40 80 83 135 191 137 125 113
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (09/22/1999)
Accumulation unit value at beginning of
period $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67 $0.87
Accumulation unit value at end of period $0.93 $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67
Number of accumulation units outstanding at
end of period (000 omitted) 244 348 522 746 1,109 1,487 1,581 1,430 1,449 1,109
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (08/26/1999)
Accumulation unit value at beginning of
period $0.91 $0.80 $0.67 $1.18 $1.07 $1.02 $0.95 $0.91 $0.71 $0.95
Accumulation unit value at end of period $0.83 $0.91 $0.80 $0.67 $1.18 $1.07 $1.02 $0.95 $0.91 $0.71
Number of accumulation units outstanding at
end of period (000 omitted) 702 821 1,009 1,233 1,646 1,879 2,133 2,822 2,936 3,287
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its name
to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES I SHARES* (09/22/1999)
Accumulation unit value at beginning of
period $1.69 $1.45 $1.03 $1.97 $1.80 $1.57 $1.45 $1.28 $0.96 $1.23
Accumulation unit value at end of period $1.55 $1.69 $1.45 $1.03 $1.97 $1.80 $1.57 $1.45 $1.28 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 75 97 110 137 240 334 404 610 634 620
*Invesco V.I. Capital Development Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth Fund,
Series I Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (10/30/1997)
Accumulation unit value at beginning of
period $1.45 $1.34 $1.06 $1.54 $1.45 $1.26 $1.21 $1.13 $0.92 $1.10
Accumulation unit value at end of period $1.43 $1.45 $1.34 $1.06 $1.54 $1.45 $1.26 $1.21 $1.13 $0.92
Number of accumulation units outstanding at
end of period (000 omitted) 2,494 2,967 3,385 4,142 5,535 7,315 3,274 4,188 4,903 5,619
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES ENTERPRISE PORTFOLIO: SERVICE SHARES (05/02/2000)
Accumulation unit value at beginning of
period $0.68 $0.55 $0.38 $0.69 $0.58 $0.52 $0.47 $0.39 $0.30 $0.42
Accumulation unit value at end of period $0.66 $0.68 $0.55 $0.38 $0.69 $0.58 $0.52 $0.47 $0.39 $0.30
Number of accumulation units outstanding at
end of period (000 omitted) 356 418 516 647 914 1,189 1,293 1,661 1,578 1,833
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (05/02/2000)
Accumulation unit value at beginning of
period $0.52 $0.42 $0.27 $0.49 $0.41 $0.39 $0.35 $0.35 $0.25 $0.42
Accumulation unit value at end of period $0.47 $0.52 $0.42 $0.27 $0.49 $0.41 $0.39 $0.35 $0.35 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 179 240 270 246 411 658 843 717 751 779
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/02/2000)
Accumulation unit value at beginning of
period $0.66 $0.59 $0.44 $0.74 $0.65 $0.60 $0.58 $0.57 $0.44 $0.61
Accumulation unit value at end of period $0.62 $0.66 $0.59 $0.44 $0.74 $0.65 $0.60 $0.58 $0.57 $0.44
Number of accumulation units outstanding at
end of period (000 omitted) 869 962 12,886 12,008 9,966 1,523 1,775 1,862 2,188 2,583
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES OVERSEAS PORTFOLIO: SERVICE SHARES (05/02/2000)
Accumulation unit value at beginning of
period $1.66 $1.35 $0.76 $1.62 $1.29 $0.89 $0.68 $0.58 $0.44 $0.60
Accumulation unit value at end of period $1.11 $1.66 $1.35 $0.76 $1.62 $1.29 $0.89 $0.68 $0.58 $0.44
Number of accumulation units outstanding at
end of period (000 omitted) 283 339 397 530 721 1,086 1,039 951 2,119 1,323
-----------------------------------------------------------------------------------------------------------------------------------
JPMORGAN INSURANCE TRUST U.S. EQUITY PORTFOLIO - CLASS 1 SHARES (04/24/2009)
Accumulation unit value at beginning of
period $1.48 $1.33 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.44 $1.48 $1.33 -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 168 188 204 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO - SERVICE SHARES (09/22/1999)
Accumulation unit value at beginning of
period $1.02 $0.97 $0.81 $1.30 $1.19 $0.99 $0.91 $0.80 $0.63 $0.72
Accumulation unit value at end of period $0.93 $1.02 $0.97 $0.81 $1.30 $1.19 $0.99 $0.91 $0.80 $0.63
Number of accumulation units outstanding at
end of period (000 omitted) 29 31 42 63 160 148 157 147 133 79
-----------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT U.S. STRATEGIC EQUITY PORTFOLIO - SERVICE SHARES (09/22/1999)
Accumulation unit value at beginning of
period $1.04 $0.93 $0.74 $1.17 $1.19 $1.03 $1.01 $0.92 $0.75 $0.91
Accumulation unit value at end of period $1.04 $1.04 $0.93 $0.74 $1.17 $1.19 $1.03 $1.01 $0.92 $0.75
Number of accumulation units outstanding at
end of period (000 omitted) 9 9 14 14 94 97 104 127 133 122
-----------------------------------------------------------------------------------------------------------------------------------
LVIP BARON GROWTH OPPORTUNITIES FUND - SERVICE CLASS (09/22/1999)
Accumulation unit value at beginning of
period $2.05 $1.65 $1.21 $2.01 $1.97 $1.73 $1.70 $1.37 $1.07 $1.27
Accumulation unit value at end of period $2.11 $2.05 $1.65 $1.21 $2.01 $1.97 $1.73 $1.70 $1.37 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 185 196 204 222 288 374 441 480 522 518
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - INITIAL CLASS (09/22/1999)
Accumulation unit value at beginning of
period $1.88 $1.40 $0.87 $1.45 $1.44 $1.29 $1.24 $1.18 $0.89 $1.33
Accumulation unit value at end of period $1.66 $1.88 $1.40 $0.87 $1.45 $1.44 $1.29 $1.24 $1.18 $0.89
Number of accumulation units outstanding at
end of period (000 omitted) 374 436 512 578 690 956 994 1,044 1,301 1,252
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) RESEARCH SERIES - INITIAL CLASS (09/22/1999)
Accumulation unit value at beginning of
period $1.06 $0.93 $0.72 $1.14 $1.02 $0.94 $0.88 $0.77 $0.63 $0.85
Accumulation unit value at end of period $1.04 $1.06 $0.93 $0.72 $1.14 $1.02 $0.94 $0.88 $0.77 $0.63
Number of accumulation units outstanding at
end of period (000 omitted) 320 388 445 586 680 888 1,120 1,634 1,404 1,695
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (09/22/1999)
Accumulation unit value at beginning of
period $2.12 $1.89 $1.44 $2.34 $1.85 $1.43 $1.24 $0.97 $0.72 $0.95
Accumulation unit value at end of period $2.23 $2.12 $1.89 $1.44 $2.34 $1.85 $1.43 $1.24 $0.97 $0.72
Number of accumulation units outstanding at
end of period (000 omitted) 680 798 879 996 1,393 1,751 1,748 1,935 1,996 2,205
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (10/05/1998)
Accumulation unit value at beginning of
period $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93 $1.16
Accumulation unit value at end of period $1.15 $1.22 $1.09 $0.85 $1.40 $1.51 $1.32 $1.28 $1.16 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,063 1,414 1,861 2,565 3,460 4,185 4,645 5,239 5,706
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of
period $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76 $0.93
Accumulation unit value at end of period $0.99 $1.20 $1.11 $0.90 $1.63 $1.53 $1.21 $1.10 $0.96 $0.76
Number of accumulation units outstanding at
end of period (000 omitted) 947 1,199 1,363 1,487 1,885 2,110 2,185 2,258 2,177 1,856
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND - CLASS IB SHARES (09/22/1999)
Accumulation unit value at beginning of
period $1.13 $1.02 $0.75 $1.32 $1.18 $0.95 $0.81 $0.73 $0.55 $0.65
Accumulation unit value at end of period $0.91 $1.13 $1.02 $0.75 $1.32 $1.18 $0.95 $0.81 $0.73 $0.55
Number of accumulation units outstanding at
end of period (000 omitted) 86 115 163 210 274 347 461 485 1,788 762
-----------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO, INVESTMENT CLASS (09/22/1999)
Accumulation unit value at beginning of
period $3.67 $2.86 $1.84 $3.28 $3.20 $2.68 $2.44 $2.17 $1.48 $1.72
Accumulation unit value at end of period $3.18 $3.67 $2.86 $1.84 $3.28 $3.20 $2.68 $2.44 $2.17 $1.48
Number of accumulation units outstanding at
end of period (000 omitted) 105 138 151 204 286 398 446 505 510 369
-----------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO, INVESTMENT CLASS (09/22/1999)
Accumulation unit value at beginning of
period $3.21 $2.70 $2.03 $2.82 $2.92 $2.57 $2.40 $1.95 $1.40 $1.65
Accumulation unit value at end of period $3.06 $3.21 $2.70 $2.03 $2.82 $2.92 $2.57 $2.40 $1.95 $1.40
Number of accumulation units outstanding at
end of period (000 omitted) 150 179 214 239 356 450 576 658 735 712
-----------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE VALUE PORTFOLIO (05/02/2000)
Accumulation unit value at beginning of
period $2.29 $2.04 $1.42 $2.56 $2.72 $2.39 $2.11 $1.79 $1.27 $1.44
Accumulation unit value at end of period $1.78 $2.29 $2.04 $1.42 $2.56 $2.72 $2.39 $2.11 $1.79 $1.27
Number of accumulation units outstanding at
end of period (000 omitted) 90 90 129 203 332 481 577 705 786 539
-----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (09/22/1999)
Accumulation unit value at beginning of
period $2.43 $1.97 $1.33 $2.49 $2.17 $1.60 $1.34 $1.04 $0.71 $0.83
Accumulation unit value at end of period $2.04 $2.43 $1.97 $1.33 $2.49 $2.17 $1.60 $1.34 $1.04 $0.71
Number of accumulation units outstanding at
end of period (000 omitted) 199 215 1,491 2,249 1,387 742 484 439 2,509 479
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (09/22/1999)
Accumulation unit value at beginning of
period $1.91 $1.57 $1.12 $1.88 $1.81 $1.70 $1.55 $1.33 $0.94 $1.15
Accumulation unit value at end of period $1.81 $1.91 $1.57 $1.12 $1.88 $1.81 $1.70 $1.55 $1.33 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 659 787 2,050 2,146 1,967 1,384 1,171 455 382 351
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE VARIABLE ANNUITY -- PROSPECTUS 59
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
43444 V (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
SIGNATURE ONE VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc.
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FT VIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
J.P. Morgan Series Trust II
Lazard Retirement Series, Inc.
Lincoln Variable Insurance Product Trust (LVIP)
MFS(R) Variable Insurance Trust(SM)
Royce Capital Fund
Third Avenue Variable Series Trust
Wanger Advisors Trust
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
This contract provides for purchase payment credits to eligible contract owners,
which we may reverse under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits"). Expense charges for contracts with
purchase payment credits may be higher than expenses for contracts without such
credits. The amount of the credit may be more than offset by any additional fees
and charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 18
THE ONE-YEAR FIXED ACCOUNT................... 20
BUYING YOUR CONTRACT......................... 20
CHARGES...................................... 23
VALUING YOUR INVESTMENT...................... 28
MAKING THE MOST OF YOUR CONTRACT............. 29
WITHDRAWALS.................................. 33
TSA -- SPECIAL PROVISIONS.................... 34
CHANGING OWNERSHIP........................... 35
BENEFITS IN CASE OF DEATH.................... 35
OPTIONAL BENEFITS............................ 39
THE ANNUITY PAYOUT PERIOD.................... 49
TAXES........................................ 50
VOTING RIGHTS................................ 54
SUBSTITUTION OF INVESTMENTS.................. 54
ABOUT THE SERVICE PROVIDERS.................. 55
ADDITIONAL INFORMATION....................... 56
APPENDIX A: 8% PERFORMANCE CREDIT RIDER
ADJUSTED PARTIAL WITHDRAWAL................ 57
APPENDIX B: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 59
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 65
--------------------------------------------------------------------------------
2 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES..
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account").
We no longer offer new contracts. However, you have the option of making
additional purchase payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. (We reserve the right to limit transfers to the GPAs and the
one-year fixed account if the interest rate we are then currently crediting is
equal to the minimum interest rate stated in the contract.) (see "Making the
Most of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 8
4 8
5 7
6 6
7 6
8 4
9 2
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE THE DEATH BENEFIT GUARANTEE PROVIDED. THE COMBINATION YOU CHOOSE
DETERMINES THE FEES YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST.
MAXIMUM ANNIVERSARY VALUE RETURN OF PURCHASE
OR ENHANCED DEATH BENEFIT PAYMENTS DEATH BENEFIT
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE 0.15% 0.15%
MORTALITY AND EXPENSE RISK FEE 1.45 1.35
TOTAL ANNUAL VARIABLE ACCOUNT EXPENSES 1.60% 1.50%
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE: $40
(We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.35%*
(As a percentage of an adjusted contract value charged annually on the contract
anniversary.)
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 7
8% PERFORMANCE CREDIT RIDER (PCR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
* This fee apples only if you elect this optional feature.
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM TOTAL ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 3.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Global Thematic Growth 0.75% 0.25% 0.19% --% 1.19%
Portfolio (Class B)
AllianceBernstein VPS Intermediate Bond 0.45 0.25 0.20 -- 0.90
Portfolio (Class B)
AllianceBernstein VPS Large Cap Growth Portfolio 0.75 0.25 0.09 -- 1.09
(Class B)
Columbia Variable Portfolio - Balanced Fund 0.64 0.13 0.16 -- 0.93(1)
(Class 3)
Columbia Variable Portfolio - Cash Management 0.33 0.13 0.14 -- 0.60(1)
Fund (Class 3)
Columbia Variable Portfolio - Diversified Bond 0.41 0.13 0.13 -- 0.67
Fund (Class 3)
Columbia Variable Portfolio - Diversified Equity 0.57 0.13 0.13 -- 0.83
Income Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity 0.66 0.13 0.16 0.01 0.96
Fund (Class 3)
Columbia Variable Portfolio - High Yield Bond 0.58 0.13 0.17 -- 0.88(1)
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth 0.71 0.13 0.17 -- 1.01(1)
Fund (Class 3)
Columbia Variable Portfolio - Select Smaller-Cap 0.79 0.13 0.19 -- 1.11(1)
Value Fund (Class 3)
Columbia Variable Portfolio - Short Duration 0.36 0.13 0.15 -- 0.64
U.S. Government Fund (Class 3)
Fidelity(R) VIP Growth & Income Portfolio 0.46 0.10 0.13 -- 0.69
Service Class
Fidelity(R) VIP Mid Cap Portfolio Service Class 0.56 0.10 0.10 -- 0.76
Fidelity(R) VIP Overseas Portfolio Service Class 0.71 0.10 0.14 -- 0.95
FTVIPT Franklin Global Real Estate Securities 0.80 0.25 0.32 -- 1.37
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 0.64 0.25 0.15 0.01 1.05
2
Goldman Sachs VIT Strategic Growth 0.75 -- 0.10 -- 0.85(2)
Fund - Institutional Shares
--------------------------------------------------------------------------------
8 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Goldman Sachs VIT Strategic International Equity 0.85% --% 0.19% --% 1.04%((3))
Fund - Institutional Shares
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(4)
Fund - Institutional Shares
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, 0.67 -- 0.28 -- 0.95(5)
Series I Shares
Invesco Van Kampen V.I. Mid Cap Growth Fund, 0.75 -- 0.33 -- 1.08(6)
Series I Shares
Janus Aspen Series Enterprise Portfolio: Service 0.64 0.25 0.05 -- 0.94
Shares
Janus Aspen Series Global Technology Portfolio: 0.64 0.25 0.16 -- 1.05
Service Shares
Janus Aspen Series Janus Portfolio: Service 0.56 0.25 0.07 -- 0.88
Shares
Janus Aspen Series Overseas Portfolio: Service 0.60 0.25 0.06 -- 0.91
Shares
JPMorgan Insurance Trust U.S. Equity 0.55 -- 0.24 -- 0.79
Portfolio - Class 1 Shares
Lazard Retirement International Equity 0.75 0.25 0.12 -- 1.12
Portfolio - Service Shares
Lazard Retirement U.S. Strategic Equity 0.70 0.25 2.42 -- 3.37(7)
Portfolio - Service Shares
LVIP Baron Growth Opportunities Fund - Service 1.00 0.25 0.08 -- 1.33(8)
Class
MFS(R) New Discovery Series - Initial Class 0.90 -- 0.08 -- 0.98
MFS(R) Research Series - Initial Class 0.75 -- 0.13 -- 0.88
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Royce Capital Fund - Micro-Cap Portfolio, 1.25 -- 0.07 -- 1.32
Investment Class
Royce Capital Fund - Small-Cap Portfolio, 1.00 -- 0.05 -- 1.05
Investment Class
Third Avenue Value Portfolio 0.90 -- 0.36 -- 1.26(9)
Wanger International 0.89 -- 0.13 -- 1.02(10)
Wanger USA 0.86 -- 0.08 -- 0.94(10)
Wells Fargo Advantage VT Intrinsic Value 0.55 0.25 0.37 0.01 1.18(11)
Fund - Class 2
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.79% for Columbia Variable
Portfolio - Balanced Fund (Class 3), 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia Variable
Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia Variable
Portfolio - Large Cap Growth Fund (Class 3) and 1.055% for Columbia
Variable Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.71%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.114%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.83%.
(3) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.81%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.144%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.99%.
(4) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(5) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 9
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(6) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(7) The Investment Manager has contractually agreed to waive its fee and, if
necessary, reimburse the Portfolio through April 30, 2013, to the extent
total annual portfolio operating expenses exceed 1.00% of the average daily
net assets, exclusive of taxes, brokerage, interest on borrowings, fees and
expenses of acquired funds and extraordinary expenses. This agreement can
only be amended by agreement of the Fund and the Investment Manager to
lower the net amount shown and will terminate automatically in the event of
termination of the Investment Management Agreement between the Investment
Manager and the Fund, on behalf of the Portfolio.
(8) Lincoln Investment Advisors Corporation (the "adviser") has contractually
agreed to reimburse the Fund to the extent that the total annual fund
operating expenses exceed 1.29% of the average daily net assets. The
agreement will continue at least through April 30, 2013 and cannot be
terminated before that date without the mutual agreement of the Trust's
board of trustees and the adviser.
(9) The Fund's advisor has contractually agreed, for one year from March 1,
2012, to waive receipt of advisory fees and/or reimburse Fund expenses in
order to limit total annual expenses (exclusive of taxes, interest,
brokerage commissions, acquired fund fees and expenses, and extraordinary
items) to 1.30% of average daily net assets, subject to later reimbursement
in certain circumstances. The Adviser recovered previously waived fees of
0.04% for the portfolio for the year ended December 31, 2011.
(10) Other expenses have been restated to reflect contractual changes to certain
other fees.
(11) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%.
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. This example assumes the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. It assumes that you select the Maximum Anniversary Value death benefit,
the GMIB and Benefit Protector Plus options. Although your actual costs may be
lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,424 $2,654 $3,759 $5,960 $624 $1,854 $3,059 $5,960
MINIMUM EXPENSES. This example assumes the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. It assumes that you select the Return of Purchase Payments death benefit
and you do not select any optional riders. Although your actual costs maybe
higher, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,055 $1,582 $2,030 $2,809 $255 $782 $1,330 $2,809
(1) In these examples, the contract administrative charge is $40.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix B.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
Variable Account. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 11
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
12 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks to generate income and price AllianceBernstein L.P.
VPS Intermediate appreciation without assuming what
Bond Portfolio AllianceBernstein considers to be undue
(Class B) risk.
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Large Cap
Growth Portfolio
(Class B)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Bala- through a combination of capital growth and Investment Advisers, LLC
nced Fund (Class current income.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks high total return through a Fidelity Management &
Growth & Income combination of current income and capital Research Company (FMR)
Portfolio Service appreciation. Normally invests a majority is the fund's manager.
Class of assets in common stocks with a focus on FMR Co., Inc. (FMRC) and
those that pay current dividends and show other investment
potential for capital appreciation. Invests advisers serve as sub-
in domestic and foreign issuers. The Fund advisers for the fund.
invests in either "growth" stocks or
"value" stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Strategic Growth Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Strategic Management International
International
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series I Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Enterprise LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Global LLC
Technology
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Janus LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Overseas LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
JPMorgan Seeks high total return from a portfolio of J.P. Morgan Investment
Insurance Trust selected equity securities. Management Inc.
U.S. Equity
Portfolio - Class
1 Shares
----------------------------------------------------------------------------------------
Lazard Retirement Seeks long-term capital appreciation. Lazard Asset Management,
International LLC
Equity
Portfolio - Serv-
ice Shares
----------------------------------------------------------------------------------------
Lazard Retirement Seeks long-term capital appreciation. Lazard Asset Management,
U.S. Strategic LLC
Equity
Portfolio - Serv-
ice Shares
----------------------------------------------------------------------------------------
LVIP Baron Growth Seeks capital appreciation through long- Lincoln Investment
Opportunities term investments in securities of small and Advisors Corporation,
Fund - Service mid-sized companies with undervalued assets adviser; BAMCO, Inc.,
Class or favorable growth prospects. sub-adviser.
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Research Seeks capital appreciation. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Royce Capital Seeks long-term growth of capital. Royce & Associates, LLC
Fund - Micro-Cap
Portfolio,
Investment Class
----------------------------------------------------------------------------------------
Royce Capital Seeks long-term growth of capital. Royce & Associates, LLC
Fund - Small-Cap
Portfolio,
Investment Class
----------------------------------------------------------------------------------------
Third Avenue Seeks long-term capital appreciation by Third Avenue Management
Value Portfolio acquiring common stocks of well-financed LLC
companies (meaning companies with high
quality assets and conservative levels of
liabilities) at a discount to what the
Adviser believes is their intrinsic value.
----------------------------------------------------------------------------------------
Wanger Seeks long-term capital appreciation. Columbia Wanger Asset
International Management, LLC
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 17
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
18 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 19
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
--------------------------------------------------------------------------------
20 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified or nonqualified annuity. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
the one-year fixed account, GPAs and/or subaccounts in which you want to
invest(1);
how you want to make purchase payments;
one of three death benefit options if you and the annuitant are 79 or
younger(2):
- Return of Purchase Payments (ROP) death benefit,
- Maximum Anniversary Value (MAV) death benefit, or
- Enhanced Death Benefit (EDB) rider(3);
the optional Guaranteed Minimum Income Benefit Rider(4);
the optional 8% Performance Credit Rider(4);
the optional Benefit Protector Death Benefit Rider(5);
the optional Benefit Protector Plus Death Benefit Rider(5); and
a beneficiary.
(1) Some states restrict the amount you can allocate to the GPAs and the one-
year fixed account. GPAs may not be available in some states.
(2) If either you or the annuitant are 80 or older at contract issue, the ROP
death benefit will apply.
(3) May not be available in all states.
(4) You may select either the GMIB or the PCR, but not both. Riders may not be
available in all states. The GMIB is only available to annuitants 75 or
younger at contract issue. If you select the GMIB you must select either the
MAV death benefit or the EDB death benefit rider.
(5) You may select one of the following: the EDB death benefit, the Benefit
Protector or the Benefit Protector Plus. These benefits may not be available
in all states. The Benefit Protector and the Benefit Protector Plus are only
available if both you and the annuitant are 75 or younger at contract issue.
The EDB death benefit is only available if both you and the annuitant are 79
or younger at contract issue.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs, and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum required investment for the GPAs.
For contracts with applications signed on or after June 16, 2003, the amount of
any purchase payment allocated to the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish a dollar cost averaging arrangement
with respect to the purchase payment according to procedures currently in
effect, or you are participating according to the rules of an asset allocation
model portfolio program available under the contract, if any.
We applied your initial purchase payment to the GPAs, one-year fixed account and
subaccounts you selected within two business days after we received it at our
administrative office. We will credit additional purchase payments you make to
your accounts on the valuation date we receive them. If we receive an additional
purchase payment at our corporate office before the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the valuation date we received the
payment. If we receive an additional purchase payment at our corporate office at
or after the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the next valuation date after we received the payment.
You may make monthly payments to your contract under a SIP. You must make an
initial purchase payment of $25,000. Then, to begin the SIP, you will complete
and send a form and your first SIP payment along with your application. There is
no charge for SIP. You can stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 21
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payments
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85
$100,000 for issue ages 86 to 90
* These limits apply in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase maximum limits. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
--------------------------------------------------------------------------------
22 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
PURCHASE PAYMENT CREDITS
You will generally receive a purchase payment credit with every payment you make
to your contract. We apply this credit immediately. We allocate the credit to
the GPAs, one-year fixed account and subaccounts in the same proportions as your
purchase payment. We apply the credit as a percentage of your current payment
based on the following schedule:
IF TOTAL NET PAYMENTS* MADE DURING THEN THE PURCHASE PAYMENT
THE LIFE OF THE CONTRACT EQUALS . . . CREDIT PERCENTAGE EQUALS . . .
$25,000 to less than $100,000 3%
$100,000 to less than $1 million 4
$1 million and over 5
* Net payments equal total payments less total withdrawals.
If you make any additional payments that cause the contract to become eligible
for a higher percentage credit, we will add credits to your prior payments (less
total withdrawals). We allocate credits according to the purchase payment
allocation on the date we add the credits to the contract.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
Because of these higher charges, there may be circumstances where you may be
worse off for having received the credit than in other contracts. All things
being equal (such as guarantee availability or fund performance and
availability), this may occur if you hold your contract for 15 years or more.
For contracts less than $100,000, this may also occur if you make a full
withdrawal in the fifth to ninth contract years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is available because of lower costs associated with larger sized
contracts and through revenue from a higher and longer withdrawal charge
schedule, a higher contract administrative charge and a higher mortality and
expense risk fee. In general, we do not profit from the higher charges assessed
to cover the cost of the purchase payment credit. We use all the revenue from
these higher charges to pay for the cost of the credits. However, we could
profit from the higher charges if market appreciation is higher than expected or
if contract owners hold their contracts for longer than expected.
We reserve the right to increase the amount of the credit for certain groups of
contract owners. The increase will not be greater than 8% of total net payments.
Increases in credit amounts are funded by reduced expenses expected from such
groups.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary, or earlier if the contract
is withdrawn. Some states limit the amount of any contract charge allocated to
the one-year fixed account. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value.
We will waive this charge when your contract value is $100,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 23
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the death benefit that applies to your contract.
The ROP death benefit: 1.35%
The MAV or EDB death benefit: 1.45
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than ten years before the date of withdrawal. In addition, amounts
withdrawn from a GPA more than 30 days before the end of the applicable
Guarantee Period will be subject to a MVA. (See "The Fixed Accounts -- Market
Value Adjustments (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
6%. At the beginning of the tenth year after that purchase payment is made, and
thereafter, there is no withdrawal charge as to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and any purchase payment credits to be
the prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
--------------------------------------------------------------------------------
24 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn:
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 8
4 8
5 7
6 6
7 6
8 4
9 2
Thereafter 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
Withdrawal charge calculation example
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the sixth contract anniversary;
- $6,000 on the eighth contract anniversary; and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 25
You withdraw the contract for its total withdrawal value of $38,101 during the
eleventh contract year and make no other withdrawals during that contract
year; and
The prior anniversary contract value was $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn
without withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received more than nine years before
withdrawal and is withdrawn without withdrawal charge; and
640 $8,000 purchase payment is in its fourth year from receipt, withdrawn with
an 8% withdrawal charge; and
480 $6,000 purchase payment is in its third year from receipt withdrawn with an
8% withdrawal charge.
------
$1,120
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge a fee (currently 0.35%) based on the adjusted contract value for this
optional feature only if you select it. If selected, we deduct the fee from the
contract value on your contract anniversary at the end of each contract year. We
prorate
--------------------------------------------------------------------------------
26 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
the GMIB fee among the subaccounts, the GPAs and the one-year fixed account in
the same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB fee after the
rider effective date and it does not apply after annuity payouts begin.
We calculate the fee as follows: 0.35% X (CV + ST - FAV)
CV = contract value on the contract anniversary.
ST = transfers from the subaccounts to the GPAs or the one-year fixed
account made six months before the contract anniversary.
FAV = the value of your GPAs and the one-year fixed account.
The result of ST - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts, and not on the GPAs or the one-year
fixed account.
EXAMPLE
You purchase the contract with a payment of $50,000 and we add a $1,500
purchase payment credit to your contract. You allocate all of your payment and
purchase payment credit to the subaccounts.
During the first contract year your contract value is $75,000. You transfer
$15,000 from the subaccounts to the one-year fixed account.
On the first contract anniversary the one-year fixed account value is $15,250
and the subaccount value is $58,000. Your total contract value is $73,250.
The GMIB fee percentage is 0.35%.
We calculate the charge for the GMIB as follows:
Contract value on the contract anniversary: $73,250.00
plus transfers from the subaccounts to the one-year fixed
account in the six months before the contract anniversary: +15,000.00
minus the value of the one-year fixed account on the
contract anniversary: -15,250.00
----------
$73,000.00
The GMIB fee charged to you: 0.35% x $73,000 = $ 255.50
8% PERFORMANCE CREDIT RIDER (PCR) FEE
We charge a fee of 0.25% of your contract value for this optional feature only
if you select it. If selected, we deduct the PCR fee from your contract value on
your contract anniversary. We prorate this fee among the subaccounts, the GPAs
and the one-year fixed account in the same proportion as your interest in each
account bears to your total contract value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the PCR fee from the proceeds payable adjusted for
the number of calendar days coverage was in place. We cannot increase the PCR
fee.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 27
increase this annual fee after the rider effective date and it does not apply
after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the one-year fixed account and
GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
- Benefit Protector rider
- Benefit Protector Plus rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
--------------------------------------------------------------------------------
28 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Guaranteed Minimum Income Benefit rider
- Performance Credit rider
- Benefit Protector rider
- Benefit Protector Plus rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 29
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your sales representative.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. For contracts issued before June 16, 2003, we have
removed this restriction, and you may transfer contract values from the one-
year fixed account to the subaccounts at any time. We will inform you at least
30 days in advance of the day we intend to reimpose this restriction.
For contracts with applications signed on or after June 16, 2003, the amount
of contract value transferred to the GPAs and the one-year fixed account
cannot result in the value of the GPAs and the one-year fixed account in total
being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
--------------------------------------------------------------------------------
30 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 31
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
--------------------------------------------------------------------------------
32 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 33
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
--------------------------------------------------------------------------------
34 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are three death benefit options under this contract:
Return of Purchase Payments (ROP) death benefit;
Maximum Anniversary Value (MAV) death benefit; and
Enhanced Death Benefit (EDB) rider.
If either you or the annuitant are age 80 or older at contract issue, the ROP
death benefit will apply. If both you and the annuitant are age 79 or younger at
contract issue, you can elect the ROP, MAV, or EDB death benefit rider (if its
available in your state) on your application. If you select GMIB you must select
either the MAV death benefit or the EDB death benefit rider. Once you elect an
option, you cannot change it. We show the option that applies in your contract.
The death benefit option that applies determines the mortality and expense risk
fee that is assessed against the subaccounts. (See "Charges -- Mortality and
Expense Risk Fee.")
Under all options, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the
annuitization start date while this contract is in force. We will base the
benefit paid on the death benefit coverage you select when you purchased the
contract. If a contract has more than one person as the owner, we will pay
benefits upon the first to die of any owner or the annuitant.
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant dies before annuity payouts begin while
this contract is in force, we will pay the beneficiary the greatest of these two
values less any purchase payment credits subject to reversal, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR THE ROP OR MAV DEATH BENEFIT = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = the contract value on the date of (but prior to) the partial withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 35
EXAMPLE
You purchase the contract with a payment of $100,000. We add a purchase
payment credit of $4,000 to the contract.
On the first contract anniversary you make an additional payment of $20,000.
We add a purchase payment credit of $800.
During the second contract year the contract value is $110,000 and you take a
$10,000 withdrawal.
During the third contract year the contract value is $105,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $105,000.00
-----------
Purchase payments plus credits minus adjusted partial withdrawals:
Total purchase payments: $120,000.00
plus purchase payment credits: +4,800.00
minus adjusted partial withdrawals calculated as:
$10,000 x $124,800
$110,000 = -11,345.45
-----------
for a death benefit of: $113,454.55
-----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$113,454.55
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation.
If both you and the annuitant are age 79 or younger at contract issue, you may
choose to add the MAV death benefit to your contract. If you select the
Guaranteed Minimum Income Benefit Rider you must select either the MAV death
benefit or the EDB death benefit rider.
The MAV death benefit provides that if you or the annuitant die before annuity
payouts begin while this contract is in force, we will pay the beneficiary the
greatest of these three values less any purchase payment credits subject to
reversal, minus any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any payments and purchase payment credits since that anniversary minus
adjusted partial withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV if the current contract value is
higher. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and purchase payment
credits and subtract adjusted partial withdrawals from the MAV.
EXAMPLE
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $750 to your contract.
On the first contract anniversary the contract value grows to $29,000.
During the second contract year the contract value falls to $27,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$25,500.
--------------------------------------------------------------------------------
36 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
WE CALCULATE THE MAV DEATH BENEFIT AS FOLLOWS:
Contract value at death: $25,500.00
----------
Purchase payments plus purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $25,750.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,750
---------------- = -1,430.56
$27,000
----------
for a death benefit of: $24,319.44
----------
The MAV immediately preceding the date of death plus any payments made since that
anniversary minus adjusted partial withdrawals:
MAV on the prior anniversary: $29,000.00
plus purchase payments and purchase payment credits made since the prior
anniversary: +0.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $29,000
---------------- = -1,611.11
$27,000
----------
for a death benefit of: $27,388.89
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$27,388.89
ENHANCED DEATH BENEFIT (EDB)
The EDB is intended to help protect your beneficiaries financially while your
investments have the opportunity to grow. The EDB does not provide any
additional benefit before the first contract anniversary and it may not be
appropriate for issue ages 75 to 79 because the benefit values may be limited
after age 81. Be sure to discuss with your investment professional whether or
not the EDB is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 79
or younger at contract issue, you may choose to add the EDB death benefit rider
to your contract. You may not select the EDB if you add either the Benefit
Protector or the Benefit Protector Plus riders to your contract. If you select
the Guaranteed Minimum Income Benefit Rider you must select either the MAV death
benefit or the EDB rider.
The EDB provides that if you or the annuitant die before annuity payouts begin
while this contract is in force, we will pay the beneficiary the greatest of
these three values less any purchase payment credits subject to reversal, minus
any applicable rider charges:
1. contract value;
2. total purchase payments plus purchase payment credits minus adjusted partial
withdrawals; or
3. the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWTXVAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = --------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as
a result of the partial withdrawal transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or
partial withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or
partial withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 37
EXAMPLE
You purchase the contract with a payment of $25,000 and we add a purchase
payment credit of $750 to your contract. You allocate $5,100 to the one-year
fixed account and $20,650 to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200.
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal all from the subaccounts, leaving the contract value
at $22,800.
THE DEATH BENEFIT IS CALCULATED AS FOLLOWS:
Contract value at death: $ 22,800.00
-----------
Purchase payments plus purchase payment credits minus adjusted partial withdrawals:
Total purchase payments and purchase payment credits: $ 25,750.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,750--- -1,589.51
$24,300 =
for a death benefit of: $ 24,160.49
-----------
The 5% rising floor:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x $20,650 = $ 21,682.50
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,682.50
------------------- = -$1,711.78
$19,000
variable account floor benefit: $ 19,970.72
plus the one-year fixed account value: +5,300.00
5% rising floor (value of the GPAs, the one-year fixed account and the $ 25,270.72
variable account floor):
THE EDB DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE 5% RISING FLOOR: $25,270.72
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
--------------------------------------------------------------------------------
38 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
Be sure to discuss with your sales representative whether or not the Benefit
Protector is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the EDB death benefit rider or the
Benefit Protector Plus rider. We reserve the right to discontinue offering the
Benefit Protector for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
In some instances the rider effective date for the Benefit Protector may be
after we issue the contract according to terms determined by us and at our sole
discretion.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 39
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $4,000 purchase payment credit to your contract. You
select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value less any purchase payment credits added
in the last 12 months, or $101,000. You have not reached the first contract
anniversary so the Benefit Protector does not provide any additional benefit at
this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
The MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
The MAV death benefit: $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and
you request a partial withdrawal of $50,000, including the applicable 8%
withdrawal charge. We will withdraw $10,500 from your contract value free
of charge (10% of your prior anniversary's contract value). The remainder
of the withdrawal is subject to an 8% withdrawal charge because your
payment is in its third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,340 + $3,160 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you $46,840.
We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
The MAV death benefit (MAV adjusted for partial withdrawals): $ 57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $ 58,667
--------------------------------------------------------------------------------
40 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the death benefit during the third contract year. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. The death benefit equals:
The MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $2,000. Your new contract value
is now $252,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector value. The death benefit equals:
The MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains $252,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
The MAV death benefit (contract value): $252,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($252,000 - $105,000) = +58,800
--------
Total death benefit of: $310,800
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Be sure to discuss with
your sales representative whether or not the Benefit Protector Plus is
appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for purchase through a transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the EDB death benefit rider or the Benefit Protector Rider.
We reserve the right to discontinue offering the Benefit Protector Plus for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 41
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR AND BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $4,000 purchase payment credit to your contract. You
select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value, less any purchase payment credits added
to the contract in the last 12 months, or $101,000. You have not reached the
first contract anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You have
not reached the second contract anniversary so the Benefit Protector Plus does
not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
The MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV death benefit minus payments not
previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
The MAV death benefit: $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
--------------------------------------------------------------------------------
42 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 8% withdrawal
charge. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to an 8% withdrawal charge because your payment is in its third year of
the withdrawal charge schedule, so we will withdraw $39,500 ($36,340 + $3,160 in
withdrawal charges) from your contract value. Altogether, we will withdraw
$50,000 and pay you $46,840. We calculate purchase payments not previously
withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
The MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the death benefit paid during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum
of 20%. The death benefit equals:
The MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $2,000. Your new contract value
is now $252,000. The new purchase payment is less than one year old and so it
has no effect on the Benefit Protector Plus value. The death benefit equals:
The MAV death benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $252,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector Plus
remains constant. The death benefit equals:
The MAV death benefit (contract value): $252,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,800
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $321,800
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 43
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. You
should consider whether the GMIB rider is appropriate for your situation
because:
you must hold the GMIB for 7 years;
the GMIB rider terminates* 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary;
the 6% rising floor value we use in the GMIB benefit base to calculate annuity
payouts under the GMIB is limited after age 81; and
there are additional costs associated with the rider.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy minimum required distributions, will reduce the
GMIB benefit base (defined below), which in turn may reduce or eliminate the
amount of any annuity payments available under the rider (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions"). Consult a tax
advisor before you purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit at the time you
purchase your contract for an additional annual charge (see "Charges"). You
cannot select this rider if you select the 8% Performance Credit Rider. You must
elect the GMIB along with either the MAV death benefit or the EDB death benefit
rider at the time you purchase your contract and your rider effective date will
be the contract issue date. If the annuitant is between age 73 and age 75 at
contract issue, you should consider whether a GMIB rider is appropriate for your
situation. Be sure to discuss with your investment professional whether either
GMIB rider option is appropriate for your situation.
In some instances we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment and purchase payment
credit; we disregard all previous purchase payments, purchase payment credits,
transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the amount you
allocate to subaccounts investing in the RiverSource Variable Portfolio -- Cash
Management Fund to 10% of the total amount in the subaccounts. If we are
required to activate this restriction, and you have more than 10% of your
subaccount value in this fund, we will send you a notice and ask that you
reallocate your contract value so that the 10% limitation is satisfied within 60
days. We will terminate the GMIB if you have not satisfied the limitation after
60 days.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a seven-year waiting period from the rider
effective date.
the annuitant on the retirement date must be between 50 and 86 years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G and an interest rate of 2.5%. Your annuity payouts remain fixed for the
lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the
--------------------------------------------------------------------------------
44 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
performance of the subaccounts you select. Variable annuity payouts after the
first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base (described below) equal to the
largest value. The GMIB benefit base, less any applicable premium tax, is the
value we apply to the guaranteed annuity purchase rates stated in Table B of the
contract to calculate the minimum annuity payouts you will receive if you
exercise the GMIB. If the GMIB benefit base is greater than the contract value,
the GMIB may provide a higher annuity payout level than is otherwise available.
However, the GMIB uses guaranteed annuity purchase rates which may result in
annuity payouts that are less than those using the annuity purchase rates that
we will apply at annuitization under the standard contract provisions.
Therefore, the level of income provided by the GMIB may be less than the income
the contract otherwise provides. If the annuity payouts through the standard
contract provisions are more favorable than the payouts available through the
GMIB, you will receive the higher standard payout option. The GMIB does not
create contract value or guarantee the performance of any investment option.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of:
1. contract value;
2. total purchase payments plus purchase payment credits minus adjusted partial
withdrawals; or
3. the 6% rising floor.
6% RISING FLOOR: This is the sum of the value of the GPAs, the one-year fixed
account and the variable account floor. We calculate the variable account floor
on each contract anniversary through age 80. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
set the variable account floor equal to:
the initial purchase payments and purchase payment credits allocated to the
subaccounts increased by 6%,
plus any subsequent amounts allocated to the subaccounts, and
minus adjusted transfers or partial withdrawals from the subaccounts.
Every contract anniversary after that, through age 80, we reset the variable
account floor by accumulating the prior anniversary's variable account floor at
6% plus any subsequent amounts allocated to the subaccounts minus adjusted
transfers or partial withdrawals from the subaccounts. We stop resetting the
variable account floor after you or the annuitant reach age 81. However, we
continue to add subsequent amounts you allocate to the subaccounts and subtract
adjusted transfers or partial withdrawals from the subaccounts.
Keep in mind that the 6% rising floor is limited after age 81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits made in the five years before you exercise the
GMIB. We would do so only if such payments and credits total $50,000 or more or
if they are 25% or more of total contract payments. If we exercise this right,
we:
subtract each payment and purchase payment credit adjusted for market value
from the contract value.
subtract each payment and purchase payment credit from the 6% rising floor. We
adjust the payments and purchase payment credit made to the GPAs and the one-
year fixed account for market value. We increase payments and purchase payment
credit allocated to the subaccounts by 6% for the number of full contract
years they have been in the contract before we subtract them from the 6%
rising floor.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 45
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, the GPAs and the one-year fixed account value
of the 6% rising floor as:
PMT = each purchase payment and purchase payment credit made in the five
years before you exercise the GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
For each payment and purchase payment credit, we calculate the 6% increase of
payments and purchase payment credits allocated to the subaccounts as:
CY = the full number of contract years the payment and purchase payment
credit have been in the contract.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider any time after the seventh rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB rider will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and we add a $4,000 purchase payment credit to your contract. You
allocate all of your purchase payment and purchase payment credit to the
subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT PURCHASE PAYMENTS AND 6% RISING GMIB
ANNIVERSARY CONTRACT VALUE PURCHASE PAYMENT CREDIT FLOOR BENEFIT BASE
1 $112,000 $104,000 $110,240
2 130,000 104,000 116,854
3 137,000 104,000 123,866
4 156,000 104,000 131,298
5 88,000 104,000 139,175
6 125,000 104,000 147,526
7 144,000 104,000 156,378 $156,378
8 158,000 104,000 165,760 165,760
9 145,000 104,000 175,706 175,706
10 133,000 104,000 186,248 186,248
11 146,000 104,000 197,423 197,423
12 153,000 104,000 209,268 209,268
13 225,000 104,000 221,825 225,000
14 245,000 104,000 235,134 245,000
15 250,000 104,000 249,242 250,000
--------------------------------------------------------------------------------
46 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
NOTE: The 6% rising floor value is limited after age 81, but the GMIB benefit
base may increase if the contract value increases. However, you should keep in
mind that you are always entitled to annuitize using the contract value without
exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $186,248 (6% Rising Floor) $ 907.03 $ 884.68 $ 718.92
15 250,000 (Contract Value) 1,402.50 1,340.00 1,077.50
The payouts above are shown at guaranteed annuity rates we use in the 2.5%
Table. Payouts under the standard provisions of this contract will be based on
our annuity rates in effect at annuitization and are guaranteed to be greater
than or equal to the guaranteed annuity rates stated in Table B of the contract.
The fixed annuity payout available under the standard provisions of this
contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $133,000 $ 686.28 $ 667.66 $ 549.29
15 250,000 1,475.00 1,407.50 1,142.50
In this example, at the 15th contract anniversary you would not experience a
benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
8% PERFORMANCE CREDIT RIDER (PCR)
The PCR is intended to provide you with an additional benefit if your earnings
are less than the target value on the seventh and tenth rider anniversaries (see
below). This is an optional benefit you may select for an additional charge (see
"Charges"). The PCR does not provide any additional benefit before the seventh
rider anniversary and it may not be appropriate for issue ages 83 or older due
to this required holding period. Be sure to discuss with your investment
professional whether or not the PCR is appropriate for your situation.
If the PCR is available in your state, you may choose to add this benefit to
your contract at issue. You cannot select the PCR if you select the GMIB.
In some instances we may allow you to add the PCR to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the PCR on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the target
value under these circumstances, we consider the contract value on the rider
effective date to be the first contract year's purchase payments.
INVESTMENT SELECTION UNDER THE PCR: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the aggregate
amount in the GPAs and the one-year fixed account and amounts you allocate to
subaccounts investing in the RiverSource Variable Portfolio -- Cash Management
Fund to 10% of your total contract value. If we are required to activate this
restriction, and you have more than 10% of your contract value in these
accounts, we will send you a notice and ask that you reallocate your contract
value so that the 10% limitation is satisfied within 60 days. We will terminate
the PCR if you have not satisfied the limitation after 60 days.
TARGET VALUE: We calculate the target value on each rider anniversary. There is
no target value prior to the first rider anniversary. On the first rider
anniversary we set the target value equal to your first year's purchase payments
plus purchase payment credits minus the target value adjusted partial
withdrawals accumulated at an annual effective rate of 8%. Every rider
anniversary after that, we recalculate the target value by accumulating the
prior anniversary's target value and any additional
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 47
purchase payments and purchase payment credits minus the target value adjusted
partial withdrawals at an annual effective rate of 8%.
PW X TV
TARGET VALUE ADJUSTED PARTIAL WITHDRAWALS = ---------
CV
PW = the partial withdrawal including any applicable withdrawal charge or MVA.
TV = the target value on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
YOUR BENEFITS UNDER THE PCR ARE AS FOLLOWS:
(a) If on the seventh rider anniversary your contract value is less than the
target value, we will add a PCR credit to your contract equal to:
3% X (PP - PCRPW - PP5)
PP = total purchase payments and purchase payment credits.
PCRPW = PCR adjusted partial withdrawals. The PCR adjusted partial withdrawal
amount is an adjustment we make to determine the proportionate amount
of any partial withdrawal attributable to purchase payments received
five or more years before the target value is calculated (on the tenth
year rider anniversary). For a more detailed description of the PCR
adjusted partial withdrawal please see Appendix A.
PP5 = purchase payments and purchase payment credits made in the prior five
years.
We apply the PCR credit to your contract on the seventh rider anniversary and
allocate it among the fixed accounts and subaccounts according to your current
asset allocation.
(b) If on the tenth rider anniversary your contract value is less than the
target value, we will add a PCR credit to your contract equal to:
5% X (PP - PCRPW - PP5)
We restart the calculation period for the PCR on the tenth rider anniversary and
every ten years after that while you own the contract. We use the contract value
(including any credits) on that anniversary as your first contract year's
payments for calculating the target value and any applicable PCR credit. We may
then apply additional PCR credits to your contract at the end of each seven and
ten-year period as described above.
PCR RESET: You can elect to lock in your contract growth by restarting the ten-
year PCR calculation period on any contract anniversary. If you elect to restart
the calculation period, the contract value on the restart date is used as the
first year's payments for the calculating the target value and any applicable
PCR credit. The next calculation period for the PCR will restart at the end of
this new ten-year period. We must receive your request to restart the PCR
calculation period within 30 days after a contract anniversary.
TERMINATING THE PCR
You may terminate the PCR within 30 days following the first contract
anniversary after the PCR rider effective date.
You may terminate the PCR within 30 days following the later of the tenth
contract anniversary after the PCR rider effective date or the last rider
reset date.
The PCR will terminate on the date:
- you make a full withdrawal from the contract;
- that a death benefit is payable; or
- you choose to begin taking annuity payouts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $4,000
purchase payment credit to your contract.
There are no additional purchase payments and no partial withdrawals.
On the seventh contract anniversary, the contract value is $150,000.
We determine the target value on the seventh contract anniversary as your
purchase payments plus purchase payment credits (there are no partial
withdrawals to subtract) accumulated at an annual effective rate of 8% or:
$104,000 x (1.08)(7) = $104,000 x 1.71382 = $178,237.72.
--------------------------------------------------------------------------------
48 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
Your contract value ($150,000) is less than the target value ($178,237.72) so
we will add a PCR credit to your contract equal to 3% of your purchase
payments and purchase payment credits (there are no partial withdrawals or
purchase payments made in the last five years to subtract), which is:
0.03 x $104,000 = $3,120.
After application of the PCR credit, your total contract value would be
$153,120.
On the tenth contract anniversary, the contract value is $220,000.
We determine the target value on the tenth contract anniversary as your
purchase payments plus purchase payment credits (there are no partial
withdrawals to subtract) accumulated at an annual effective rate of 8% or:
$104,000 x (1.08)(10) = $104,000 x 2.158924 = $224,528.20.
Your contract value ($220,000) is less than the target value ($224,528.20) so
we will add a PCR credit to your contract equal to 5% of your purchase
payments and purchase payment credits (there are no partial withdrawals or
purchase payments made in the last five years to subtract), which is:
0.05 x $104,000 = $5,200.
After application of the PCR credit, your total contract value would be
$225,200.
The PCR calculation period automatically restarts on the tenth contract
anniversary with the target values first year's payments equal to $225,200. We
would make the next PCR credit determination on the twentieth contract
anniversary.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 49
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
Contract values that you allocated to the one-year fixed account will provide
fixed dollar payouts and contract values that you allocated among the
subaccounts will provide variable annuity payouts.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
--------------------------------------------------------------------------------
50 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 51
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible
--------------------------------------------------------------------------------
52 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
contributions; or (2) you rolled after-tax dollars from a retirement plan into
your IRA; or (3) the contract is used to fund a retirement plan and you or your
employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 53
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
--------------------------------------------------------------------------------
54 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 6.25% as well as
service/trail commissions of up to 0.75% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 55
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
56 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: 8% PERFORMANCE CREDIT RIDER ADJUSTED PARTIAL WITHDRAWAL
STEP ONE
For EACH withdrawal made within the current calculation period we calculate the
remaining purchase payment amount (RPA):
RPA = Total purchase payments and any purchase payment credits made prior to
the partial withdrawal in question minus the RPA adjusted partial
withdrawals for all previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the RPA will simply
be the total purchase payments and any purchase payment credits as there are no
previous withdrawals to subtract.
PW X RPA
RPA ADJUSTED PARTIAL WITHDRAWALS = ---------
CV
PW = the partial withdrawal including any applicable withdrawal charge or
MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP TWO
For EACH withdrawal made within the current calculation period we calculate the
eligible purchase payment amount (EPA):
EPA = Total purchase payments and any purchase payment credits made prior to
the partial withdrawal in question AND prior to the five year
exclusion period minus EPA adjusted partial withdrawals for all
previous partial withdrawals.
NOTE: In our calculations for the first partial withdrawal, the EPA will simply
be the total purchase payments and any purchase payment credits made before the
five year exclusion period as there are no previous withdrawals to subtract.
Also note that EPA/RPA will always be less than or equal to one.
PW X EPA EPA
EPA ADJUSTED PARTIAL WITHDRAWALS = --------- X ---------
CV RPA
PW = the partial withdrawal including any applicable withdrawal charge or
MVA.
CV = the contract value on the date of (but prior to) the partial
withdrawal.
EPA = the eligible premium amount on the date of (but prior to) the partial
withdrawal.
RPA = the remaining premium amount on the date of (but prior to) the partial
withdrawal.
STEP THREE
The total PCRPW (Performance Credit Rider adjusted partial withdrawal) amount is
the SUM OF EACH EPA ADJUSTED PARTIAL WITHDRAWAL.
EXAMPLE: Calculation at the end of the ten-year period assuming the contract is
eligible for the PCR credit (i.e., your contract value is less than target
value). This example does not include any applicable purchase payment credits.
You purchase the contract with a purchase payment of $100,000.
On the sixth contract anniversary you make an additional purchase payment in
the amount of $100,000.
Contract values before any partial withdrawals are shown below.
On the third contract anniversary you make a partial withdrawal in the amount
of $10,000.
On the eighth contract anniversary you make another partial withdrawal in the
amount of $10,000.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 57
NOTE: The shaded portion of the table indicates the five year exclusion period.
CONTRACT DURATION IN
YEARS TOTAL PURCHASE PAYMENTS CONTRACT VALUE
-----------------------------------------------------------------------------------------------------------
At Issue $100,000 $100,000
1 100,000 110,000
2 100,000 115,000
3 100,000 120,000
4 100,000 115,000
5 100,000 120,000
6 200,000 225,000
7 200,000 230,000
8 200,000 235,000
9 200,000 230,000
10 200,000 235,000
STEP ONE: For each withdrawal made within the current calculation period we
calculate the RPA:
For the first partial withdrawal on the third contract anniversary:
RPA before the partial withdrawal = RPA adjusted partial withdrawal =
total purchase payments made prior to the partial $10,000 x $100,000
withdrawal $120,000 = $8,333
minus the RPA adjusted partial withdrawals for all
previous partial
withdrawals = $100,000 - 0 = $100,000
For the second partial withdrawal on the eighth contract anniversary:
RPA before the partial withdrawal = RPA adjusted partial withdrawal =
total purchase payments made prior to the partial $10,000 x $191,667
withdrawal ------------------ = $8,156
minus the RPA adjusted partial withdrawals for all $235,000
previous partial
withdrawals = $200,000 - $8,333 = $191,667
STEP TWO: For each withdrawal made within the current calculation period, we
calculate the EPA:
For the first partial withdrawal on the third contract anniversary:
EPA before the partial withdrawal = EPA adjusted partial withdrawal =
total purchase payments made prior to the $10,000 x $100,000 $100,000
partial withdrawal $120,000 x -------- = $8,333
AND the five-year exclusion period minus the $100,000
EPA
adjusted partial withdrawals for all previous
partial
withdrawals = $100,000 - 0 = $100,000
For the second partial withdrawal on the eighth contract anniversary:
EPA before the partial withdrawal = EPA adjusted partial withdrawal =
total purchase payments made prior to the $10,000 x $91,667 $91,667
partial withdrawal ----------------- x -------- = $1,866
AND the five-year exclusion period minus the $235,000 $191,667
EPA
adjusted partial withdrawals for all previous
partial
withdrawals = $100,000 - $8,333 = $91,667
STEP THREE: The total PCRPW amount is the sum of each EPA adjusted partial
withdrawal.
PCRPW amount = $8,333 + $1,866 = $10,199
--------------------------------------------------------------------------------
58 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. The date in which operations commenced in each subaccount is
noted in parentheses. We have not provided this information for subaccounts that
were not available under your contract as of Dec. 31, 2011.
VARIABLE ACCOUNT CHARGES OF 1.50% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2000)
Accumulation unit value at beginning of period $0.47 $0.40 $0.27 $0.52 $0.44 $0.41 $0.40 $0.39 $0.27 $0.48
Accumulation unit value at end of period $0.35 $0.47 $0.40 $0.27 $0.52 $0.44 $0.41 $0.40 $0.39 $0.27
Number of accumulation units outstanding at end
of period (000 omitted) 191 289 296 388 585 779 1,021 1,148 1,304 1,976
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERMEDIATE BOND PORTFOLIO (CLASS B) (05/01/2000)
Accumulation unit value at beginning of period $1.43 $1.34 $1.15 $1.25 $1.21 $1.19 $1.18 $1.16 $1.14 $1.07
Accumulation unit value at end of period $1.50 $1.43 $1.34 $1.15 $1.25 $1.21 $1.19 $1.18 $1.16 $1.14
Number of accumulation units outstanding at end
of period (000 omitted) 196 189 222 708 752 838 910 918 919 1,233
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (05/01/2000)
Accumulation unit value at beginning of period $0.62 $0.57 $0.42 $0.71 $0.64 $0.65 $0.57 $0.54 $0.44 $0.65
Accumulation unit value at end of period $0.59 $0.62 $0.57 $0.42 $0.71 $0.64 $0.65 $0.57 $0.54 $0.44
Number of accumulation units outstanding at end
of period (000 omitted) 177 301 308 322 474 591 764 846 957 1,162
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (05/01/2000)
Accumulation unit value at beginning of period $0.98 $0.89 $0.72 $1.05 $1.05 $0.93 $0.91 $0.84 $0.71 $0.83
Accumulation unit value at end of period $0.99 $0.98 $0.89 $0.72 $1.05 $1.05 $0.93 $0.91 $0.84 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 63 83 635 709 764 787 1,045 1,151 439 426
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/01/2000)
Accumulation unit value at beginning of period $1.08 $1.10 $1.11 $1.10 $1.07 $1.04 $1.03 $1.03 $1.04 $1.05
Accumulation unit value at end of period $1.06 $1.08 $1.10 $1.11 $1.10 $1.07 $1.04 $1.03 $1.03 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 2,784 2,902 4,792 4,620 2,288 1,592 2,283 1,884 2,410 4,222
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/01/2000)
Accumulation unit value at beginning of period $1.43 $1.34 $1.19 $1.29 $1.25 $1.21 $1.21 $1.17 $1.14 $1.09
Accumulation unit value at end of period $1.51 $1.43 $1.34 $1.19 $1.29 $1.25 $1.21 $1.21 $1.17 $1.14
Number of accumulation units outstanding at end
of period (000 omitted) 1,907 2,260 11,383 11,223 11,858 7,847 4,589 4,594 337 264
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.67 $1.45 $1.15 $1.97 $1.85 $1.57 $1.40 $1.20 $0.87 $1.09
Accumulation unit value at end of period $1.56 $1.67 $1.45 $1.15 $1.97 $1.85 $1.57 $1.40 $1.20 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 2,190 2,635 8,261 7,758 5,845 5,092 2,962 1,191 666 368
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51 $0.67
Accumulation unit value at end of period $0.69 $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51
Number of accumulation units outstanding at end
of period (000 omitted) 5,573 6,904 7,534 8,098 8,999 9,362 9,338 7,431 384 138
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.58 $1.40 $0.93 $1.26 $1.25 $1.15 $1.12 $1.02 $0.83 $0.90
Accumulation unit value at end of period $1.64 $1.58 $1.40 $0.93 $1.26 $1.25 $1.15 $1.12 $1.02 $0.83
Number of accumulation units outstanding at end
of period (000 omitted) 491 558 1,023 1,243 1,496 1,611 1,087 834 579 835
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/01/2000)
Accumulation unit value at beginning of period $0.47 $0.41 $0.30 $0.55 $0.55 $0.50 $0.47 $0.44 $0.36 $0.50
Accumulation unit value at end of period $0.45 $0.47 $0.41 $0.30 $0.55 $0.55 $0.50 $0.47 $0.44 $0.36
Number of accumulation units outstanding at end
of period (000 omitted) 161 186 825 2,901 2,181 97 109 80 141 35
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.28 $1.02 $0.74 $1.23 $1.30 $1.18 $1.15 $0.98 $0.67 $0.83
Accumulation unit value at end of period $1.15 $1.28 $1.02 $0.74 $1.23 $1.30 $1.18 $1.15 $0.98 $0.67
Number of accumulation units outstanding at end
of period (000 omitted) 93 147 368 451 601 679 723 878 759 350
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $1.22 $1.21 $1.16 $1.21 $1.17 $1.14 $1.14 $1.15 $1.15 $1.10
Accumulation unit value at end of period $1.22 $1.22 $1.21 $1.16 $1.21 $1.17 $1.14 $1.14 $1.15 $1.15
Number of accumulation units outstanding at end
of period (000 omitted) 1,093 1,343 3,154 2,604 3,169 3,280 3,298 3,266 2,667 2,375
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (05/01/2000)
Accumulation unit value at beginning of period $0.98 $0.86 $0.69 $1.20 $1.09 $0.98 $0.92 $0.89 $0.73 $0.89
Accumulation unit value at end of period $0.98 $0.98 $0.86 $0.69 $1.20 $1.09 $0.98 $0.92 $0.89 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 123 199 711 728 920 1,003 1,225 1,269 914 828
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 59
VARIABLE ACCOUNT CHARGES OF 1.50% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (05/01/2000)
Accumulation unit value at beginning of period $2.48 $1.95 $1.42 $2.38 $2.09 $1.88 $1.62 $1.32 $0.96 $1.09
Accumulation unit value at end of period $2.18 $2.48 $1.95 $1.42 $2.38 $2.09 $1.88 $1.62 $1.32 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 257 288 378 418 551 655 1,057 1,142 1,305 1,744
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS (05/01/2000)
Accumulation unit value at beginning of period $0.98 $0.88 $0.71 $1.28 $1.11 $0.96 $0.81 $0.73 $0.52 $0.66
Accumulation unit value at end of period $0.80 $0.98 $0.88 $0.71 $1.28 $1.11 $0.96 $0.81 $0.73 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 58 76 126 143 204 215 173 188 186 165
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.80 $1.51 $1.29 $2.27 $2.91 $2.45 $2.19 $1.69 $1.26 $1.26
Accumulation unit value at end of period $1.67 $1.80 $1.51 $1.29 $2.27 $2.91 $2.45 $2.19 $1.69 $1.26
Number of accumulation units outstanding at end
of period (000 omitted) 168 188 320 437 618 601 752 890 771 926
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.52 $1.39 $1.12 $1.81 $1.77 $1.52 $1.39 $1.26 $1.02 $1.17
Accumulation unit value at end of period $1.48 $1.52 $1.39 $1.12 $1.81 $1.77 $1.52 $1.39 $1.26 $1.02
Number of accumulation units outstanding at end
of period (000 omitted) 2,261 2,741 3,891 5,550 8,671 9,715 9,517 9,666 1,946 1,063
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.59 $1.49 $1.10 $1.88 $1.65 $1.38 $1.27 $1.09 $0.84 $1.00
Accumulation unit value at end of period $1.40 $1.59 $1.49 $1.10 $1.88 $1.65 $1.38 $1.27 $1.09 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 227 259 361 471 644 681 641 671 256 76
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC GROWTH FUND - INSTITUTIONAL SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.81 $0.74 $0.51 $0.88 $0.81 $0.76 $0.75 $0.70 $0.57 $0.77
Accumulation unit value at end of period $0.77 $0.81 $0.74 $0.51 $0.88 $0.81 $0.76 $0.75 $0.70 $0.57
Number of accumulation units outstanding at end
of period (000 omitted) 44 48 87 63 64 60 86 112 106 86
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC INTERNATIONAL EQUITY FUND - INSTITUTIONAL SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.85 $0.78 $0.62 $1.16 $1.09 $0.91 $0.81 $0.72 $0.54 $0.67
Accumulation unit value at end of period $0.71 $0.85 $0.78 $0.62 $1.16 $1.09 $0.91 $0.81 $0.72 $0.54
Number of accumulation units outstanding at end
of period (000 omitted) 5 8 12 22 93 91 60 73 49 50
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of period $0.82 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61 $0.79
Accumulation unit value at end of period $0.84 $0.82 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61
Number of accumulation units outstanding at end
of period (000 omitted) 632 756 882 1,011 1,408 1,710 1,799 1,866 1,380 1,247
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (03/03/2000)
Accumulation unit value at beginning of period $0.54 $0.47 $0.40 $0.70 $0.64 $0.61 $0.57 $0.54 $0.42 $0.57
Accumulation unit value at end of period $0.49 $0.54 $0.47 $0.40 $0.70 $0.64 $0.61 $0.57 $0.54 $0.42
Number of accumulation units outstanding at end
of period (000 omitted) 1,378 1,667 1,786 2,087 2,684 2,922 3,828 4,221 4,189 3,934
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES I SHARES* (05/01/2000)
Accumulation unit value at beginning of period $1.20 $1.02 $0.73 $1.40 $1.28 $1.11 $1.03 $0.91 $0.68 $0.88
Accumulation unit value at end of period $1.09 $1.20 $1.02 $0.73 $1.40 $1.28 $1.11 $1.03 $0.91 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 27 27 36 35 57 57 101 137 185 221
*Invesco V.I. Capital Development Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series I Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.08 $1.00 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.06 $1.08 $1.00 $0.79 $1.15 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,276 1,417 1,589 1,937 2,548 3,049 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES ENTERPRISE PORTFOLIO: SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.67 $0.54 $0.38 $0.69 $0.57 $0.51 $0.46 $0.39 $0.30 $0.42
Accumulation unit value at end of period $0.65 $0.67 $0.54 $0.38 $0.69 $0.57 $0.51 $0.46 $0.39 $0.30
Number of accumulation units outstanding at end
of period (000 omitted) 64 142 143 151 187 202 304 370 411 456
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.51 $0.42 $0.27 $0.49 $0.41 $0.38 $0.35 $0.35 $0.24 $0.42
Accumulation unit value at end of period $0.46 $0.51 $0.42 $0.27 $0.49 $0.41 $0.38 $0.35 $0.35 $0.24
Number of accumulation units outstanding at end
of period (000 omitted) 18 46 49 57 77 91 125 163 254 254
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.66 $0.58 $0.44 $0.74 $0.65 $0.59 $0.58 $0.56 $0.44 $0.60
Accumulation unit value at end of period $0.61 $0.66 $0.58 $0.44 $0.74 $0.65 $0.59 $0.58 $0.56 $0.44
Number of accumulation units outstanding at end
of period (000 omitted) 614 735 9,654 8,263 5,758 822 1,146 1,326 1,650 2,346
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
60 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.50% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES OVERSEAS PORTFOLIO: SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $1.65 $1.34 $0.76 $1.61 $1.28 $0.88 $0.68 $0.58 $0.44 $0.60
Accumulation unit value at end of period $1.10 $1.65 $1.34 $0.76 $1.61 $1.28 $0.88 $0.68 $0.58 $0.44
Number of accumulation units outstanding at end
of period (000 omitted) 144 182 193 293 440 388 392 446 799 541
----------------------------------------------------------------------------------------------------------------------------------
JPMORGAN INSURANCE TRUST U.S. EQUITY PORTFOLIO - CLASS 1 SHARES (04/24/2009)
Accumulation unit value at beginning of period $1.48 $1.32 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.43 $1.48 $1.32 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 95 98 168 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO - SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $1.00 $0.95 $0.80 $1.28 $1.17 $0.97 $0.89 $0.79 $0.62 $0.71
Accumulation unit value at end of period $0.91 $1.00 $0.95 $0.80 $1.28 $1.17 $0.97 $0.89 $0.79 $0.62
Number of accumulation units outstanding at end
of period (000 omitted) 30 30 75 73 72 74 31 34 -- --
----------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT U.S. STRATEGIC EQUITY PORTFOLIO - SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $1.03 $0.93 $0.74 $1.16 $1.19 $1.03 $1.01 $0.92 $0.75 $0.91
Accumulation unit value at end of period $1.04 $1.03 $0.93 $0.74 $1.16 $1.19 $1.03 $1.01 $0.92 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 49 52 51 56 55 57 57 55 38 38
----------------------------------------------------------------------------------------------------------------------------------
LVIP BARON GROWTH OPPORTUNITIES FUND - SERVICE CLASS (05/01/2000)
Accumulation unit value at beginning of period $1.70 $1.36 $1.00 $1.67 $1.64 $1.44 $1.41 $1.14 $0.89 $1.06
Accumulation unit value at end of period $1.74 $1.70 $1.36 $1.00 $1.67 $1.64 $1.44 $1.41 $1.14 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 26 35 306 344 389 406 431 497 556 47
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - INITIAL CLASS (05/01/2000)
Accumulation unit value at beginning of period $1.25 $0.93 $0.58 $0.97 $0.96 $0.86 $0.83 $0.79 $0.60 $0.89
Accumulation unit value at end of period $1.11 $1.25 $0.93 $0.58 $0.97 $0.96 $0.86 $0.83 $0.79 $0.60
Number of accumulation units outstanding at end
of period (000 omitted) 34 58 71 74 97 125 155 314 440 403
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) RESEARCH SERIES - INITIAL CLASS (05/01/2000)
Accumulation unit value at beginning of period $0.87 $0.76 $0.59 $0.94 $0.84 $0.77 $0.73 $0.64 $0.52 $0.70
Accumulation unit value at end of period $0.85 $0.87 $0.76 $0.59 $0.94 $0.84 $0.77 $0.73 $0.64 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 57 95 99 105 143 160 253 401 360 915
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit value at beginning of period $1.40 $1.25 $0.95 $1.55 $1.23 $0.95 $0.83 $0.64 $0.48 $0.63
Accumulation unit value at end of period $1.47 $1.40 $1.25 $0.95 $1.55 $1.23 $0.95 $0.83 $0.64 $0.48
Number of accumulation units outstanding at end
of period (000 omitted) 462 601 896 1,163 1,429 1,801 2,285 2,496 2,767 2,321
----------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO, INVESTMENT CLASS (05/01/2000)
Accumulation unit value at beginning of period $3.05 $2.39 $1.53 $2.74 $2.68 $2.24 $2.04 $1.82 $1.24 $1.44
Accumulation unit value at end of period $2.64 $3.05 $2.39 $1.53 $2.74 $2.68 $2.24 $2.04 $1.82 $1.24
Number of accumulation units outstanding at end
of period (000 omitted) 64 90 167 283 290 295 390 429 432 599
----------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO, INVESTMENT CLASS (05/01/2000)
Accumulation unit value at beginning of period $2.66 $2.24 $1.68 $2.35 $2.43 $2.14 $2.00 $1.62 $1.17 $1.38
Accumulation unit value at end of period $2.54 $2.66 $2.24 $1.68 $2.35 $2.43 $2.14 $2.00 $1.62 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 75 99 130 120 134 150 217 233 228 227
----------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE VALUE PORTFOLIO (05/01/2000)
Accumulation unit value at beginning of period $2.27 $2.02 $1.41 $2.54 $2.71 $2.37 $2.10 $1.78 $1.27 $1.44
Accumulation unit value at end of period $1.76 $2.27 $2.02 $1.41 $2.54 $2.71 $2.37 $2.10 $1.78 $1.27
Number of accumulation units outstanding at end
of period (000 omitted) 48 58 114 127 187 205 377 425 433 865
----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (05/01/2000)
Accumulation unit value at beginning of period $1.58 $1.29 $0.87 $1.63 $1.42 $1.05 $0.88 $0.68 $0.47 $0.55
Accumulation unit value at end of period $1.33 $1.58 $1.29 $0.87 $1.63 $1.42 $1.05 $0.88 $0.68 $0.47
Number of accumulation units outstanding at end
of period (000 omitted) 1,032 1,138 2,663 3,854 2,616 2,570 2,094 1,370 371 397
----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (05/01/2000)
Accumulation unit value at beginning of period $1.88 $1.55 $1.10 $1.86 $1.79 $1.68 $1.54 $1.32 $0.93 $1.14
Accumulation unit value at end of period $1.79 $1.88 $1.55 $1.10 $1.86 $1.79 $1.68 $1.54 $1.32 $0.93
Number of accumulation units outstanding at end
of period (000 omitted) 757 924 2,016 2,159 1,972 1,471 1,241 640 107 67
----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of period $1.13 $1.00 $0.87 $1.39 $1.38 $1.18 $1.14 $1.04 $0.83 $1.05
Accumulation unit value at end of period $1.09 $1.13 $1.00 $0.87 $1.39 $1.38 $1.18 $1.14 $1.04 $0.83
Number of accumulation units outstanding at end
of period (000 omitted) 891 1,097 1,512 1,227 1,702 2,527 3,235 3,406 3,317 3,205
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 61
VARIABLE ACCOUNT CHARGES OF 1.60% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (02/11/2000)
Accumulation unit value at beginning of period $0.50 $0.43 $0.28 $0.55 $0.47 $0.44 $0.43 $0.41 $0.29 $0.51
Accumulation unit value at end of period $0.38 $0.50 $0.43 $0.28 $0.55 $0.47 $0.44 $0.43 $0.41 $0.29
Number of accumulation units outstanding at end
of period (000 omitted) 994 1,156 1,328 1,522 1,834 2,665 2,981 3,267 3,866 3,655
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERMEDIATE BOND PORTFOLIO (CLASS B) (02/11/2000)
Accumulation unit value at beginning of period $1.54 $1.43 $1.23 $1.34 $1.30 $1.28 $1.27 $1.25 $1.23 $1.16
Accumulation unit value at end of period $1.61 $1.54 $1.43 $1.23 $1.34 $1.30 $1.28 $1.27 $1.25 $1.23
Number of accumulation units outstanding at end
of period (000 omitted) 381 762 992 1,228 846 862 889 920 966 1,192
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS LARGE CAP GROWTH PORTFOLIO (CLASS B) (02/11/2000)
Accumulation unit value at beginning of period $0.66 $0.61 $0.45 $0.76 $0.68 $0.70 $0.62 $0.58 $0.48 $0.70
Accumulation unit value at end of period $0.63 $0.66 $0.61 $0.45 $0.76 $0.68 $0.70 $0.62 $0.58 $0.48
Number of accumulation units outstanding at end
of period (000 omitted) 1,033 1,121 1,364 1,741 2,262 3,220 3,655 3,938 4,901 4,631
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.02 $0.92 $0.75 $1.09 $1.09 $0.97 $0.94 $0.88 $0.74 $0.86
Accumulation unit value at end of period $1.02 $1.02 $0.92 $0.75 $1.09 $1.09 $0.97 $0.94 $0.88 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 789 915 1,004 1,330 1,631 1,534 1,393 1,424 1,263 915
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.07 $1.09 $1.10 $1.10 $1.06 $1.03 $1.02 $1.03 $1.04 $1.05
Accumulation unit value at end of period $1.05 $1.07 $1.09 $1.10 $1.10 $1.06 $1.03 $1.02 $1.03 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 1,085 1,373 2,289 3,556 3,511 4,258 5,054 5,813 9,032 12,876
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.42 $1.33 $1.18 $1.28 $1.24 $1.21 $1.20 $1.17 $1.14 $1.09
Accumulation unit value at end of period $1.49 $1.42 $1.33 $1.18 $1.28 $1.24 $1.21 $1.20 $1.17 $1.14
Number of accumulation units outstanding at end
of period (000 omitted) 670 833 3,776 3,697 3,973 1,279 1,145 1,267 849 894
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.64 $1.43 $1.14 $1.94 $1.83 $1.55 $1.39 $1.19 $0.86 $1.08
Accumulation unit value at end of period $1.54 $1.64 $1.43 $1.14 $1.94 $1.83 $1.55 $1.39 $1.19 $0.86
Number of accumulation units outstanding at end
of period (000 omitted) 1,619 1,778 3,850 4,036 3,632 3,425 2,161 854 518 179
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $0.67 $0.58 $0.47 $0.83 $0.82 $0.73 $0.69 $0.67 $0.52 $0.68
Accumulation unit value at end of period $0.69 $0.67 $0.58 $0.47 $0.83 $0.82 $0.73 $0.69 $0.67 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 2,569 3,124 3,726 3,771 4,175 4,631 3,835 3,213 184 144
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.58 $1.41 $0.93 $1.26 $1.26 $1.15 $1.13 $1.03 $0.83 $0.91
Accumulation unit value at end of period $1.64 $1.58 $1.41 $0.93 $1.26 $1.26 $1.15 $1.13 $1.03 $0.83
Number of accumulation units outstanding at end
of period (000 omitted) 1,230 1,699 2,044 1,953 2,461 3,559 2,355 3,591 3,747 3,634
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $0.49 $0.43 $0.32 $0.58 $0.57 $0.52 $0.49 $0.46 $0.38 $0.52
Accumulation unit value at end of period $0.47 $0.49 $0.43 $0.32 $0.58 $0.57 $0.52 $0.49 $0.46 $0.38
Number of accumulation units outstanding at end
of period (000 omitted) 178 194 200 505 492 384 703 733 539 476
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.42 $1.14 $0.83 $1.37 $1.45 $1.32 $1.28 $1.09 $0.75 $0.92
Accumulation unit value at end of period $1.28 $1.42 $1.14 $0.83 $1.37 $1.45 $1.32 $1.28 $1.09 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 202 209 231 254 355 416 516 616 743 259
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (02/11/2000)
Accumulation unit value at beginning of period $1.23 $1.21 $1.16 $1.21 $1.17 $1.15 $1.15 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.22 $1.23 $1.21 $1.16 $1.21 $1.17 $1.15 $1.15 $1.16 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) 627 537 1,126 824 634 688 614 765 812 397
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (02/11/2000)
Accumulation unit value at beginning of period $0.99 $0.88 $0.70 $1.22 $1.11 $1.00 $0.94 $0.91 $0.74 $0.91
Accumulation unit value at end of period $0.99 $0.99 $0.88 $0.70 $1.22 $1.11 $1.00 $0.94 $0.91 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 1,378 1,500 1,719 2,275 3,050 3,548 3,902 4,085 3,720 3,068
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (02/11/2000)
Accumulation unit value at beginning of period $2.46 $1.94 $1.41 $2.36 $2.08 $1.88 $1.61 $1.31 $0.96 $1.09
Accumulation unit value at end of period $2.16 $2.46 $1.94 $1.41 $2.36 $2.08 $1.88 $1.61 $1.31 $0.96
Number of accumulation units outstanding at end
of period (000 omitted) 886 1,212 1,482 1,817 2,472 3,539 3,997 4,551 5,037 5,481
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS (02/11/2000)
Accumulation unit value at beginning of period $0.91 $0.82 $0.66 $1.19 $1.04 $0.89 $0.76 $0.68 $0.48 $0.62
Accumulation unit value at end of period $0.74 $0.91 $0.82 $0.66 $1.19 $1.04 $0.89 $0.76 $0.68 $0.48
Number of accumulation units outstanding at end
of period (000 omitted) 428 470 544 1,476 1,677 1,079 1,172 1,219 1,060 3,767
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
62 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.60% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (02/11/2000)
Accumulation unit value at beginning of period $1.99 $1.67 $1.43 $2.52 $3.23 $2.72 $2.44 $1.88 $1.41 $1.40
Accumulation unit value at end of period $1.85 $1.99 $1.67 $1.43 $2.52 $3.23 $2.72 $2.44 $1.88 $1.41
Number of accumulation units outstanding at end
of period (000 omitted) 353 344 398 432 671 910 960 841 925 967
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (02/11/2000)
Accumulation unit value at beginning of period $1.61 $1.47 $1.19 $1.92 $1.88 $1.62 $1.48 $1.34 $1.09 $1.25
Accumulation unit value at end of period $1.57 $1.61 $1.47 $1.19 $1.92 $1.88 $1.62 $1.48 $1.34 $1.09
Number of accumulation units outstanding at end
of period (000 omitted) 1,086 1,205 1,461 1,611 2,023 2,313 2,432 2,461 1,354 690
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of period $1.58 $1.48 $1.10 $1.87 $1.64 $1.38 $1.27 $1.09 $0.84 $1.00
Accumulation unit value at end of period $1.39 $1.58 $1.48 $1.10 $1.87 $1.64 $1.38 $1.27 $1.09 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 348 443 472 440 778 909 892 833 387 330
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC GROWTH FUND - INSTITUTIONAL SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.83 $0.76 $0.52 $0.91 $0.84 $0.79 $0.78 $0.72 $0.59 $0.80
Accumulation unit value at end of period $0.79 $0.83 $0.76 $0.52 $0.91 $0.84 $0.79 $0.78 $0.72 $0.59
Number of accumulation units outstanding at end
of period (000 omitted) 275 314 485 402 603 790 986 1,121 1,066 1,135
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRATEGIC INTERNATIONAL EQUITY FUND - INSTITUTIONAL SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.81 $0.75 $0.59 $1.11 $1.04 $0.87 $0.78 $0.69 $0.52 $0.65
Accumulation unit value at end of period $0.68 $0.81 $0.75 $0.59 $1.11 $1.04 $0.87 $0.78 $0.69 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 158 202 248 287 351 483 630 618 735 634
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.83 $0.75 $0.63 $1.01 $1.05 $0.94 $0.90 $0.79 $0.62 $0.81
Accumulation unit value at end of period $0.85 $0.83 $0.75 $0.63 $1.01 $1.05 $0.94 $0.90 $0.79 $0.62
Number of accumulation units outstanding at end
of period (000 omitted) 426 501 530 1,149 1,251 888 880 911 741 666
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (02/11/2000)
Accumulation unit value at beginning of period $0.59 $0.52 $0.44 $0.77 $0.70 $0.67 $0.63 $0.60 $0.47 $0.63
Accumulation unit value at end of period $0.54 $0.59 $0.52 $0.44 $0.77 $0.70 $0.67 $0.63 $0.60 $0.47
Number of accumulation units outstanding at end
of period (000 omitted) 765 1,143 1,387 1,626 2,002 2,777 3,612 4,617 5,063 5,490
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES I SHARES* (02/11/2000)
Accumulation unit value at beginning of period $1.18 $1.01 $0.72 $1.39 $1.27 $1.11 $1.03 $0.90 $0.68 $0.88
Accumulation unit value at end of period $1.08 $1.18 $1.01 $0.72 $1.39 $1.27 $1.11 $1.03 $0.90 $0.68
Number of accumulation units outstanding at end
of period (000 omitted) 277 292 396 561 787 1,099 1,197 1,399 1,743 1,419
*Invesco V.I. Capital Development Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series I Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.08 $1.00 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.06 $1.08 $1.00 $0.79 $1.15 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 812 1,217 1,457 1,848 2,491 2,734 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES ENTERPRISE PORTFOLIO: SERVICE SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.55 $0.45 $0.31 $0.57 $0.48 $0.43 $0.39 $0.33 $0.25 $0.35
Accumulation unit value at end of period $0.53 $0.55 $0.45 $0.31 $0.57 $0.48 $0.43 $0.39 $0.33 $0.25
Number of accumulation units outstanding at end
of period (000 omitted) 604 919 1,057 1,535 1,715 2,068 2,545 3,020 3,748 3,767
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (05/01/2000)
Accumulation unit value at beginning of period $0.51 $0.41 $0.27 $0.49 $0.41 $0.38 $0.35 $0.35 $0.24 $0.42
Accumulation unit value at end of period $0.45 $0.51 $0.41 $0.27 $0.49 $0.41 $0.38 $0.35 $0.35 $0.24
Number of accumulation units outstanding at end
of period (000 omitted) 170 236 298 374 436 653 960 1,339 2,256 1,352
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.64 $0.57 $0.43 $0.72 $0.64 $0.58 $0.57 $0.56 $0.43 $0.60
Accumulation unit value at end of period $0.60 $0.64 $0.57 $0.43 $0.72 $0.64 $0.58 $0.57 $0.56 $0.43
Number of accumulation units outstanding at end
of period (000 omitted) 1,021 1,621 5,519 5,464 5,544 3,179 3,654 4,012 5,078 5,747
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES OVERSEAS PORTFOLIO: SERVICE SHARES (02/11/2000)
Accumulation unit value at beginning of period $1.49 $1.21 $0.69 $1.46 $1.16 $0.80 $0.62 $0.53 $0.40 $0.55
Accumulation unit value at end of period $0.99 $1.49 $1.21 $0.69 $1.46 $1.16 $0.80 $0.62 $0.53 $0.40
Number of accumulation units outstanding at end
of period (000 omitted) 1,338 1,754 2,102 2,694 2,756 2,778 2,877 3,282 4,438 4,904
---------------------------------------------------------------------------------------------------------------------------------
JPMORGAN INSURANCE TRUST U.S. EQUITY PORTFOLIO - CLASS 1 SHARES (04/24/2009)
Accumulation unit value at beginning of period $1.48 $1.32 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.43 $1.48 $1.32 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 59 59 87 -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 63
VARIABLE ACCOUNT CHARGES OF 1.60% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT INTERNATIONAL EQUITY PORTFOLIO - SERVICE SHARES (02/11/2000)
Accumulation unit value at beginning of period $0.99 $0.94 $0.79 $1.27 $1.17 $0.97 $0.89 $0.79 $0.62 $0.71
Accumulation unit value at end of period $0.90 $0.99 $0.94 $0.79 $1.27 $1.17 $0.97 $0.89 $0.79 $0.62
Number of accumulation units outstanding at end
of period (000 omitted) 48 43 54 199 310 388 441 430 427 281
---------------------------------------------------------------------------------------------------------------------------------
LAZARD RETIREMENT U.S. STRATEGIC EQUITY PORTFOLIO - SERVICE SHARES (02/11/2000)
Accumulation unit value at beginning of period $1.10 $0.99 $0.79 $1.25 $1.28 $1.11 $1.09 $0.99 $0.81 $0.98
Accumulation unit value at end of period $1.10 $1.10 $0.99 $0.79 $1.25 $1.28 $1.11 $1.09 $0.99 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 102 123 126 143 231 222 267 271 193 147
---------------------------------------------------------------------------------------------------------------------------------
LVIP BARON GROWTH OPPORTUNITIES FUND - SERVICE CLASS (02/11/2000)
Accumulation unit value at beginning of period $1.69 $1.36 $1.00 $1.67 $1.64 $1.44 $1.42 $1.15 $0.89 $1.06
Accumulation unit value at end of period $1.73 $1.69 $1.36 $1.00 $1.67 $1.64 $1.44 $1.42 $1.15 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 195 216 256 321 607 820 969 1,061 1,193 624
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - INITIAL CLASS (02/11/2000)
Accumulation unit value at beginning of period $1.14 $0.85 $0.53 $0.89 $0.88 $0.79 $0.76 $0.73 $0.55 $0.82
Accumulation unit value at end of period $1.01 $1.14 $0.85 $0.53 $0.89 $0.88 $0.79 $0.76 $0.73 $0.55
Number of accumulation units outstanding at end
of period (000 omitted) 439 540 571 676 864 1,889 2,075 2,485 5,133 4,295
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) RESEARCH SERIES - INITIAL CLASS (02/11/2000)
Accumulation unit value at beginning of period $0.90 $0.79 $0.62 $0.98 $0.88 $0.81 $0.76 $0.67 $0.55 $0.73
Accumulation unit value at end of period $0.88 $0.90 $0.79 $0.62 $0.98 $0.88 $0.81 $0.76 $0.67 $0.55
Number of accumulation units outstanding at end
of period (000 omitted) 942 1,055 1,207 1,335 1,463 1,789 2,180 2,940 2,362 2,675
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (02/11/2000)
Accumulation unit value at beginning of period $1.61 $1.44 $1.10 $1.79 $1.42 $1.10 $0.96 $0.75 $0.56 $0.73
Accumulation unit value at end of period $1.69 $1.61 $1.44 $1.10 $1.79 $1.42 $1.10 $0.96 $0.75 $0.56
Number of accumulation units outstanding at end
of period (000 omitted) 506 569 728 1,193 1,334 1,351 1,659 1,728 1,521 2,042
---------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - MICRO-CAP PORTFOLIO, INVESTMENT CLASS (02/11/2000)
Accumulation unit value at beginning of period $3.17 $2.47 $1.59 $2.85 $2.79 $2.34 $2.13 $1.90 $1.29 $1.51
Accumulation unit value at end of period $2.74 $3.17 $2.47 $1.59 $2.85 $2.79 $2.34 $2.13 $1.90 $1.29
Number of accumulation units outstanding at end
of period (000 omitted) 334 365 451 472 635 968 1,036 1,354 833 1,130
---------------------------------------------------------------------------------------------------------------------------------
ROYCE CAPITAL FUND - SMALL-CAP PORTFOLIO, INVESTMENT CLASS (02/11/2000)
Accumulation unit value at beginning of period $3.03 $2.56 $1.92 $2.68 $2.79 $2.45 $2.29 $1.86 $1.34 $1.58
Accumulation unit value at end of period $2.89 $3.03 $2.56 $1.92 $2.68 $2.79 $2.45 $2.29 $1.86 $1.34
Number of accumulation units outstanding at end
of period (000 omitted) 174 196 240 333 428 588 734 852 678 993
---------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE VALUE PORTFOLIO (02/11/2000)
Accumulation unit value at beginning of period $2.43 $2.16 $1.51 $2.73 $2.91 $2.56 $2.27 $1.92 $1.37 $1.56
Accumulation unit value at end of period $1.88 $2.43 $2.16 $1.51 $2.73 $2.91 $2.56 $2.27 $1.92 $1.37
Number of accumulation units outstanding at end
of period (000 omitted) 277 355 445 611 880 1,292 1,445 1,239 1,160 1,457
---------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (02/11/2000)
Accumulation unit value at beginning of period $1.19 $0.97 $0.66 $1.22 $1.07 $0.79 $0.66 $0.52 $0.35 $0.42
Accumulation unit value at end of period $1.00 $1.19 $0.97 $0.66 $1.22 $1.07 $0.79 $0.66 $0.52 $0.35
Number of accumulation units outstanding at end
of period (000 omitted) 471 488 1,424 2,260 1,834 1,113 909 895 861 813
---------------------------------------------------------------------------------------------------------------------------------
WANGER USA (02/11/2000)
Accumulation unit value at beginning of period $1.44 $1.18 $0.85 $1.42 $1.37 $1.29 $1.18 $1.01 $0.72 $0.88
Accumulation unit value at end of period $1.36 $1.44 $1.18 $0.85 $1.42 $1.37 $1.29 $1.18 $1.01 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 1,184 1,298 1,959 2,236 2,262 2,124 1,887 1,310 833 774
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (02/11/2000)
Accumulation unit value at beginning of period $1.12 $1.00 $0.87 $1.39 $1.38 $1.18 $1.14 $1.04 $0.84 $1.05
Accumulation unit value at end of period $1.08 $1.12 $1.00 $0.87 $1.39 $1.38 $1.18 $1.14 $1.04 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 964 1,071 1,256 1,157 1,375 1,432 1,739 1,400 495 368
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
64 RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE VARIABLE ANNUITY -- PROSPECTUS 65
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
240192 W (4/12)
PROSPECTUS
APRIL 30, 2012
WELLS FARGO
ADVANTAGE(R) VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
The Dreyfus Socially Responsible Growth Fund, Inc.
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM)
Oppenheimer Variable Account Funds
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE ONE-YEAR FIXED ACCOUNT................... 19
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 21
VALUING YOUR INVESTMENT...................... 25
MAKING THE MOST OF YOUR CONTRACT............. 27
WITHDRAWALS.................................. 32
TSA -- SPECIAL PROVISIONS.................... 33
CHANGING OWNERSHIP........................... 33
BENEFITS IN CASE OF DEATH.................... 34
OPTIONAL BENEFITS............................ 37
THE ANNUITY PAYOUT PERIOD.................... 45
TAXES........................................ 47
VOTING RIGHTS................................ 51
SUBSTITUTION OF INVESTMENTS.................. 51
ABOUT THE SERVICE PROVIDERS.................. 52
ADDITIONAL INFORMATION....................... 53
APPENDIX: CONDENSED FINANCIAL
INFORMATION (UNAUDITED).................... 54
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 59
--------------------------------------------------------------------------------
2 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. Unless
an exception applies, transfers or withdrawals from a GPA done more than 30 days
before the end of the guarantee period will receive a Market Value Adjustment,
which may result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate and
transfer to this account. There may be restrictions on the timing of transfers
from this account. (See "The One-Year Fixed Account")
We no longer offer new contracts. However, you have the option of making
additional purchase payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. We reserve the right to further limit transfers to the GPAs
and the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a five-year or seven-year withdrawal charge schedule at the
time of application.
FIVE-YEAR SCHEDULE SEVEN-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 8
3 6 3 7
4 4 4 6
5 2 5 5
Thereafter 0 6 4
7 2
Thereafter 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
You can choose the length of your contract's withdrawal charge schedule and the
death benefit guarantee provided. The combination you choose determines the fees
you pay. The table below shows the combinations available to you and their cost.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSE
Standard Death Benefit 0.15% 1.05% 1.20%
Enhanced Death Benefit Rider 0.15 1.25 1.40
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE:
Standard Death Benefit 0.15 1.30 1.45
Enhanced Death Benefit Rider 0.15 1.50 1.65
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%(1),(2)
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following annual current
rider charges apply: GMIB -- .30%.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.60% 1.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Cash Management Fund (Class 0.33% 0.13% 0.14% --% 0.60%(1)
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
The Dreyfus Socially Responsible Growth Fund, Inc., Initial 0.75 -- 0.10 -- 0.85
Shares
Fidelity(R) VIP Dynamic Capital Appreciation Portfolio 0.56 0.25 0.30 -- 1.11
Service Class 2
Fidelity(R) VIP High Income Portfolio Service Class 2 0.57 0.25 0.12 -- 0.94
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(3)
Fund - Institutional Shares
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(4)
Shares
MFS(R) Investors Trust Series - Initial Class 0.75 -- 0.07 -- 0.82
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(5)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(6)
3)
Wells Fargo Advantage VT Index Asset Allocation 0.55 0.25 0.26 -- 1.06(7)
Fund - Class 2
--------------------------------------------------------------------------------
8 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Wells Fargo Advantage VT International Equity Fund - Class 0.75% 0.25% 0.22% 0.01% 1.23%(8)
2
Wells Fargo Advantage VT Intrinsic Value Fund - Class 2 0.55 0.25 0.37 0.01 1.18(8)
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(8)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(9)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(8)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia Variable
Portfolio - High Yield Bond Fund (Class 3) and 1.055% for Columbia Variable
Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(5) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(6) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(7) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(8) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(9) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
With a seven-year
withdrawal charge
schedule $1,187 $1,883 $2,507 $4,202 $387 $1,183 $2,007 $4,202
With a five-year
withdrawal charge
schedule 1,213 1,858 2,330 4,432 413 1,258 2,130 4,432
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the Standard Death Benefit and you do not
select any optional benefits. Although your actual costs may be higher, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
With a seven-year
withdrawal charge
schedule $1,015 $1,359 $1,627 $2,403 $215 $659 $1,127 $2,403
With a five-year
withdrawal charge
schedule 1,040 1,337 1,457 2,667 240 737 1,257 2,667
(1) In these examples, the contract administrative charge is $30.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. (See "Revenue
we received from the funds may create potential conflicts of interest.") These
relationships may influence recommendations
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 11
your investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
12 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
The Dreyfus Seeks capital growth, with current income The Dreyfus Corporation
Socially as a secondary goal.
Responsible
Growth Fund,
Inc., Initial
Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks capital appreciation. Normally Fidelity Management &
Dynamic Capital invests primarily in common stocks of Research Company (FMR)
Appreciation domestic and foreign issuers. The Fund is the fund's manager.
Portfolio Service invests in either "growth" or "value" FMR Co., Inc. (FMRC) and
Class 2 stocks or both. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks a high level of current income, while Fidelity Management &
High Income also considering growth of capital. Research Company (FMR)
Portfolio Service Normally invests primarily in income- is the fund's manager.
Class 2 producing debt securities, preferred stocks FMR Co., Inc. (FMRC) and
and convertible securities, with an other investment
emphasis on lower-quality debt securities. advisers serve as sub-
May invest in non-income producing advisers for the fund.
securities, including defaulted securities
and common stocks. Invests in companies in
troubled or uncertain financial condition.
The Fund invests in domestic and foreign
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Trust Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term total return, consisting of Wells Fargo Funds
Advantage VT capital appreciation and current income. Management, LLC,
Index Asset adviser; Wells Capital
Allocation Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The minimum
required investment in each GPA is $1,000. There are restrictions on the amount
you can allocate to these accounts as well as on transfers from these accounts
(see "Buying Your Contract" and "Transfer policies"). These accounts are not
offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine Future
Rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
--------------------------------------------------------------------------------
16 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the Guarantee Period without receiving a MVA (see "Market
Value Adjustment (MVA)" below). During this 30 day window you may choose to
start a new Guarantee Period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies - Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) - or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the guarantee period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the guarantee period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 17
compares to the interest rate of a new GPA for the same number of years as the
Guarantee Period remaining on your GPA. This is summarized in the following
table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
Assume:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, as reflected in the table above, the MVA will be
negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the remaining term
in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period (rounded
up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
18 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 4% if the five-year
withdrawal charge schedule applies and 6% if the seven-year withdrawal charge
schedule applies. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to
the amounts we deduct for withdrawal charges, so we would deduct the withdrawal
charge from your early withdrawal after we applied the MVA. Also note that when
you request an early withdrawal, we withdraw an amount from your GPA that will
give you the net amount you requested after we apply the MVA and any applicable
withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified annuity or a nonqualified annuity. You can own
a nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
the length of the withdrawal charge period (five or seven years)(1);
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Enhanced Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the one-year fixed account, GPAs and/or subaccounts in which you want to
invest(4);
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 19
how you want to make purchase payments; and
a beneficiary.
(l) Contracts issued through Ameriprise Financial Services, Inc. are only
available with a seven-year withdrawal charge schedule.
(2) You may select one of the following: the EDB, the Benefit Protector or the
Benefit Protector Plus. Riders may not be available in all states. The
Benefit Protector and the Benefit Protector Plus are only available if you
and the annuitant are 75 or younger at contract issue. The EDB is only
available if both you and the annuitant are 79 or younger at contract issue.
(3) The GMIB is only available at the time you purchase your contract if the
annuitant is 75 or younger at contract issue and you also select the EDB.
Riders may not be available in all states.
(4) Some states restrict the amount you can allocate to the GPAs and the one-
year fixed account. GPAs are not available in Maryland, Oregon, Pennsylvania
or Washington and may not be available in other states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum required investment for the GPAs.
For contracts with applications signed on or after June 16, 2003, the amount of
any purchase payment allocated to the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish a dollar cost averaging arrangement
with respect to the purchase payment according to procedures currently in
effect, or you are participating according to the rules of an asset allocation
model portfolio program available under the contract, if any.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
--------------------------------------------------------------------------------
20 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$99,999 for contracts issued through Ameriprise Financial Services, Inc.
$1,000,000 for all other contracts.
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 21
These fees are based on the withdrawal charge schedule and death benefits that
apply to your contract.
SEVEN-YEAR WITHDRAWAL FIVE-YEAR WITHDRAWAL
CHARGE SCHEDULE CHARGE SCHEDULE
Standard Death Benefit 1.05% 1.30%
Enhanced Death Benefit Rider 1.25 1.50
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select the withdrawal charge period at the time of your application for the
contract. Contracts issued through Ameriprise Financial Services, Inc. are
available only with a seven-year withdrawal charge schedule. The withdrawal
charge percentages that apply to you are shown in your contract. In addition,
amounts withdrawn from a GPA more than 30 days before the end of the applicable
Guarantee Period will be subject to a MVA. (See "The Fixed Accounts -- Market
Value Adjustment (MVA).")
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than six or eight years before the date of withdrawal.
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you selected the seven-year schedule, during the first two years
after a purchase payment is made, the withdrawal charge percentage attached to
that payment is 8%. The withdrawal charge percentage for that payment during the
seventh year after it is made is 2%. At the beginning of the eighth year after
that purchase payment is made, and thereafter, there is no withdrawal charge as
to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 15% of your prior anniversary's contract value; and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment to be the prior anniversary's contract
value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 15% of your
prior anniversary's contract value.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
--------------------------------------------------------------------------------
22 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn, depending on the schedule you selected*:
FIVE-YEAR SCHEDULE SEVEN-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 8
3 6 3 7
4 4 4 6
5 2 5 5
Thereafter 0 6 4
7 2
Thereafter 0
* Contracts issued through Ameriprise Financial Services, Inc. are only
available with a seven-year withdrawal charge schedule.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with a seven-year withdrawal charge schedule
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the sixth contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
tenth contract year and make no other withdrawals during that contract year;
and
The prior anniversary contract value is $38,488.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 23
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $5,773.20 is 15% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $8,327.80 is contract earnings in excess of the 15% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
480 $8,000 purchase payment is in its fourth year from receipt, withdrawn with a
6% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt withdrawn with a
7% withdrawal charge
----
$900
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 15% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
Withdrawals you make once a year if you or the annuitant become unemployed at
least one year after contract issue, up to the following amounts each year:
(a) 25% of your prior anniversary's contract value (or $10,000 if greater) if
the unemployment condition is met for at least 30 straight days; or
(b) 50% of your prior anniversary's contract value (or $10,000 if greater) if
the unemployment condition is met for at least 180 straight days.
The unemployment condition is met if the unemployed person is currently
receiving unemployment compensation from a government unit of the United States,
whether federal or state. You must provide us with a signed letter from the
unemployed person stating that he or she meets the above criteria with a legible
photocopy of the unemployment benefit payments meeting the above criteria with
regard to dates.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
--------------------------------------------------------------------------------
24 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFITS
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE*
We charge an annual fee (currently 0.70%) based on the GMIB benefit base for
this optional feature only if you select it. If selected, we deduct the fee from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year
fixed account in the same proportion your interest in each account bears to your
total contract value. If the contract is terminated for any reason or when
annuity payouts begin, we will deduct the GMIB fee from the proceeds payable
adjusted for the number of calendar days coverage was in place. We cannot
increase the GMIB fee after the rider effective date and it does not apply after
annuity payouts begin. For details on how we calculate the fee, see "Optional
Benefits -- Guaranteed Minimum Income Benefit Rider."
* For applications signed prior to May 1, 2003, the following annual current
rider charges apply: GMIB - 0.30%.
VALUING YOUR INVESTMENT
We value your accounts as follows:
WE VALUE YOUR ACCOUNTS AS FOLLOWS:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 25
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
- Guaranteed Minimum Income Benefit rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
- Guaranteed Minimum Income Benefit rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
26 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
TIERED DOLLAR-COST AVERAGING (TIERED DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Tiered DCA program. There is no charge for the Tiered DCA program. Under
the Tiered DCA program, you can allocate a new purchase payment to one of two
special Tiered DCA accounts. We determine which Tiered DCA account you are
eligible for as follows:
IF YOUR NET CONTRACT VALUE(1) IS ... WE ALLOCATE YOUR NEW PURCHASE PAYMENTS TO:
$10,000 - $49,999 Tier 1 DCA
account $50,000 or more Tier 2 DCA account(2)
(1) "Net contract value" equals your current contract value plus any new
purchase payment you make. If this is a new contract funded by purchase
payments from multiple sources, we determine your net contract value based
on the purchase payments, withdrawal requests and exchange requests
submitted with your application.
(2) You cannot allocate your new purchase payments to a Tier 1 DCA account if
you are eligible to participate in a Tier 2 DCA account.
You may only allocate a new purchase payment of at least $1,000 to the Tiered
DCA account for which you are eligible. You cannot transfer existing contract
values into the Tiered DCA account. Each Tiered DCA account lasts for only six
months from the time we receive your first purchase payment. We make monthly
transfers of your total Tiered DCA account value into the GPAs, the one-year
fixed account and/or subaccounts you select over the six-month period. If you
elect to transfer into a GPA, you must meet the $1,000 minimum required
investment limitation for each transfer.
We reserve the right to credit a lower interest rate to each Tiered DCA account
if you select the GPAs or the one-year fixed account as part of your Tiered DCA
transfers. We credit higher rates on the Tier 2 DCA account than on the Tier 1
DCA
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 27
account. We will change the interest rate on each Tiered DCA account from time
to time at our discretion. From time to time, we may credit interest to the
Tiered DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment, that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes.
We credit each Tiered DCA account with current guaranteed annual rate that is in
effect on the date we receive your purchase payment. However, we credit this
annual rate over the six-month period on the balance remaining in your Tiered
DCA account. Therefore, the net effective interest rate you receive is less than
the stated annual rate. We do not credit this interest after we transfer the
value out of the Tiered DCA account into the accounts you selected.
If you make additional purchase payments while a Tiered DCA account term is in
progress, the amounts you allocate to an existing Tiered DCA account will be
transferred out of the Tiered DCA account over the reminder of the term. If you
are funding a Tiered DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Tiered
DCA account at the beginning of the six-month period. Therefore, you may receive
less total interest than you would have if all your purchase payments were in
the Tiered DCA account from the beginning. If we receive any of your multiple
payments after the six-month period ends, you can either allocate those payments
to a new Tiered DCA account (if available) or to any other accounts available
under your contract.
You cannot participate in the Tiered DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Tiered DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Tiered DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Tiered DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Tiered DCA account balance. We will transfer the remaining balance
from your Tiered DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Tiered DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Tiered DCA program at any time. Any
modifications will not affect any purchase payments that are already in a Tiered
DCA account. For more information on the Tiered DCA program, contact your
investment professional.
The Tiered DCA program does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Tiered
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Tiered DCA program to match. We will restart the rebalancing period you selected
as of the date we record your change. You also can ask us in writing to stop
rebalancing your contract value. You must allow 30 days for us to change any
instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
--------------------------------------------------------------------------------
28 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. For contracts issued before June 16, 2003, we have
removed this restriction, and you may transfer contract values from the one-
year fixed account to the subaccounts at any time. We will inform you at least
30 days in advance of the day we intend to reimpose this restriction.
For contracts with applications signed on or after June 16, 2003, the amount
of contract value transferred to the GPAs and the one-year fixed account
cannot result in the value of the GPAs and the one-year fixed account in total
being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 29
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION
--------------------------------------------------------------------------------
30 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED
BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS,
INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 31
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Plan E. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
--------------------------------------------------------------------------------
32 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 33
BENEFITS IN CASE OF DEATH
There are two death benefit options under this contract: the standard death
benefit and the Enhanced Death Benefit (EDB) Rider. If either you or the
annuitant are 80 or older at contract issue, the standard death benefit will
apply. If both you and the annuitant are 79 or younger at contract issue, you
can elect either the standard death benefit or the EDB Rider (if it is available
in your state) on your application. If you select the GMIB, you must elect the
EDB Rider. Once you elect an option, you cannot change it. We show the option
that applies in your contract. The death benefit option that applies determines
the mortality and expense risk fee that is assessed against the subaccounts.
(See "Charges -- Mortality and Expense Risk Fee.")
Under either death benefit we will pay the death benefit to your beneficiary
upon the earlier of your death or the annuitant's death. We will base the
benefit paid on the death benefit coverage you select when you purchased the
contract. If a contract has more than one person as the owner, we will pay
benefits upon the first to die of any owner or the annuitant.
STANDARD DEATH BENEFIT
If you or the annuitant die before annuity payouts begin while this contract is
in force, we will pay the beneficiary as follows: If you or the annuitant were
age 80 or older at contract issue, we will pay the beneficiary the greater of
these two values, minus any applicable rider charges:
1. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
2. contract value.
If you and the annuitant were age 79 or younger at contract issue, we will pay
the beneficiary the greatest of these three values, minus any applicable rider
charges:
1. total purchase payments applied to the contract minus adjusted partial
withdrawals;
2. contract value; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments applied to the contract since that anniversary minus
adjusted partial withdrawals since that anniversary.
PW X DB
STANDARD DEATH BENEFIT ADJUSTED PARTIAL WITHDRAWALS = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of your (a) current contract value, or (b) total purchase payments minus
adjusted partial withdrawals. Every contract anniversary after that, through age
80, we compare the previous anniversary's MAV (plus any purchase payments since
that anniversary minus adjusted partial withdrawals since that anniversary) to
the current contract value and we reset the MAV to the higher value. We stop
resetting the MAV after you or the annuitant reach age 81. However, we continue
to add subsequent purchase payments and subtract adjusted partial withdrawals
from the MAV.
EXAMPLE ASSUMING YOU AND THE ANNUITANT WERE AGE 79 OR YOUNGER AT CONTRACT ISSUE:
You purchase the contract with a payment of $20,000.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
--------------------------------------------------------------------------------
34 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
WE CALCULATE THE STANDARD DEATH BENEFIT AS FOLLOWS:
PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $20,000.00
minus the standard death benefit adjusted partial withdrawals, calculated
as:
$1,500 x $20,000
---------------- = -1,363.64
$22,000
----------
for a death benefit of: $18,636.36
----------
CONTRACT VALUE AT DEATH: $20,500.00
----------
THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH PLUS ANY PAYMENTS MADE SINCE THAT
ANNIVERSARY MINUS ADJUSTED PARTIAL WITHDRAWALS:
MAV on the prior anniversary: $24,000.00
plus purchase payments made since that anniversary: +0.00
minus the standard death benefit adjusted partial withdrawals, calculated
as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000
----------
for a death benefit of: $22,363.64
----------
THE STANDARD DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES
IS THE MAV: $22,363.64
ENHANCED DEATH BENEFIT (EDB) RIDER
The EDB Rider is intended to help protect your beneficiaries financially while
your investments have the opportunity to grow. This is an optional benefit that
you may select for an additional charge (see "Charges"). The EDB Rider does not
provide any additional benefit before the first contract anniversary and it may
not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your sales representative whether
or not the EDB Rider is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 79
or younger at contract issue, you may choose to add the EDB Rider to your
contract at the time of purchase. Once you select the EDB Rider you may not
cancel it. You may not add the EDB Rider if you add either the Benefit Protector
or the Benefit Protector Plus to your contract. You must select the EDB Rider if
you choose to add the Guaranteed Minimum Income Benefit Rider to your contract.
The EDB Rider provides that if you or the annuitant die before annuity payouts
begin while this contract is in force, we will pay the beneficiary the greatest
of these two values, minus any applicable rider charges:
the standard death benefit; or
the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%,
plus any subsequent amounts allocated to the subaccounts,
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = -----------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as
a result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or
partial withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or
partial withdrawal.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 35
EXAMPLE
You purchase the contract with a payment of $20,000 with $5,000 allocated to
the one-year fixed account and $15,000 allocated to the subaccounts.
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $12,000. Total contract value is $17,200.
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $14,000. Total contract value is $19,300. You take
a $1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $17,800.
THE DEATH BENEFIT IS CALCULATED AS FOLLOWS:
THE STANDARD DEATH BENEFIT (WHICH IN THIS CASE IS THE MAV):
MAV on the prior anniversary: $ 20,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the standard death benefit adjusted partial withdrawal taken since
that anniversary, calculated as:
$1,500 x $20,000
---------------- =
$19,300 -1,554.40
------------
Standard death benefit, which is the MAV: $18,445.60
------------
THE 5% RISING FLOOR:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x 15,000 = $15,750.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $15,750
---------------- =
$14,000 $- 1,687.50
------------
variable account floor benefit: $14,062.50
plus the one-year fixed account value: +5,300.00
------------
5% rising floor (value of the GPAs, the one-year fixed account and the
variable account floor): $19,362.50
------------
EDB RIDER, CALCULATED AS THE GREATER OF THE STANDARD DEATH BENEFIT OR THE 5%
RISING FLOOR: $19,362.50
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
--------------------------------------------------------------------------------
36 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is not available under contracts issued through Ameriprise
Financial Services, Inc. The Benefit Protector is intended to provide an
additional benefit to your beneficiary to help offset expenses after your death
such as funeral expenses or federal and state taxes. This is an optional benefit
that you may select for an additional annual charge (see "Charges"). The Benefit
Protector provides reduced benefits if you or the annuitant are 70 or older at
the rider effective date and it does not provide any additional benefit before
the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the
Enhanced Death Benefit Riders. We reserve the right to discontinue offering the
Benefit Protector for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 37
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the standard death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the standard death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the seven-year withdrawal schedule.
During the first contract year the contract value grows to $105,000. The death
benefit under the standard death benefit equals the contract value. You have
not reached the first contract anniversary so the Benefit Protector does not
provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The
death benefit equals:
the standard death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (the standard death benefit minus payments not
previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
the standard death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $15,750 from
your contract value free of charge (15% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in its third year of the
withdrawal charge schedule, so we will withdraw $34,250 ($31,852 +
$2,398 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,602. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
the standard death benefit (MAV adjusted for partial
withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
--------------------------------------------------------------------------------
38 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the
prior death benefit. The reduction in contract value has no effect.
On the sixth contract anniversary the contract value grows to a new
high of $200,000. Earnings at
death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. The death
benefit equals:
the standard death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the ninth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
the standard death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the tenth contract year the contract value remains $250,000
and the "new" purchase payment is one year old and the value of the
Benefit Protector changes. The death benefit equals:
the standard death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is not available under contracts issued through
Ameriprise Financial Services, Inc. The Benefit Protector Plus is intended to
provide an additional benefit to your beneficiary to help offset expenses after
your death such as funeral expenses or federal and state taxes. This is an
optional benefit that you may select for an additional annual charge (see
"Charges"). The Benefit Protector Plus provides reduced benefits if you or the
annuitant are 70 or older at the rider effective date and it does not provide
any additional benefit before the first rider anniversary and it does not
provide any benefit beyond what is offered under the Benefit Protector rider
during the second rider year. Be sure to discuss with your sales representative
whether or not the Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the Enhanced Death Benefit Riders.
We reserve the right to discontinue offering the Benefit Protector Plus for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 39
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the standard death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three & Four 40% x (earnings at death + 25% of initial purchase payment*)
Five or more 40% x (earnings at death + 50% of initial purchase payment*)
IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three & Four 15% x (earnings at death + 25% of initial purchase payment*)
Five or more 15% x (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the seven-year withdrawal charge schedule.
During the first contract year the contract value grows to $105,000. The death
benefit under the standard death benefit equals the contract value. You have
not reached the first contract anniversary so the Benefit Protector Plus does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
the standard death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(the standard death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
the standard death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
--------------------------------------------------------------------------------
40 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $15,750 from your contract value free of
charge (15% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment is in its
third year of the withdrawal charge schedule, so we will withdraw $34,250
($31,852 + $2,398 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,602. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000
of the partial withdrawal is contract earnings). The death benefit equals:
the standard death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death: 0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the prior death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
the standard death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000. Your new contract value is now $250,000. The new purchase payment is
less than one year old and so it has no effect on the Benefit Protector Plus
value. The death benefit equals:
the standard death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
On the tenth contract anniversary the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
the standard death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old:
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the standard death benefit (see "Benefits in Case
of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 41
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years(1);
the GMIB rider terminates(2) 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary(1);
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81; and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your sales representative.
(1) Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
(2) The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy required minimum distributions, will reduce the
GMIB benefit base (defined below), which in turn may reduce or eliminate the
amount of any annuity payments available under the rider (see "Taxes
-- Qualified Annuities -- Required Minimum Distributions"). Consult a tax
advisor before you purchase any GMIB with a qualified annuity, such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit at the time you
purchase your contract for an additional annual charge. You must elect the GMIB
along with the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, transfers and withdrawals in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: You may allocate your purchase payments or
transfers to any of the subaccounts, the GPAs or the one-year fixed account.
However, we reserve the right to limit the amount you allocate to subaccounts
investing in the Wells Fargo Advantage VT Money Market Fund to 10% of the total
amount in the subaccounts. If we are required to activate this restriction, and
you have more than 10% of your subaccount value in this fund, we will send you a
notice and ask that you reallocate your contract value so that the 10%
limitation is satisfied within 60 days. We will terminate the GMIB if you have
not satisfied the limitation after 60 days.
EXERCISING THE GMIB
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a "contingent event" (disability, terminal illness, confinement to a nursing
home or hospital, or unemployment, see "Charges -- Contingent events" for more
details.)
the annuitant on the date the option is exercised must be between 50 and 86
years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund;
- Plan B -- Life Annuity with ten years certain;
- Plan D -- Joint and last survivor life annuity - no refund;
you may change the annuitant for the payouts.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the GMIB benefit base
(described below) for annuity payouts calculated using the guaranteed annuity
purchase rates under any one of the payout plans listed above as long as the
annuitant is between 50 and 86 years old on the retirement date.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G and an interest rate of 3%. Your annuity payouts remain fixed for the
lifetime of the annuity payout period.
--------------------------------------------------------------------------------
42 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base (described below) equal to the
largest value. The GMIB benefit base, less any applicable premium tax, is the
value we apply to the guaranteed annuity purchase rates stated in Table B of the
contract to calculate the minimum annuity payouts you will receive if you
exercise the GMIB. If the GMIB benefit base is greater than the contract value,
the GMIB may provide a higher annuity payout level than is otherwise available.
However, the GMIB uses guaranteed annuity purchase rates which may result in
annuity payouts that are less than those using the annuity purchase rates that
we will apply at annuitization under the standard contract provisions.
Therefore, the level of income provided by the GMIB may be less than the income
the contract otherwise provides. If the annuity payouts through the standard
contract provisions are more favorable than the payouts available through the
GMIB, you will receive the higher standard payout option. The GMIB does not
create contract value or guarantee the performance of any investment option.
GMIB BENEFIT BASE: If the GMIB is effective at contract issue, the GMIB benefit
base is the greatest of:
1. total purchase payments minus adjusted partial withdrawals;
2. contract value;
3. the MAV at the last contract anniversary plus any payments made since that
anniversary minus adjusted partial withdrawals since that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
you make in the five years before you exercise the GMIB. We would do so only if
such payments total $50,000 or more or if they are 25% or more of total contract
payments. If we exercise this right, we:
subtract each payment adjusted for market value from the contract value and
the MAV.
subtract each payment from the 5% rising floor. We adjust the payments made to
the GPAs and the one-year fixed account for market value. We increase payments
allocated to the subaccounts by 5% for the number of full contract years they
have been in the contract before we subtract them from the 5% rising floor.
For each payment, we calculate the market value adjustment to the contract
value, MAV, GPAs and the one-year fixed account value of the 5% rising floor as:
PMT X CVG
-----------
ECV
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments and partial withdrawals
occur at the beginning of a contract year.
For each payment, we calculate the 5% increase of payments allocated to the
subaccounts as:
CY = the full number of contract years the payment has been in the
contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 43
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB rider will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract during the 2004 calendar year with a payment of
$100,000 and you allocate all your purchase payments to the subaccounts.
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $105,000
2 125,000 125,000 110,250
3 132,000 132,000 115,763
4 150,000 150,000 121,551
5 85,000 150,000 127,628
6 120,000 150,000 134,010
7 138,000 150,000 140,710
8 152,000 152,000 147,746
9 139,000 152,000 155,133
10 126,000 152,000 162,889 $162,889
11 138,000 152,000 171,034 171,034
12 147,000 152,000 179,586 179,586
13 163,000 163,000 188,565 188,565
14 159,000 163,000 197,993 197,993
15 212,000 212,000 207,893 212,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
------------------------------------------
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE GMIB BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $162,889 (5% rising floor) $ 840.51 $ 817.70 $672.73
15 212,000 (MAV) 1,250.80 1,193.56 968.84
The payouts above are shown at guaranteed annuity rates as stated in Table B of
the contract. Payouts under the standard provisions of this contract will be
based on our annuity rates in effect at annuitization and are guaranteed to be
greater than or
--------------------------------------------------------------------------------
44 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
equal to the guaranteed annuity rates stated in Table B of the contract. The
fixed annuity payout available under the standard provisions of this contract
would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE CONTRACT VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 212,000 1,250.80 1,193.56 968.84
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
THE GMIB FEE:
This fee currently costs 0.70% of the GMIB benefit base annually and it is taken
in a lump sum from the contract value on each contract anniversary at the end of
each contract year. If the contract is terminated or if annuity payouts begin,
we will deduct the fee at that time adjusted for the number of calendar days
coverage was in place. We cannot increase the GMIB fee after the rider effective
date and it does not apply after annuity payouts begin. We can increase the GMIB
fee on new contracts up to a maximum of 0.75%.
We calculate the fee as follows:
BB + AT - FAV
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs and the one-year fixed
account made in the six months before the contract anniversary calculated as:
PT = the amount transferred from the subaccounts to the GPAs and the one-year
fixed account within six months of the contract anniversary
VAT = variable account floor on the date of (but prior to) the transfer
SVT = value of the subaccounts on the date of (but prior to) the transfer
FAV = the value of the GPAs and the one-year fixed account.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and allocate all of your
payment to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE WE BASE THE GMIB FEE CHARGED TO YOU
1 $ 80,000 0.70% 5% rising floor = $100,000 x 1.05 $ 735
2 150,000 0.70% Contract value = $150,000 1,050
3 102,000 0.70% MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 45
rider charges have been deducted, plus any positive or negative MVA (less any
applicable premium tax). Additionally, we currently allow you to use part of the
amount available to purchase payouts, leaving any remaining contract value to
accumulate on a tax-deferred basis. If you select a variable annuity payout, we
reserve the right to limit the number of subaccounts in which you may invest.
The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. If
the original contract had a five-year withdrawal charge schedule, the discount
rate we use in the calculation is 5.17% for the
--------------------------------------------------------------------------------
46 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
assumed investment return of 3.5% and 6.67% for the assumed investment return
of 5.0%. If the original contract had a seven-year withdrawal charge schedule,
the discount rate we use in the calculation will be either 5.02% or 6.52%
depending on the applicable assumed investment rate. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 47
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the
--------------------------------------------------------------------------------
48 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
exchange of a qualified long-term care insurance contract for a qualified long-
term care insurance contract. However, if the insurance policy has an
outstanding loan, there may be tax consequences. Depending on the issue date of
your original policy or contract, there may be tax or other benefits that are
given up to gain the benefits of the new policy or contract. Consider whether
the features and benefits of the new policy or contract outweigh any tax or
other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 49
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or
--------------------------------------------------------------------------------
50 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
state income taxes. We reserve the right to make such a charge in the future if
there is a change in the tax treatment of variable annuities or in our tax
status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 51
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 5.00% as well as
service/trail commissions of up to 0.75% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the
--------------------------------------------------------------------------------
52 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
outcome of any such proceedings could have a material adverse impact on results
of operations in any particular reporting period as the proceedings are
resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 53
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.07 $1.08 $1.09 $1.08 $1.04 $1.01 $0.99 $1.00 $1.00 --
Accumulation unit
value at end of
period $1.05 $1.07 $1.08 $1.09 $1.08 $1.04 $1.01 $0.99 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,477 1,772 4,706 1,829 792 340 57 73 203 --
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.72 $1.49 $1.19 $2.02 $1.89 $1.60 $1.42 $1.22 $0.87 $1.09
Accumulation unit
value at end of
period $1.62 $1.72 $1.49 $1.19 $2.02 $1.89 $1.60 $1.42 $1.22 $0.87
Number of
accumulation units
outstanding at end
of period (000
omitted) 713 984 14,162 11,637 6,473 3,391 1,105 1,194 591 573
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.68 $0.59 $0.48 $0.84 $0.83 $0.73 $0.69 $0.66 $0.52 $0.67
Accumulation unit
value at end of
period $0.71 $0.68 $0.59 $0.48 $0.84 $0.83 $0.73 $0.69 $0.66 $0.52
Number of
accumulation units
outstanding at end
of period (000
omitted) 880 1,242 1,472 1,713 2,064 2,748 727 804 75 75
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.67 $1.49 $0.98 $1.32 $1.31 $1.20 $1.17 $1.06 $0.86 $0.93
Accumulation unit
value at end of
period $1.75 $1.67 $1.49 $0.98 $1.32 $1.31 $1.20 $1.17 $1.06 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) 192 290 430 462 515 630 328 368 394 684
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.32 $1.06 $0.76 $1.26 $1.33 $1.21 $1.16 $0.99 $0.68 $0.83
Accumulation unit
value at end of
period $1.20 $1.32 $1.06 $0.76 $1.26 $1.33 $1.21 $1.16 $0.99 $0.68
Number of
accumulation units
outstanding at end
of period (000
omitted) 32 42 45 58 92 139 214 237 384 307
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.28 $1.26 $1.21 $1.25 $1.21 $1.17 $1.17 $1.17 $1.17 $1.12
Accumulation unit
value at end of
period $1.28 $1.28 $1.26 $1.21 $1.25 $1.21 $1.17 $1.17 $1.17 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 697 1,388 3,602 1,648 1,509 1,294 1,196 1,221 1,040 1,450
------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.72 $0.64 $0.48 $0.74 $0.70 $0.65 $0.63 $0.60 $0.48 $0.69
Accumulation unit
value at end of
period $0.72 $0.72 $0.64 $0.48 $0.74 $0.70 $0.65 $0.63 $0.60 $0.48
Number of
accumulation units
outstanding at end
of period (000
omitted) 112 194 210 232 333 476 530 701 753 817
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $1.38 $1.18 $0.88 $1.52 $1.44 $1.28 $1.08 $1.08 $0.87 $0.95
Accumulation unit
value at end of
period $1.33 $1.38 $1.18 $0.88 $1.52 $1.44 $1.28 $1.08 $1.08 $0.87
Number of
accumulation units
outstanding at end
of period (000
omitted) 24 28 25 151 226 191 100 105 99 92
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $1.67 $1.49 $1.05 $1.42 $1.40 $1.27 $1.26 $1.17 $0.93 $0.91
Accumulation unit
value at end of
period $1.71 $1.67 $1.49 $1.05 $1.42 $1.40 $1.27 $1.26 $1.17 $0.93
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 25 62 74 104 146 148 223 280 154
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.46 $1.94 $1.40 $2.35 $2.06 $1.86 $1.59 $1.29 $0.95 $1.06
Accumulation unit
value at end of
period $2.17 $2.46 $1.94 $1.40 $2.35 $2.06 $1.86 $1.59 $1.29 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 701 1,184 3,949 5,166 3,440 2,476 1,850 1,925 1,154 1,005
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $2.10 $1.76 $1.49 $2.62 $3.35 $2.81 $2.51 $1.93 $1.44 $1.42
Accumulation unit
value at end of
period $1.96 $2.10 $1.76 $1.49 $2.62 $3.35 $2.81 $2.51 $1.93 $1.44
Number of
accumulation units
outstanding at end
of period (000
omitted) 108 158 221 277 385 391 403 418 397 421
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $2.07 $1.86 $1.39 $2.00 $1.95 $1.67 $1.66 $1.48 $1.13 $1.16
Accumulation unit
value at end of
period $2.09 $2.07 $1.86 $1.39 $2.00 $1.95 $1.67 $1.66 $1.48 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 665 767 889 938 1,265 1,436 1,440 1,366 1,259 1,080
------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
54 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (05/01/2002)
Accumulation unit
value at beginning
of period $1.63 $1.28 $1.01 $1.52 $1.58 $1.36 $1.27 $1.04 $0.79 $1.00
Accumulation unit
value at end of
period $1.55 $1.63 $1.28 $1.01 $1.52 $1.58 $1.36 $1.27 $1.04 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 180 256 260 317 406 494 503 478 149 59
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.72 $0.57 $0.40 $0.71 $0.64 $0.60 $0.58 $0.52 $0.39 $0.55
Accumulation unit
value at end of
period $0.67 $0.72 $0.57 $0.40 $0.71 $0.64 $0.60 $0.58 $0.52 $0.39
Number of
accumulation units
outstanding at end
of period (000
omitted) 934 1,281 1,495 1,794 2,000 2,527 2,955 3,142 2,747 2,813
------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.66 $1.51 $1.21 $1.95 $1.91 $1.63 $1.49 $1.34 $1.08 $1.25
Accumulation unit
value at end of
period $1.62 $1.66 $1.51 $1.21 $1.95 $1.91 $1.63 $1.49 $1.34 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,701 2,487 2,690 2,831 3,212 4,354 3,461 3,662 1,227 875
------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $3.08 $2.49 $1.89 $3.04 $2.98 $2.60 $2.33 $1.87 $1.48 $1.57
Accumulation unit
value at end of
period $2.84 $3.08 $2.49 $1.89 $3.04 $2.98 $2.60 $2.33 $1.87 $1.48
Number of
accumulation units
outstanding at end
of period (000
omitted) 312 373 2,121 2,524 2,353 1,620 981 1,028 1,083 1,065
------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.85 $0.76 $0.64 $1.02 $1.05 $0.94 $0.90 $0.79 $0.62 $0.80
Accumulation unit
value at end of
period $0.87 $0.85 $0.76 $0.64 $1.02 $1.05 $0.94 $0.90 $0.79 $0.62
Number of
accumulation units
outstanding at end
of period (000
omitted) 345 373 437 674 934 1,503 1,492 1,569 1,608 1,593
------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (03/03/2000)
Accumulation unit
value at beginning
of period $0.56 $0.49 $0.41 $0.72 $0.65 $0.62 $0.58 $0.55 $0.43 $0.57
Accumulation unit
value at end of
period $0.51 $0.56 $0.49 $0.41 $0.72 $0.65 $0.62 $0.58 $0.55 $0.43
Number of
accumulation units
outstanding at end
of period (000
omitted) 506 545 641 701 1,022 1,762 1,950 2,150 2,296 2,455
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van
Kampen V.I. Capital Growth Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen
V.I. Capital Growth Fund, Series I Shares changed its name to Invesco Van Kampen V.I. American
Franchise Fund, Series I Shares.
------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit
value at beginning
of period $1.10 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.10 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 736 871 999 1,471 1,975 2,929 -- -- -- --
------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit
value at beginning
of period $1.05 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67 $0.86
Accumulation unit
value at end of
period $1.01 $1.05 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67
Number of
accumulation units
outstanding at end
of period (000
omitted) 248 266 331 520 670 907 986 1,123 1,326 1,476
------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit
value at beginning
of period $1.59 $1.41 $1.07 $1.74 $1.38 $1.06 $0.92 $0.72 $0.53 $0.70
Accumulation unit
value at end of
period $1.67 $1.59 $1.41 $1.07 $1.74 $1.38 $1.06 $0.92 $0.72 $0.53
Number of
accumulation units
outstanding at end
of period (000
omitted) 324 374 451 755 939 1,148 1,224 1,369 1,686 1,931
------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.63 $1.43 $1.04 $1.76 $1.68 $1.45 $1.28 $1.09 $0.77 $1.00
Accumulation unit
value at end of
period $1.47 $1.63 $1.43 $1.04 $1.76 $1.68 $1.45 $1.28 $1.09 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 327 424 497 695 722 710 579 518 82 13
------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.67 $1.47 $1.26 $1.49 $1.37 $1.30 $1.28 $1.19 $1.03 $1.00
Accumulation unit
value at end of
period $1.66 $1.67 $1.47 $1.26 $1.49 $1.37 $1.30 $1.28 $1.19 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 685 1,026 13,876 10,614 8,749 2,701 919 906 264 111
------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.20 $1.18 $0.95 $1.16 $1.18 $1.16 $1.04 $0.98 $0.84 $1.00
Accumulation unit
value at end of
period $1.17 $1.20 $1.18 $0.95 $1.16 $1.18 $1.16 $1.04 $0.98 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 60 61 63 104 150 132 111 50 12
------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.86 $0.79 $0.64 $1.16 $1.08 $0.86 $0.77 $0.67 $0.53 $0.65
Accumulation unit
value at end of
period $0.71 $0.86 $0.79 $0.64 $1.16 $1.08 $0.86 $0.77 $0.67 $0.53
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,321 1,666 1,959 2,382 3,162 3,931 4,113 4,437 3,942 3,982
------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 347 424 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 55
VARIABLE ACCOUNT CHARGES OF 1.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.67 $1.36 $1.01 $1.49 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit
value at end of
period $1.58 $1.67 $1.36 $1.01 $1.49 $1.59 $1.34 $1.28 $1.08 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 63 108 394 434 396 192 185 221 40 22
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.12 $1.00 $0.88 $1.25 $1.18 $1.06 $1.02 $0.95 $0.79 $0.91
Accumulation unit
value at end of
period $1.18 $1.12 $1.00 $0.88 $1.25 $1.18 $1.06 $1.02 $0.95 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 732 838 1,076 2,686 3,084 3,544 4,274 4,536 4,842 5,138
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.51 $1.31 $1.15 $1.99 $1.75 $1.44 $1.26 $1.08 $1.00 --
Accumulation unit
value at end of
period $1.30 $1.51 $1.31 $1.15 $1.99 $1.75 $1.44 $1.26 $1.08 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 445 740 773 755 857 966 1,110 1,249 139 --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.17 $1.04 $0.90 $1.43 $1.41 $1.20 $1.16 $1.05 $0.84 $1.06
Accumulation unit
value at end of
period $1.13 $1.17 $1.04 $0.90 $1.43 $1.41 $1.20 $1.16 $1.05 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 474 657 1,060 823 1,148 1,387 1,578 1,938 1,984 2,083
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.53 $1.29 $0.91 $1.27 $1.15 $1.10 $1.08 $1.02 $1.00 --
Accumulation unit
value at end of
period $1.43 $1.53 $1.29 $0.91 $1.27 $1.15 $1.10 $1.08 $1.02 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,317 1,629 743 873 981 1,054 1,161 1,187 55 --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 644 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.63 $0.50 $0.33 $0.58 $0.51 $0.42 $0.40 $0.36 $0.25 $0.42
Accumulation unit
value at end of
period $0.59 $0.63 $0.50 $0.33 $0.58 $0.51 $0.42 $0.40 $0.36 $0.25
Number of
accumulation units
outstanding at end
of period (000
omitted) 942 1,389 1,044 1,148 1,358 1,741 1,913 2,281 2,845 3,066
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.72 $1.63 $1.47 $1.46 $1.39 $1.35 $1.34 $1.30 $1.22 $1.14
Accumulation unit
value at end of
period $1.84 $1.72 $1.63 $1.47 $1.46 $1.39 $1.35 $1.34 $1.30 $1.22
Number of
accumulation units
outstanding at end
of period (000
omitted) 574 787 1,689 1,799 2,363 1,377 939 985 1,052 1,227
------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.65% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (01/29/2003)
Accumulation unit
value at beginning
of period $1.02 $1.04 $1.05 $1.05 $1.02 $0.99 $0.98 $0.99 $1.00 --
Accumulation unit
value at end of
period $1.01 $1.02 $1.04 $1.05 $1.05 $1.02 $0.99 $0.98 $0.99 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,702 2,115 3,351 3,612 1,885 1,470 766 287 357 --
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.64 $1.43 $1.14 $1.95 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit
value at end of
period $1.53 $1.64 $1.43 $1.14 $1.95 $1.83 $1.55 $1.39 $1.20 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,320 2,716 8,325 7,708 6,016 4,986 2,404 286 196 36
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.65 $0.56 $0.46 $0.81 $0.80 $0.71 $0.68 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.67 $0.65 $0.56 $0.46 $0.81 $0.80 $0.71 $0.68 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,409 3,157 3,716 3,845 3,974 4,539 4,651 2,949 133 79
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.56 $1.40 $0.92 $1.25 $1.25 $1.15 $1.12 $1.02 $0.83 $0.90
Accumulation unit
value at end of
period $1.63 $1.56 $1.40 $0.92 $1.25 $1.25 $1.15 $1.12 $1.02 $0.83
Number of
accumulation units
outstanding at end
of period (000
omitted) 702 858 1,039 1,295 1,788 2,394 1,528 436 245 216
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.26 $1.01 $0.73 $1.22 $1.29 $1.17 $1.14 $0.98 $0.67 $0.82
Accumulation unit
value at end of
period $1.13 $1.26 $1.01 $0.73 $1.22 $1.29 $1.17 $1.14 $0.98 $0.67
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 23 30 31 42 43 46 47 47 37
------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.21 $1.19 $1.15 $1.20 $1.16 $1.13 $1.13 $1.14 $1.15 $1.10
Accumulation unit
value at end of
period $1.20 $1.21 $1.19 $1.15 $1.20 $1.16 $1.13 $1.13 $1.14 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 920 995 2,247 1,818 1,636 1,686 1,464 2,105 1,933 1,155
------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.65% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.69 $0.61 $0.46 $0.72 $0.68 $0.63 $0.62 $0.59 $0.48 $0.68
Accumulation unit
value at end of
period $0.68 $0.69 $0.61 $0.46 $0.72 $0.68 $0.63 $0.62 $0.59 $0.48
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 21 29 43 53 54 77 109 119 156
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $1.32 $1.14 $0.85 $1.48 $1.41 $1.26 $1.06 $1.06 $0.86 $0.95
Accumulation unit
value at end of
period $1.26 $1.32 $1.14 $0.85 $1.48 $1.41 $1.26 $1.06 $1.06 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 1 1 1 -- 1 1 1 1 10
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $1.60 $1.43 $1.01 $1.37 $1.36 $1.25 $1.24 $1.15 $0.92 $0.91
Accumulation unit
value at end of
period $1.63 $1.60 $1.43 $1.01 $1.37 $1.36 $1.25 $1.24 $1.15 $0.92
Number of
accumulation units
outstanding at end
of period (000
omitted) 25 19 19 19 22 22 22 22 26 13
------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.35 $1.86 $1.35 $2.28 $2.01 $1.82 $1.57 $1.28 $0.94 $1.06
Accumulation unit
value at end of
period $2.06 $2.35 $1.86 $1.35 $2.28 $2.01 $1.82 $1.57 $1.28 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 740 844 2,215 2,876 2,509 1,985 1,376 1,002 621 42
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.77 $1.49 $1.27 $2.24 $2.88 $2.43 $2.18 $1.68 $1.26 $1.25
Accumulation unit
value at end of
period $1.64 $1.77 $1.49 $1.27 $2.24 $2.88 $2.43 $2.18 $1.68 $1.26
Number of
accumulation units
outstanding at end
of period (000
omitted) 61 79 103 112 129 143 179 154 90 58
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.69 $1.53 $1.14 $1.65 $1.62 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit
value at end of
period $1.70 $1.69 $1.53 $1.14 $1.65 $1.62 $1.39 $1.39 $1.24 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 422 433 456 528 522 401 503 448 360 343
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (05/01/2002)
Accumulation unit
value at beginning
of period $1.56 $1.24 $0.98 $1.48 $1.54 $1.34 $1.25 $1.03 $0.79 $1.00
Accumulation unit
value at end of
period $1.48 $1.56 $1.24 $0.98 $1.48 $1.54 $1.34 $1.25 $1.03 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 106 114 186 253 389 446 450 471 247 4
------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.63 $0.50 $0.36 $0.63 $0.58 $0.54 $0.52 $0.48 $0.35 $0.50
Accumulation unit
value at end of
period $0.59 $0.63 $0.50 $0.36 $0.63 $0.58 $0.54 $0.52 $0.48 $0.35
Number of
accumulation units
outstanding at end
of period (000
omitted) 378 425 493 554 790 901 1,089 1,247 982 331
------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.50 $1.37 $1.10 $1.78 $1.75 $1.51 $1.38 $1.25 $1.02 $1.17
Accumulation unit
value at end of
period $1.46 $1.50 $1.37 $1.10 $1.78 $1.75 $1.51 $1.38 $1.25 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,501 1,886 2,268 2,938 4,831 5,961 5,530 5,447 3,579 123
------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.93 $2.38 $1.82 $2.94 $2.89 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit
value at end of
period $2.70 $2.93 $2.38 $1.82 $2.94 $2.89 $2.53 $2.28 $1.84 $1.46
Number of
accumulation units
outstanding at end
of period (000
omitted) 575 685 1,547 1,775 1,885 1,605 937 431 147 125
------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.81 $0.73 $0.61 $0.99 $1.02 $0.92 $0.88 $0.78 $0.61 $0.79
Accumulation unit
value at end of
period $0.83 $0.81 $0.73 $0.61 $0.99 $1.02 $0.92 $0.88 $0.78 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 20 33 52 81 104 122 171 282 210 204
------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (03/03/2000)
Accumulation unit
value at beginning
of period $0.53 $0.47 $0.39 $0.69 $0.63 $0.60 $0.56 $0.54 $0.42 $0.57
Accumulation unit
value at end of
period $0.48 $0.53 $0.47 $0.39 $0.69 $0.63 $0.60 $0.56 $0.54 $0.42
Number of
accumulation units
outstanding at end
of period (000
omitted) 41 184 193 187 229 241 320 416 470 489
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van
Kampen V.I. Capital Growth Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen
V.I. Capital Growth Fund, Series I Shares changed its name to Invesco Van Kampen V.I. American
Franchise Fund, Series I Shares.
------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit
value at beginning
of period $1.07 $1.00 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.07 $1.00 $0.79 $1.15 $1.08 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 76 161 191 204 254 304 -- -- -- --
------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit
value at beginning
of period $0.98 $0.90 $0.72 $1.09 $1.01 $0.91 $0.86 $0.79 $0.65 $0.84
Accumulation unit
value at end of
period $0.95 $0.98 $0.90 $0.72 $1.09 $1.01 $0.91 $0.86 $0.79 $0.65
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 7 9 10 44 49 54 60 68
------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.65% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit
value at beginning
of period $1.38 $1.23 $0.94 $1.53 $1.22 $0.94 $0.82 $0.64 $0.48 $0.63
Accumulation unit
value at end of
period $1.45 $1.38 $1.23 $0.94 $1.53 $1.22 $0.94 $0.82 $0.64 $0.48
Number of
accumulation units
outstanding at end
of period (000
omitted) 62 71 90 113 128 193 290 358 415 453
------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.56 $1.37 $1.00 $1.70 $1.63 $1.41 $1.26 $1.07 $0.77 $1.00
Accumulation unit
value at end of
period $1.40 $1.56 $1.37 $1.00 $1.70 $1.63 $1.41 $1.26 $1.07 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 309 313 562 645 737 429 462 327 229 --
------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.42 $1.22 $1.45 $1.34 $1.27 $1.26 $1.19 $1.03 $1.00
Accumulation unit
value at end of
period $1.59 $1.60 $1.42 $1.22 $1.45 $1.34 $1.27 $1.26 $1.19 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,542 3,022 8,791 8,108 9,314 6,883 5,202 3,248 1,819 --
------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.03 $0.97 $0.84 $1.00
Accumulation unit
value at end of
period $1.12 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.03 $0.97 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 12 44 77 114 123 133 155 148 132 33
------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.74 $0.68 $0.56 $1.01 $0.95 $0.76 $0.68 $0.60 $0.47 $0.59
Accumulation unit
value at end of
period $0.60 $0.74 $0.68 $0.56 $1.01 $0.95 $0.76 $0.68 $0.60 $0.47
Number of
accumulation units
outstanding at end
of period (000
omitted) 575 682 744 934 1,657 1,026 1,024 1,360 1,054 666
------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 33 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.61 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.51 $1.61 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,403 1,665 1,992 2,323 2,697 2,783 2,494 926 92 --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.06 $0.95 $0.84 $1.20 $1.14 $1.03 $1.00 $0.93 $0.77 $0.90
Accumulation unit
value at end of
period $1.11 $1.06 $0.95 $0.84 $1.20 $1.14 $1.03 $1.00 $0.93 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 102 132 136 216 356 460 990 1,418 1,415 1,505
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (01/29/2003)
Accumulation unit
value at beginning
of period $1.82 $1.59 $1.40 $2.44 $2.16 $1.79 $1.57 $1.34 $1.00 --
Accumulation unit
value at end of
period $1.56 $1.82 $1.59 $1.40 $2.44 $2.16 $1.79 $1.57 $1.34 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 183 211 249 301 425 387 352 320 216 --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.11 $0.99 $0.86 $1.38 $1.36 $1.17 $1.13 $1.03 $0.83 $1.05
Accumulation unit
value at end of
period $1.07 $1.11 $0.99 $0.86 $1.38 $1.36 $1.17 $1.13 $1.03 $0.83
Number of
accumulation units
outstanding at end
of period (000
omitted) 288 388 391 412 447 532 679 518 534 482
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (01/29/2003)
Accumulation unit
value at beginning
of period $2.04 $1.73 $1.23 $1.72 $1.56 $1.50 $1.48 $1.40 $1.00 --
Accumulation unit
value at end of
period $1.89 $2.04 $1.73 $1.23 $1.72 $1.56 $1.50 $1.48 $1.40 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 857 1,082 170 194 284 283 298 336 232 --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 359 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.60 $0.48 $0.32 $0.56 $0.50 $0.41 $0.39 $0.35 $0.25 $0.41
Accumulation unit
value at end of
period $0.56 $0.60 $0.48 $0.32 $0.56 $0.50 $0.41 $0.39 $0.35 $0.25
Number of
accumulation units
outstanding at end
of period (000
omitted) 338 441 268 278 331 341 374 654 660 655
------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.62 $1.54 $1.40 $1.39 $1.33 $1.30 $1.30 $1.27 $1.19 $1.12
Accumulation unit
value at end of
period $1.73 $1.62 $1.54 $1.40 $1.39 $1.33 $1.30 $1.30 $1.27 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 952 1,315 925 951 1,942 3,108 1,402 1,115 1,012 1,004
------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VARIABLE ANNUITY -- PROSPECTUS 59
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
44223 V (4/12)
PROSPECTUS
APRIL 30, 2012
WELLS FARGO
ADVANTAGE(R) BUILDER VARIABLE ANNUITY
FOR CONTRACTS PURCHASED IN THE STATE OF OREGON THE NAME OF THE PRODUCT IS
CHANGED TO: ADVANTAGE BUILDER VARIABLE ANNUITY.
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
The Dreyfus Socially Responsible Growth Fund, Inc.
Fidelity(R) Variable Insurance Products - Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM)
Oppenheimer Variable Account Funds
Putnam Variable Trust - Class IB Shares
Wells Fargo Variable Trust Funds
Please read the prospectuses carefully and keep them for future reference.
The contract provides for purchase payment credits which we may reverse up to
the maximum withdrawal charge under certain circumstances. (See "Buying Your
Contract -- Purchase Payment Credits.") Expense charges from contracts with
purchase payment credits may be higher than charges for contracts without such
credits. The amount of the credit may be more than offset by additional fees and
charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 12
FINANCIAL STATEMENTS......................... 12
THE VARIABLE ACCOUNT AND THE FUNDS........... 12
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 18
THE ONE-YEAR FIXED ACCOUNT................... 20
BUYING YOUR CONTRACT......................... 21
CHARGES...................................... 23
VALUING YOUR INVESTMENT...................... 27
MAKING THE MOST OF YOUR CONTRACT............. 28
WITHDRAWALS.................................. 34
TSA -- SPECIAL PROVISIONS.................... 34
CHANGING OWNERSHIP........................... 35
BENEFITS IN CASE OF DEATH.................... 35
OPTIONAL BENEFITS............................ 39
THE ANNUITY PAYOUT PERIOD.................... 47
TAXES........................................ 49
VOTING RIGHTS................................ 52
SUBSTITUTION OF INVESTMENTS.................. 53
ABOUT THE SERVICE PROVIDERS.................. 53
ADDITIONAL INFORMATION....................... 54
APPENDIX: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 56
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION..................... 61
--------------------------------------------------------------------------------
2 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
We no longer offer new contracts. However, you have the option of making
additional purchase payments. Purchase payment amounts and purchase payment
timing may vary by state and be limited under the terms of your contract. (See
"Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. We reserve the right to further limit transfers to the GPAs
and the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
The following tables describe the fees and expenses that you will pay when
buying, owning and making a withdrawal from the contract. The first table
describes the fees and expenses that you paid at the time that you bought the
contract and will pay when you make a withdrawal from the contract. State
premium taxes also may be deducted.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a six-year or eight-year withdrawal charge schedule at the
time of application.
SIX-YEAR SCHEDULE EIGHT-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 8
3 8 3 8
4 6 4 8
5 4 5 8
6 2 6 6
Thereafter 0 7 4
8 2
Thereafter 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU CAN CHOOSE THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE AND THE
DEATH BENEFIT GUARANTEE PROVIDED. THE COMBINATION YOU CHOOSE DETERMINES THE FEES
YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST.
VARIABLE ACCOUNT TOTAL MORTALITY AND TOTAL VARIABLE
EIGHT-YEAR WITHDRAWAL CHARGE SCHEDULE: ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSE
Standard Death Benefit 0.15% 1.10% 1.25%
Enhanced Death Benefit Rider 0.15 1.30 1.45
SIX-YEAR WITHDRAWAL CHARGE SCHEDULE:
Standard Death Benefit 0.15 1.35 1.50
Enhanced Death Benefit Rider 0.15 1.55 1.70
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR FEE 0.25%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS FEE 0.40%(1)
(As a percentage of the contract value charged annually on the contract
anniversary.)
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE 0.70%(1),(2)
(As a percentage of the GMIB benefit base charged annually on the contract
anniversary.)
(1) This fee applies only if you elect this optional feature.
(2) For applications signed prior to May 1, 2003, the following annual current
rider charges apply: GMIB -- .30%.
--------------------------------------------------------------------------------
8 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 1.37%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Cash Management Fund (Class 0.33% 0.13% 0.14% --% 0.60%((1))
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
The Dreyfus Socially Responsible Growth Fund, Inc., Initial 0.75 -- 0.10 -- 0.85
Shares
Fidelity(R) VIP Dynamic Capital Appreciation Portfolio 0.56 0.25 0.30 -- 1.11
Service Class 2
Fidelity(R) VIP High Income Portfolio Service Class 2 0.57 0.25 0.12 -- 0.94
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(3)
Fund - Institutional Shares
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(4)
Shares
MFS(R) Investors Trust Series - Initial Class 0.75 -- 0.07 -- 0.82
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(5)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(6)
3)
Wells Fargo Advantage VT Index Asset Allocation 0.55 0.25 0.26 -- 1.06(7)
Fund - Class 2
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Wells Fargo Advantage VT International Equity Fund - Class 0.75% 0.25% 0.22% 0.01% 1.23%((8))
2
Wells Fargo Advantage VT Intrinsic Value Fund - Class 2 0.55 0.25 0.37 0.01 1.18(8)
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(8)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(9)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(8)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia Variable
Portfolio - High Yield Bond Fund (Class 3) and 1.055% for Columbia Variable
Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(5) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(6) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 1.035%.
(7) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(8) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(9) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
10 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the EDB and the GMIB. Although your actual
costs may be lower, based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
With an eight-
year withdrawal
charge schedule $1,193 $1,998 $2,832 $4,248 $393 $1,198 $2,032 $4,248
With a six-year
withdrawal charge
schedule 1,218 2,073 2,555 4,477 418 1,273 2,155 4,477
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the Standard Death Benefit and you do not
select any optional benefits. Although your actual costs may be higher, based on
these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
With an eight-
year withdrawal
charge schedule $1,020 $1,475 $1,953 $2,456 $220 $675 $1,153 $2,456
With a six-year
withdrawal charge
schedule 1,045 1,552 1,683 2,719 245 752 1,283 2,719
(1) In these examples, the contract administrative charge is $30.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 11
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. (See "Revenue
we received from the funds may create potential conflicts of interest.") These
relationships may influence recommendations
--------------------------------------------------------------------------------
12 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
your investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under any asset allocation program we
offer or under asset allocation programs used in conjunction with the
contracts and plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 13
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
14 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
The Dreyfus Seeks capital growth, with current income The Dreyfus Corporation
Socially as a secondary goal.
Responsible
Growth Fund,
Inc., Initial
Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks capital appreciation. Normally Fidelity Management &
Dynamic Capital invests primarily in common stocks of Research Company (FMR)
Appreciation domestic and foreign issuers. The Fund is the fund's manager.
Portfolio Service invests in either "growth" or "value" FMR Co., Inc. (FMRC) and
Class 2 stocks or both. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks a high level of current income, while Fidelity Management &
High Income also considering growth of capital. Research Company (FMR)
Portfolio Service Normally invests primarily in income- is the fund's manager.
Class 2 producing debt securities, preferred stocks FMR Co., Inc. (FMRC) and
and convertible securities, with an other investment
emphasis on lower-quality debt securities. advisers serve as sub-
May invest in non-income producing advisers for the fund.
securities, including defaulted securities
and common stocks. Invests in companies in
troubled or uncertain financial condition.
The Fund invests in domestic and foreign
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Trust Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term total return, consisting of Wells Fargo Funds
Advantage VT capital appreciation and current income. Management, LLC,
Index Asset adviser; Wells Capital
Allocation Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 17
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments and purchase payment credits to one or more
of the GPAs with guarantee periods declared by us. These periods of time may
vary by state. The minimum required investment in each GPA is $1,000. There are
restrictions on the amount you can allocate to these accounts as well as on
transfers from these accounts (see "Buying Your Contract" and "Transfer
policies"). These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
--------------------------------------------------------------------------------
18 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the guarantee period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I-------
EARLY WITHDRAWAL AMOUNT X [( 1 + J + .001 )(N/12)- 1 ] = MVA
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 19
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030-------------
$1,000 X [( 1 + .035 + .001 )(84/12)- 1 ] = -$39.84
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030-------------
$1,000 X [( 1 + .025 + .001 )(84/12)- 1 ] = $27.61
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 6% if the six-year
withdrawal charge schedule applies and 8% if the eight-year withdrawal charge
schedule applies. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to
the amounts we deduct for withdrawal charges, so we would deduct the withdrawal
charge from your early withdrawal after we applied the MVA. Also note that when
you request an early withdrawal, we withdraw an amount from your GPA that will
give you the net amount you requested after we apply the MVA and any applicable
withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an interest sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
offered may vary by state but will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Buying Your Contract" and "Transfer
policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
--------------------------------------------------------------------------------
20 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
BUYING YOUR CONTRACT
New contracts are not currently being offered.
We are required by law to obtain personal information from you which we will use
to verify your identity. If you do not provide this information we reserve the
right to refuse to issue your contract or take other steps we deem reasonable.
As the owner, you have all rights and may receive all benefits under the
contract. You can own a qualified annuity or a nonqualified annuity. You can own
a nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 85 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
the length of the withdrawal charge period (six or eight years)(1);
the optional Benefit Protector Death Benefit Rider(2);
the optional Benefit Protector Plus Death Benefit Rider(2);
the optional Enhanced Death Benefit Rider(2);
the optional Guaranteed Minimum Income Benefit Rider(3);
the one-year fixed account, GPAs and/or subaccounts in which you want to
invest(4);
how you want to make purchase payments; and
a beneficiary.
(1) The six-year withdrawal charge schedule is not available under contracts
issued in Oregon and contracts issued through Ameriprise Financial Services,
Inc.
(2) You may select one of the following: the EDB, the Benefit Protector or the
Benefit Protector Plus. Riders may not be available in all states. The
Benefit Protector and the Benefit Protector Plus are only available if you
and the annuitant are 75 or younger at contract issue. The EDB is only
available if both you and the annuitant are 79 or younger at contract issue.
(3) The GMIB is only available at the time you purchase your contract if the
annuitant is 75 or younger at contract issue and you also select the EDB.
Riders may not be available in all states.
(4) Some states restrict the amount you can allocate to the GPAs and the one-
year fixed account. GPAs are not available in Maryland, Oregon, Pennsylvania
or Washington and may not be available in other states.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account, to the GPAs and/or to the one-year fixed account in even
1% increments subject to the $1,000 minimum required investment for the GPAs.
For contracts with applications signed on or after June 16, 2003, the amount of
any purchase payment allocated to the GPAs and the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish a dollar cost averaging arrangement
with respect to the purchase payment according to procedures currently in
effect, or you are participating according to the rules of an asset allocation
model portfolio program available under the contract, if any.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a SIP. To begin the SIP,
you will complete and send a form and your first SIP payment along with your
application. There is no charge for SIP. You can stop your SIP payments at any
time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date. For contracts issued in Oregon,
purchase payments may not be made after the first contract anniversary.
THE RETIREMENT DATE
Annuity payouts are scheduled to begin on the retirement date. When we processed
your application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. You can also select a date
within the maximum limits. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 21
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
If paying by SIP:
$50 for additional payments.
If paying by any other method:
$100 for additional payments.
MAXIMUM TOTAL ALLOWABLE PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will generally receive a purchase payment credit with every payment you make
to your contract. We apply this credit immediately. We allocate the credit to
the GPAs, one-year fixed account and subaccounts in the same proportions as your
purchase payment. We apply the credit as a percentage of your net current
payment based on the following schedule:
IF TOTAL NET PAYMENTS* MADE DURING THEN THE PURCHASE PAYMENT
THE LIFE OF THE CONTRACT EQUALS . . . CREDIT PERCENTAGE EQUALS . . .
Less than $10,000 1%
$10,000 to less than 1 million 2
$1 million to less than 5 million 3
$5 million and over 4
--------------------------------------------------------------------------------
22 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
* Net payments equal total payments less total withdrawals.
If you make any additional payments that cause the contract to become eligible
for a higher percentage credit, we will add credits to your prior payments (less
total withdrawals). We allocate credits according to the purchase payment
allocation on the date we add the credits to the contract.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
withdrawal charge waiver due to "Contingent events" (see "Charges -- Contingent
events"), we will assess a charge, similar to a withdrawal charge, equal to the
amount of the purchase payment credits. The amount we pay to you under these
circumstances will always equal or exceed your withdrawal value.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
These fees are based on the withdrawal charge schedule and death benefits that
apply to your contract.
EIGHT-YEAR WITHDRAWAL SIX-YEAR WITHDRAWAL
CHARGE SCHEDULE CHARGE SCHEDULE
Standard death benefit 1.10% 1.35%
Enhanced death benefit rider 1.30 1.55
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 23
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract, you may be subject to a withdrawal
charge. A withdrawal charge applies if all or part of the withdrawal amount is
from purchase payments we received less than six or eight years before the date
of withdrawal. You select the withdrawal charge period at the time of your
application for the contract. The withdrawal charge percentages that apply to
you are shown in your contract. In addition, amounts withdrawn from a GPA more
than 30 days before the end of the applicable Guarantee Period will be subject
to a MVA. (See "The Fixed Accounts -- Market Value Adjustments (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, if you selected the eight-year schedule, during the first two years
after a purchase payment is made, the withdrawal charge percentage attached to
that payment is 8%. The withdrawal charge percentage for that payment during the
seventh year after it is made is 4%. At the beginning of the ninth year after
that purchase payment is made, and thereafter, there is no withdrawal charge as
to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value, and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment and purchase payment credit to be the
prior anniversary's contract value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + ------------ X (PPNPW - XSF)
(CV - TFA)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
--------------------------------------------------------------------------------
24 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage, and then adding the
total withdrawal charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn, depending on the schedule you selected*:
SIX-YEAR SCHEDULE* EIGHT-YEAR SCHEDULE
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 8
3 8 3 8
4 6 4 8
5 4 5 8
6 2 6 6
Thereafter 0 7 4
8 2
Thereafter 0
* The six-year withdrawal charge schedule is not available under contracts
issued in Oregon and contracts issued through Ameriprise Financial Services,
Inc.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with an eight-year withdrawal charge schedule
with this history:
We receive these payments
- $10,000 initial;
- $8,000 on the sixth contract anniversary; and
- $6,000 on the eighth contract anniversary; and
You withdraw the contract for its total withdrawal value of $38,101 during the
ninth contract year and make no other withdrawals during that contract year;
and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received nine or more years before
withdrawal and is withdrawn without withdrawal charge; and
640 $8,000 purchase payment is in its fourth year from receipt, withdrawn with
an 8% withdrawal charge; and
480 $6,000 purchase payment is in its third year from receipt withdrawn with an
8% withdrawal charge.
------
$1,120
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 25
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent it exceeds contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
Withdrawals you make if you or the annuitant become disabled within the
meaning of the Code Section 72(m)(7) after contract issue. The disabled person
must also be receiving Social Security disability or state long term
disability benefits. The disabled person must be age 70 or younger at the time
of withdrawal. You must provide us with a signed letter from the disabled
person stating that he or she meets the above criteria, a legible photocopy of
Social Security disability or state long term disability benefit payments and
the application for such payments.
Withdrawals you make once a year if you or the annuitant become unemployed at
least one year after contract issue, up to the following amounts each year:
(a) 25% of your prior anniversary's contract value (or $10,000 if greater) if
the unemployment condition is met for at least 30 straight days; or
(b) 50% of your prior anniversary's contract value (or $10,000 if greater) if
the unemployment condition is met for at least 180 straight days.
The unemployment condition is met if the unemployed person is currently
receiving unemployment compensation from a government unit of the United States,
whether federal or state. You must provide us with a signed letter from the
unemployed person stating that he or she meets the above criteria with a legible
photocopy of the unemployment benefit payments meeting the above criteria with
regard to dates.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
--------------------------------------------------------------------------------
26 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
OPTIONAL LIVING BENEFITS
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB) FEE
We charge an annual fee (currently 0.70%)* based on the GMIB benefit base for
this optional feature only if you select it. If selected, we deduct the fee from
the contract value on your contract anniversary at the end of each contract
year. We prorate the GMIB fee among the subaccounts, the GPAs and the one-year
fixed account in the same proportion your interest in each account bears to your
total contract value.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the GMIB fee from the proceeds payable adjusted for the number of
calendar days coverage was in place. We cannot increase the GMIB fee after the
rider effective date and it does not apply after annuity payouts begin. For
details on how we calculate the fee, see "Optional Benefits -- Guaranteed
Minimum Income Benefit Rider."
* For applications signed prior to May 1, 2003, the following annual rider
charges apply: GMIB -- 0.30%.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and the one-year fixed
accounts;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
- Guaranteed Minimum Income Benefit rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 27
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
- Guaranteed Minimum Income Benefit rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
--------------------------------------------------------------------------------
28 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
TIERED DOLLAR-COST AVERAGING (TIERED DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Tiered DCA program. There is no charge for the Tiered DCA program. Under
the Tiered DCA program, you can allocate a new purchase payment and any
applicable purchase payment credits to one of two special Tiered DCA accounts.
We determine which Tiered DCA account you are eligible for as follows:
WE ALLOCATE YOUR NEW PURCHASE PAYMENT
IF YOUR NET CONTRACT VALUE(1) IS . . . AND ANY APPLICABLE PURCHASE PAYMENT CREDIT TO:
$10,000-$49,999 Tier 1 DCA account
$50,000 or more Tier 2 DCA account(2)
(1) "Net contract value" equals your current contract value plus any new
purchase payment and purchase payment credit. If this is a new contract
funded by purchase payments from multiple sources, we determine your net
contract value based on the purchase payments, purchase payment credits,
withdrawal requests and exchange requests submitted with your application.
(2) You cannot allocate your new purchase payments and purchase payment credits
to a Tier 1 DCA account if you are eligible to participate in a Tier 2 DCA
account.
You may only allocate a new purchase payment of at least $1,000 to the Tiered
DCA account for which you are eligible. You cannot transfer existing contract
values into the Tiered DCA account. Each Tiered DCA account lasts for only six
months from the time we receive your first purchase payment. We make monthly
transfers of your total Tiered DCA account value into the GPAs, the one-year
fixed account and/or subaccount you select over the six-month period. If you
elect to transfer into a GPA, you must meet the $1,000 minimum required
investment limitation for each transfer.
We reserve the right to credit a lower interest rate to each Tiered DCA account
if you select the GPAs or the one-year fixed account as part of your Tiered DCA
transfers. We credit higher rates on the Tier 2 DCA account than on the Tier 1
DCA account. We will change the interest rate on each Tiered DCA account from
time to time at our discretion. From time to time, we may credit interest to the
Tiered DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment and purchase
payment credit, that rate does not change even if we change the rate we credit
on new purchase payments or if your net contract value changes.
We credit each Tiered DCA account with current guaranteed annual rate that is in
effect on the date we receive your purchase payment. However, we credit this
annual rate over the six-month period on the balance remaining in your Tiered
DCA account. Therefore, the net effective interest rate you receive is less than
the stated annual rate. We do not credit this interest after we transfer the
value out of the Tiered DCA account into the accounts you selected.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 29
If you make additional purchase payments while a Tiered DCA account term is in
progress, the amounts you allocate to an existing Tiered DCA account will be
transferred out of the Tiered DCA account over the remainder of the term. If you
are funding a Tiered DCA account from multiple sources, we apply each purchase
payment and purchase payment credit to the account and credit interest on that
purchase payment and purchase payment credit on the date we receive it. This
means that all purchase payments and purchase payment credits may not be in the
Tiered DCA account at the beginning of the six-month period. Therefore, you may
receive less total interest than you would have if all your purchase payments
and purchase payment credits were in the Tiered DCA account from the beginning.
If we receive any of your multiple payments after the six-month period ends, you
can either allocate those payments to a new Tiered DCA account (if available) or
to any other accounts available under your contract.
You cannot participate in the Tiered DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Tiered DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Tiered DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Tiered DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Tiered DCA account balance. We will transfer the remaining balance
from your Tiered DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Tiered DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Tiered DCA program at any time. Any
modifications will not affect any purchase payments and purchase payment credits
that are already in a Tiered DCA account. For more information on the Tiered DCA
program, contact your investment professional.
The Tiered DCA program does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through the periods of low
levels. Dollar-cost averaging can be an effective way to help meet your long-
term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Tiered
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Tiered DCA program to match. We will restart the rebalancing period you selected
as of the date we record your change. You also can ask us in writing to stop
rebalancing your contract value. You must allow 30 days for us to change any
instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless
--------------------------------------------------------------------------------
30 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
the transfer is an automated transfer from the two-year GPA as part of a dollar-
cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the GPAs and
one-year fixed account if the interest rate we are then currently crediting to
the one-year fixed account is equal to the minimum interest rate stated in the
contract.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. For contracts issued before June 16, 2003, we have
removed this restriction, and you may transfer contract values from the one-
year fixed account to the subaccounts at any time. We will inform you at least
30 days in advance of the day we intend to reimpose this restriction.
For contracts with applications signed on or after June 16, 2003, the amount
of contract value transferred to the GPAs and the one-year fixed account
cannot result in the value of the GPAs and the one-year fixed account in total
being greater than 30% of the contract value. The time limitations on
transfers from the GPAs and one-year fixed account will be enforced, and
transfers out of the GPAs and one-year fixed account are limited to 30% of the
GPA and one-year fixed account values at the beginning of the contract year or
$10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable payout, once annuity payouts begin, you may make
transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 31
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies
--------------------------------------------------------------------------------
32 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
and procedures will do so. Orders we place to purchase fund shares for the
variable account are subject to acceptance by the fund. We reserve the right
to reject without prior notice to you any transfer request if the fund does
not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your GPAs, one-year fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. For contracts issued before June 16,
2003, we have removed this restriction, and you may transfer contract values
from the one-year fixed account to the subaccounts at any time. We will inform
you at least 30 days in advance of the day we intend to reimpose this
restriction.
For contracts with applications signed on or after June 16, 2003, the time
limitations on transfers from the one-year fixed account will be enforced, and
transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 33
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the
--------------------------------------------------------------------------------
34 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
employer either by affirmative election or inadvertent action causes
contributions under a plan that is subject to ERISA to be made to this contract,
we will not be responsible for any obligations and requirements under ERISA and
the regulations thereunder, unless we have prior written agreement with the
employer. You should consult with your employer to determine whether your 403(b)
plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have a GMIB and/or Benefit Protector Plus Death Benefit rider, the rider
will terminate upon transfer of ownership of your annuity contract. Continuance
of the Benefit Protector rider is optional. (see "Optional Benefits").
BENEFITS IN CASE OF DEATH
There are two death benefit options under this contract: the standard death
benefit and the Enhanced Death Benefit (EDB) Rider. If either you or the
annuitant are 80 or older at contract issue, the standard death benefit will
apply. If both you and the annuitant are 79 or younger at contract issue, you
can elect either the standard death benefit or the EDB Rider (if it is available
in your state) on your application. If you select the GMIB, you must elect the
EDB Rider. Once you elect a death benefit option, you cannot change it. We show
the option that applies in your contract. The death benefit option that applies
determines the mortality and expense risk fee that is assessed against the
subaccounts. (See "Charges -- Mortality and Expense Risk Fee.")
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 35
Under either death benefit, we will pay the death benefit to your beneficiary
upon the earlier of your death or the annuitant's death. We will base the
benefit paid on the death benefit coverage you chose when you purchased the
contract. If a contract has more than one person as the owner, we will pay
benefits upon the first to die of any owner or the annuitant.
STANDARD DEATH BENEFIT
The standard death benefit is intended to help protect your beneficiaries
financially while your investments have the opportunity to grow. If you or the
annuitant die before annuity payouts begin while this contract is in force, we
will pay the beneficiary as follows LESS ANY PURCHASE PAYMENT CREDITS ADDED TO
THE CONTRACT IN THE LAST 12 MONTHS:
If you or the annuitant were age 80 or older at contract issue, we will pay the
beneficiary the greater of these two values, minus any applicable rider charges:
1. total purchase payments and purchase payment credits applied to the contract
minus adjusted partial withdrawals; or
2. contract value.
If you and the annuitant were age 79 or younger at contract issue, we will pay
the beneficiary the greatest of these three values, minus any applicable rider
charges:
1. total purchase payments plus purchase payment credits applied to the contract
minus adjusted partial withdrawals;
2. contract value; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments and purchase payment credits applied to the contract
since that anniversary minus adjusted partial withdrawals since that
anniversary.
PW X DB
STANDARD DEATH BENEFIT ADJUSTED PARTIAL WITHDRAWALS = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
Maximum anniversary value (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of your (a) current contract value, or (b) total purchase payments and
purchase payment credits minus adjusted partial withdrawals. Every contract
anniversary after that, through age 80, we compare the previous anniversary's
MAV (plus any purchase payments and purchase payment credits since that
anniversary minus adjusted partial withdrawals since that anniversary) to the
current contract value and we reset the MAV if the current contract value is
higher. We stop resetting the MAV after you or the annuitant reach age 81.
However, we continue to add subsequent purchase payments and purchase payment
credits and subtract adjusted partial withdrawals from the MAV.
EXAMPLE ASSUMING YOU AND THE ANNUITANT WERE AGE 79 OR YOUNGER AT CONTRACT ISSUE:
You purchase the contract with a payment of $20,000. We add a purchase payment
credit of $400 to your contract.
On the first contract anniversary the contract value grows to $24,000.
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
We calculate the standard death benefit as follows:
Purchase payments and purchase payment credits minus adjusted partial
withdrawals:
Total purchase payments and purchase payment credits: $20,400.00
----------
minus the standard death benefit adjusted partial withdrawals, calculated
as:
$1,500 x $20,400
$22,000 = -1,390.91
----------
for a death benefit of: $19,009.09
Contract value at death: $20,500.00
----------
--------------------------------------------------------------------------------
36 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
The MAV immediately preceding the date of death plus any payments made since that
anniversary minus adjusted partial withdrawals:
MAV immediately preceding the date of death: $24,000.00
plus purchase payments and purchase payment credits since the prior
anniversary: +0.00
minus the standard death benefit adjusted partial withdrawals, calculated
as:
$1,500 x $24,000
$22,000 = -1,636.36
----------
for a death benefit of: $22,363.64
----------
THE STANDARD DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES
IS THE MAV: $22,363.64
ENHANCED DEATH BENEFIT (EDB) RIDER
The EDB Rider is intended to help protect your beneficiaries financially while
your investments have the opportunity to grow. This is an optional benefit that
you may select for an additional charge (see "Charges"). The EDB Rider does not
provide any additional benefit before the first contract anniversary and it may
not be appropriate for issue ages 75 to 79 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the EDB Rider is appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 79
or younger at contract issue, you may choose to add the EDB Rider to your
contract at the time of purchase. Once you select the EDB Rider you may not
cancel it. You may not add the EDB Rider if you add either the Benefit Protector
or the Benefit Protector Plus to your contract. You must select the EDB Rider if
you choose to add the Guaranteed Minimum Income Benefit Rider to your contract.
The EDB Rider provides that if you or the annuitant die before annuity payouts
begin while this contract is in force, we will pay the beneficiary the greatest
of these two values, less any purchase payment credits added in the last 12
months, minus any applicable rider charges:
the standard death benefit; or
the 5% rising floor.
5% RISING FLOOR: This is the sum of the value of your GPAs, the one-year fixed
account and the variable account floor. There is no variable account floor prior
to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%;
plus any subsequent amounts allocated to the subaccounts;
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent amounts allocated to the subaccounts
and subtract adjusted transfers and partial withdrawals from the subaccounts. On
each contract anniversary after the first, through age 80, we add an amount to
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% RISING FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer or partial
withdrawal.
EXAMPLE
You purchase the contract with a payment of $20,000 and we add a $400 purchase
payment credit to your contract. You allocate $5,100 to the one-year fixed
account and $15,300 to the subaccounts.
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $12,000. Total contract value is $17,200.
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $14,000. Total contract value is $19,300. You take
a $1,500 partial withdrawal all from the subaccounts, leaving the contract
value at $17,800.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 37
The death benefit is calculated as follows:
The standard death benefit (which in this case is the MAV)
MAV on the prior anniversary: $20,400.00
----------
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus the standard death benefit adjusted partial withdrawal taken since
that anniversary, calculated as:
$1,500 x $20,400
$19,300 = -1,585.49
----------
standard death benefit, which is the MAV: $18,814.51
----------
The 5% rising floor:
The variable account floor the first contract anniversary, calculated as:
1.05 x 15,300 = $16,065.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% rising floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $16,065
$14,000 = -1,721.25
----------
variable account floor benefit: $14,343.75
plus the one-year fixed account value: +5,300.00
----------
5% rising floor (value of the GPAs, the one-year fixed account and the
variable account floor): $19,643.75
----------
EDB RIDER, CALCULATED AS THE GREATER OF THE STANDARD DEATH BENEFIT OR THE 5%
RISING FLOOR: $19,643.75
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The GMIB and Benefit Protector Plus riders, if
selected, will terminate. Continuance of the Benefit Protector rider is
optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are
--------------------------------------------------------------------------------
38 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
made. If you elected any optional contract features or riders, your spouse and
the new annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The GMIB and the Benefit Protector Plus riders, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout, or if your
death occurs after attaining age 70 1/2, we will pay the beneficiary in a
single sum unless the beneficiary elects to receive payouts under any payout
plan available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is not available under contracts issued through Ameriprise
Financial Services, Inc. The Benefit Protector is intended to provide an
additional benefit to your beneficiary to help offset expenses after your death
such as funeral expenses or federal and state taxes. This is an optional benefit
that you may select for an additional annual charge (see "Charges"). The Benefit
Protector provides reduced benefits if you or the annuitant are 70 or older at
the rider effective date and it does not provide any additional benefit before
the first rider anniversary. Be sure to discuss with your investment
professional whether or not the Benefit Protector is appropriate for your
situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus or the
Enhanced Death Benefit Riders. We reserve the right to discontinue offering the
Benefit Protector for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary the following less any purchase payment
credits added to the contract in the last 12 months:
the standard death benefit (see "Benefits in Case of Death"), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the standard death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 39
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $2,000 purchase payment credit to your contract.
During the first contract year the contract value grows to $105,000. The death
benefit under the standard death benefit equals the contract value less any
purchase payment credits added to the contract in the last 12 months, or
$103,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The
death benefit equals:
the standard death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(the standard death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death benefit
equals:
the standard death benefit (MAV): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death:
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you request a
partial withdrawal of $50,000, including the applicable 8% withdrawal charge. We will
withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to an 8% withdrawal charge
because your contract is in its third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,340 + $3,160 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $46,840. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the
partial withdrawal is contract earnings). The death benefit equals:
the standard death benefit (MAV adjusted for partial
withdrawals): $57,619
plus the Benefit Protector benefit which equals 40% of earnings
at death:
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death benefit
equals the death benefit during the third contract year. The reduction in contract value
has no effect.
On the ninth contract anniversary the contract value grows to a new high of $200,000.
Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn
that are one or more years old. The death benefit equals:
the standard death benefit (contract value): $200,000
plus the Benefit Protector benefit which equals 40% of earnings
at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of $50,000 and we
add a purchase payment credit of $1,000. Your new contract value is now $251,000. The new
purchase payment is less than one year old and so it has no effect on the Benefit Protector
value. The death benefit equals:
the standard death benefit (contract value less any purchase
payment
credits added in the last 12 months): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
40 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains $251,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes. The death
benefit equals:
the standard death benefit (contract value): $251,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(the standard death benefit minus payments not previously
withdrawn):
0.40 x ($251,000 - $105,000) = +58,400
--------
Total death benefit of: $309,400
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is not available under contracts issued through
Ameriprise Financial Services, Inc. The Benefit Protector Plus is intended to
provide an additional benefit to your beneficiary to help offset expenses after
your death such as funeral expenses or federal and state taxes. This is an
optional benefit that you may select for an additional annual charge (see
"Charges"). The Benefit Protector Plus provides reduced benefits if you or the
annuitant are 70 or older at the rider effective date and it does not provide
any additional benefit before the first rider anniversary and it does not
provide any benefit beyond what is offered under the Benefit Protector rider
during the second rider year. Be sure to discuss with your investment
professional whether or not the Benefit Protector Plus is appropriate for your
situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to you contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector or the Enhanced Death Benefit Riders.
We reserve the right to discontinue offering the Benefit Protector Plus for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary the following less any
purchase payment credits added to the contract in the last 12 months:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10 3.75
Five or more 20 7.5
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 41
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows (less any purchase payment credits added to the contract in
the last 12 months):
the standard death benefit (see "Benefits in Case of Death") PLUS
IF YOU AND THE ANNUITANT ARE UNDER
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three & Four 40% x (earnings at death + 25% initial purchase payment*)
Five or more 40% x (earnings at death + 50% initial purchase payment*)
IF YOU OR THE ANNUITANT ARE AGE 70
CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three & Four 15% x (earnings at death + 25% initial purchase payment*)
Five or more 15% x (earnings at death + 50% initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. We add a $2,000 purchase payment credit to your contract.
During the first contract year the contract value grows to $105,000. The death
benefit under the standard death benefit equals the contract value less any
purchase payment credits added to the contract in the last 12 months, or
$103,000. You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
the standard death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(the standard death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death benefit
equals:
the standard death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you request a
partial withdrawal, of $50,000 including the applicable 8% withdrawal charge. We will
withdraw $10,500 from your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to an 8% withdrawal charge
because your payment is in its third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,340 + $3,160 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $46,840. We calculate purchase payments
not previously withdrawn as $100,000 - $45,000 = $55,000 (remember that $5,000 of the
partial withdrawal is contract earnings). The death benefit equals:
the standard death benefit (MAV adjusted for partial
withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death benefit
equals the death benefit paid during the third contract year. The reduction in contract
value has no effect
--------------------------------------------------------------------------------
42 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
On the ninth contract anniversary the contract value grows to a new high of $200,000.
Earnings at death reaches its maximum of 250% of purchase payments not previously withdrawn
that are one or more years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death benefit equals:
the standard death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of $50,000 and we
add a purchase payment credit of $1,000. Your new contract value is now $251,000. The new
purchase payment is less than one year old and so it has no effect on the Benefit Protector
Plus value. The death benefit equals:
the standard death benefit (contract value less any purchase
payment
credits added in the last 12 months): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $251,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains constant.
The death benefit equals:
the standard death benefit (contract value): $251,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(the standard death benefit minus payments not previously
withdrawn):
0.40 x ($251,000 - $105,000) = +58,400
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $320,400
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the standard death benefit (see "Benefits in Case
of Death").
NOTE: For special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
GUARANTEED MINIMUM INCOME BENEFIT RIDER (GMIB)
The GMIB is intended to provide you with a guaranteed minimum lifetime income
regardless of the volatility inherent in the investments in the subaccounts. If
the annuitant is between age 70 and age 75 at contract issue, you should
consider whether the GMIB is appropriate for your situation because:
you must hold the GMIB for 10 years(1);
the GMIB rider terminates(2) 30 days following the contract anniversary after
the annuitant's 86th birthday;
you can only exercise the GMIB within 30 days after a contract anniversary(1);
the MAV and the 5% rising floor values we use in the GMIB benefit base to
calculate annuity payouts under the GMIB are limited after age 81; and
there are additional costs associated with the rider.
Be sure to discuss whether or not the GMIB is appropriate for your situation
with your investment professional.
(1) Unless the annuitant qualifies for a contingent event (see
"Charges -- Contingent events").
(2) The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
If you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the IRS must begin, you should consider whether the
GMIB is appropriate for you. Partial withdrawals you take from the contract,
including those taken to satisfy minimum required
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 43
distributions, will reduce the GMIB benefit base (defined below), which in turn
may reduce or eliminate the amount of any annuity payments available under the
rider (see "Taxes -- Qualified Annuities -- Required Minimum Distributions").
Consult a tax advisor before you purchase any GMIB with a qualified annuity,
such as an IRA.
If this rider is available in your state and the annuitant is 75 or younger at
contract issue, you may choose to add this optional benefit at the time you
purchase your contract for an additional annual charge. You must elect the GMIB
along with the EDB at the time you purchase your contract and your rider
effective date will be the contract issue date.
In some instances we may allow you to add the GMIB to your contract at a later
date if it was not available when you initially purchased your contract. In
these instances, we would add the GMIB on the next contract anniversary and this
would become the rider effective date. For purposes of calculating the GMIB
benefit base under these circumstances, we consider the contract value on the
rider effective date to be the initial purchase payment; we disregard all
previous purchase payments, purchase payment credits, transfers and withdrawals
in the GMIB calculations.
INVESTMENT SELECTION UNDER THE GMIB: You may allocate your purchase payments and
purchase payment credits or transfers to any of the subaccounts, the GPAs or the
one-year fixed account. However, we reserve the right to limit the amount you
allocate to subaccounts investing in the Wells Fargo Advantage VT Money Market
Fund to 10% of the total amount in the subaccounts. If we are required to
activate this restriction, and you have more than 10% of your subaccount value
in this fund, we will send you a notice and ask that you reallocate your
contract value so that the 10% limitation is satisfied within 60 days. We will
terminate the GMIB if you have not satisfied the limitation after 60 days.
EXERCISING THE GMIB:
you may only exercise the GMIB within 30 days after any contract anniversary
following the expiration of a ten-year waiting period from the rider effective
date. However, there is an exception if at any time the annuitant experiences
a "contingent event" (disability, terminal illness, confinement to a nursing
home or hospital, or unemployment, see "Charges -- Contingent events" for more
details.)
the annuitant on the date the option is exercised must be between 50 and 86
years old.
you can only take an annuity payout under one of the following annuity payout
plans:
- Plan A -- Life Annuity - no refund
- Plan B -- Life Annuity with ten years certain
- Plan D -- Joint and last survivor life annuity - no refund
you may change the annuitant for the payouts.
If you exercise the GMIB under a contingent event, you can take up to 50% of the
benefit base in cash. You can use the balance of the benefit base (described
below) for annuity payouts calculated using the guaranteed annuity purchase
rates under any one of the payout plans listed above as long as the annuitant is
between 50 and 86 years old on the retirement date.
When you exercise your GMIB, you may select a fixed or variable annuity payout
plan. Fixed annuity payouts are calculated using the annuity purchase rates
based on the "1983 Individual Annuitant Mortality Table A" with 100% Projection
Scale G and the guaranteed annuity rates as stated in Table B of the contract.
Your annuity payouts remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your annuity payouts remain unchanged for the
first year. After the first year, subsequent annuity payouts are variable and
depend on the performance of the subaccounts you select. Variable annuity
payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity payout will be unchanged from the previous annuity payout. If
your subaccount performance is in excess of 5%, your variable annuity payout
will increase from the previous annuity payout. If your subaccount investment
performance is less than 5%, your variable annuity payout will decrease from the
previous annuity payout.
The GMIB benchmarks the contract growth at each anniversary against several
comparison values and sets the GMIB benefit base (described below) equal to the
largest value. The GMIB benefit base, less any applicable premium tax, is the
value we
--------------------------------------------------------------------------------
44 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
apply to the guaranteed annuity purchase rates stated in Table B of the contract
to calculate the minimum annuity payouts you will receive if you exercise the
GMIB. If the GMIB benefit base is greater than the contract value, the GMIB may
provide a higher annuity payout level than is otherwise available. However, the
GMIB uses guaranteed annuity purchase rates which may result in annuity payouts
that are less than those using the annuity purchase rates that we will apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the GMIB may be less than the income the contract otherwise
provides. If the annuity payouts through the standard contract provisions are
more favorable than the payouts available through the GMIB, you will receive the
higher standard payout option. The GMIB does not create contract value or
guarantee the performance of any investment option.
GMIB BENEFIT BASE:
If the GMIB is effective at contract issue, the GMIB benefit base is the
greatest of:
1. total purchase payments and purchase payment credits minus adjusted partial
withdrawals;
2. contract value;
3. the MAV at the last contract anniversary plus any payments and purchase
payment credits since that anniversary minus adjusted partial withdrawals
since that anniversary; or
4. the 5% rising floor.
Keep in mind that the MAV and the 5% rising floor values are limited after age
81.
We reserve the right to exclude from the GMIB benefit base any purchase payments
and purchase payment credits you make in the five years before you exercise the
GMIB. We would do so only if such payments and credits total $50,000 or more or
if they are 25% or more of total contract payments and credits. If we exercise
this right, we:
subtract each payment and purchase payment credit adjusted for market value
from the contract value and the MAV.
subtract each payment and purchase payment credit from the 5% rising floor. We
adjust the payments and purchase payment credits allocated to the GPAs and the
one-year fixed account for market value. We increase payments and purchase
payment credits allocated to the subaccounts by 5% for the number of full
contract years they have been in the contract before we subtract them from the
5% rising floor.
For each payment and purchase payment credit, we calculate the market value
adjustment to the contract value, MAV, the GPAs and the one-year fixed account
value of the 5% rising floor as:
PMT = each purchase payment made in the five years before you exercise the
GMIB.
CVG = current contract value at the time you exercise the GMIB.
ECV = the estimated contract value on the anniversary prior to the payment
in question. We assume that all payments, purchase payment credits
and partial withdrawals occur at the beginning of a contract year.
For each payment and purchase payment credit, we calculate the 5% increase of
payments and purchase payment credits allocated to the subaccounts as:
CY = the full number of contract years the payment and purchase payment
credit have been in the contract.
TERMINATING THE GMIB
You may terminate the rider within 30 days after the first and fifth rider
anniversaries.
You may terminate the rider any time after the tenth rider anniversary.
The rider will terminate on the date:
- you make a full withdrawal from the contract;
- a death benefit is payable; or
- you choose to begin taking annuity payouts under the regular contract
provisions.
The GMIB rider will terminate* 30 days following the contract anniversary
after the annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the GMIB rider before this time, your benefits will continue according to
the annuity payout plan you have selected.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a $2,000
purchase payment credit to your contract. You allocate all your purchase
payments and purchase payment credits to the subaccounts.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 45
There are no additional purchase payments and no partial withdrawals.
Assume the annuitant is male and age 55 at contract issue. For the joint and
last survivor option (annuity payout Plan D), the joint annuitant is female
and age 55 at contract issue.
Taking into account fluctuations in contract value due to market conditions, we
calculate the GMIB benefit base as:
CONTRACT GMIB
ANNIVERSARY CONTRACT VALUE MAV 5% RISING FLOOR BENEFIT BASE
1 $107,000 $107,000 $107,100
2 125,000 125,000 112,455
3 132,000 132,000 118,078
4 150,000 150,000 123,982
5 85,000 150,000 130,181
6 120,000 150,000 136,690
7 138,000 150,000 143,524
8 152,000 152,000 150,700
9 139,000 152,000 158,235
10 126,000 152,000 166,147 $166,147
11 138,000 152,000 174,455 174,455
12 147,000 152,000 183,177 183,177
13 163,000 163,000 192,336 192,336
14 159,000 163,000 201,953 201,953
15 215,000 215,000 212,051 215,000
NOTE: The MAV and 5% rising floor values are limited after age 81. Additionally,
the GMIB benefit base may increase if the contract value increases. However, you
should keep in mind that you are always entitled to annuitize using the contract
value without exercising the GMIB.
If you annuitize the contract within 30 days after a contract anniversary, the
payout under a fixed annuity option (which is the same as the minimum payout for
the first year under a variable annuity option) would be:
MINIMUM GUARANTEED MONTHLY INCOME
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY GMIB LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE BENEFIT BASE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $166,147 (5% rising floor) $ 857.32 $ 834.06 $686.19
15 215,000 (MAV) 1,268.50 1,210.45 982.55
The payouts above are shown at guaranteed annuity rates of 3% as stated in Table
B of the contract. Payouts under the standard provisions of this contract will
be based on our annuity rates in effect at annuitization and are guaranteed to
be greater than or equal to the guaranteed annuity rates stated in Table B of
the contract. The fixed annuity payout available under the standard provisions
of this contract would be at least as great as shown below:
CONTRACT PLAN A - PLAN B - PLAN D - JOINT AND
ANNIVERSARY CONTRACT LIFE ANNUITY -- LIFE ANNUITY WITH LAST SURVIVOR LIFE
AT EXERCISE VALUE NO REFUND TEN YEARS CERTAIN ANNUITY -- NO REFUND
10 $126,000 $ 650.16 $ 632.52 $520.38
15 215,000 1,268.50 1,210.45 982.55
In the above example, at the 15th contract anniversary you would not experience
a benefit from the GMIB as the payout available to you is equal to or less than
the payout available under the standard provisions of the contract.
Remember that after the first year, lifetime income payouts under a variable
annuity payout option will depend on the investment performance of the
subaccounts you select. If your subaccount performance is 5%, your annuity
payout will be unchanged from the previous annuity payout. If your subaccount
performance is in excess of 5%, your variable annuity payout will increase from
the previous annuity payout. If your subaccount investment performance is less
than 5%, your variable annuity payout will decrease from the previous annuity
payout.
THE GMIB FEE: This fee currently costs 0.70% of the GMIB benefit base annually
and it is taken in a lump sum from the contract value on each contract
anniversary at the end of each contract year. If the contract is terminated or
if annuity payouts begin, we will deduct the fee at that time adjusted for the
number of calendar days coverage was in place. We cannot increase
--------------------------------------------------------------------------------
46 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
the GMIB fee after the rider effective date and it does not apply after annuity
payouts begin. We can increase the GMIB fee on new contracts up to a maximum of
0.75%. We calculate the fee as follows:
BB = the GMIB benefit base.
AT = adjusted transfers from the subaccounts to the GPAs and the one-year
fixed account made in the six months before the contract anniversary
calculated as:
PT = the amount transferred from the subaccounts to the GPAs and the one-year
fixed account within six months of the contract anniversary
VAT = variable account floor on the date of (but prior to) the transfer
SVT = value of the subaccounts on the date of (but prior to) the transfer
FAV = the value of the GPAs and the one-year fixed accounts.
The result of AT - FAV will never be greater than zero. This allows us to base
the GMIB fee largely on the subaccounts.
EXAMPLE
You purchase the contract with a payment of $100,000 and we add a purchase
payment credit of $2,000 to your contract. You allocate all of your payment
and the purchase payment credit to the subaccounts.
You make no transfers or partial withdrawals.
CONTRACT GMIB FEE VALUE ON WHICH WE GMIB FEE
ANNIVERSARY CONTRACT VALUE PERCENTAGE BASE THE GMIB FEE CHARGED TO YOU
$ 80,000 0.70% 5% rising floor = $102,000 x 1.05 $749.70
2 150,000 0.70 Contract value = $150,000 1,050
3 102,000 0.70 MAV = $150,000 1,050
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 47
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make payouts
only for the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
--------------------------------------------------------------------------------
48 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 49
taxable as ordinary income to the beneficiary in the year he or she receives the
payments. (See also "Benefits in Case of Death -- If You Die Before the
Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
--------------------------------------------------------------------------------
50 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 51
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVER SOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
--------------------------------------------------------------------------------
52 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 4.00% as well as
service/trail commissions of up to 0.25% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 53
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference
--------------------------------------------------------------------------------
54 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet
site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. In addition
to this prospectus, the SAI and information about the contract, information
incorporated by reference is available on the EDGAR Database on the SEC's
Internet site at (http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 55
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of
period $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.12 $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08
Number of accumulation units outstanding at
end of period (000 omitted) 2,256 2,075 3,153 2,711 1,073 1,203 1,149 1,454 1,720 2,516
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of
period $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81 $1.01
Accumulation unit value at end of period $1.49 $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81
Number of accumulation units outstanding at
end of period (000 omitted) 653 957 8,590 7,188 4,908 3,199 1,284 1,141 861 536
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52 $0.67
Accumulation unit value at end of period $0.71 $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52
Number of accumulation units outstanding at
end of period (000 omitted) 1,928 2,512 3,082 3,503 4,303 4,701 1,109 1,250 172 141
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of
period $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88 $0.96
Accumulation unit value at end of period $1.79 $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 174 280 582 944 1,284 1,320 1,059 1,262 1,212 1,027
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of
period $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87 $1.06
Accumulation unit value at end of period $1.51 $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 141 164 220 278 307 338 394 445 419 366
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.27 $1.25 $1.20 $1.25 $1.20 $1.17 $1.17 $1.17 $1.17 $1.12
Accumulation unit value at end of period $1.27 $1.27 $1.25 $1.20 $1.25 $1.20 $1.17 $1.17 $1.17 $1.17
Number of accumulation units outstanding at
end of period (000 omitted) 561 747 2,143 1,351 1,441 1,522 1,654 2,036 2,508 2,657
-----------------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.72 $0.63 $0.48 $0.74 $0.70 $0.65 $0.63 $0.60 $0.48 $0.69
Accumulation unit value at end of period $0.72 $0.72 $0.63 $0.48 $0.74 $0.70 $0.65 $0.63 $0.60 $0.48
Number of accumulation units outstanding at
end of period (000 omitted) 233 379 404 564 672 620 626 623 735 715
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $1.37 $1.18 $0.88 $1.52 $1.44 $1.28 $1.07 $1.07 $0.87 $0.95
Accumulation unit value at end of period $1.32 $1.37 $1.18 $0.88 $1.52 $1.44 $1.28 $1.07 $1.07 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 76 138 326 606 708 717 525 523 535 305
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $1.66 $1.48 $1.04 $1.41 $1.39 $1.27 $1.26 $1.17 $0.93 $0.91
Accumulation unit value at end of period $1.70 $1.66 $1.48 $1.04 $1.41 $1.39 $1.27 $1.26 $1.17 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 154 191 188 228 462 564 287 337 316 317
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $2.45 $1.93 $1.40 $2.34 $2.06 $1.85 $1.59 $1.29 $0.95 $1.06
Accumulation unit value at end of period $2.15 $2.45 $1.93 $1.40 $2.34 $2.06 $1.85 $1.59 $1.29 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 821 1,216 3,621 4,422 4,006 3,592 3,013 3,064 2,428 1,445
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $2.09 $1.75 $1.49 $2.61 $3.34 $2.81 $2.50 $1.92 $1.43 $1.42
Accumulation unit value at end of period $1.94 $2.09 $1.75 $1.49 $2.61 $3.34 $2.81 $2.50 $1.92 $1.43
Number of accumulation units outstanding at
end of period (000 omitted) 338 361 536 687 913 867 938 992 1,000 1,015
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $2.06 $1.85 $1.38 $1.99 $1.94 $1.66 $1.66 $1.47 $1.13 $1.15
Accumulation unit value at end of period $2.08 $2.06 $1.85 $1.38 $1.99 $1.94 $1.66 $1.66 $1.47 $1.13
Number of accumulation units outstanding at
end of period (000 omitted) 879 1,130 1,534 1,905 2,317 2,299 2,435 2,548 2,063 1,728
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
56 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of
period $2.64 $2.09 $1.64 $2.47 $2.57 $2.22 $2.07 $1.69 $1.30 $1.45
Accumulation unit value at end of period $2.51 $2.64 $2.09 $1.64 $2.47 $2.57 $2.22 $2.07 $1.69 $1.30
Number of accumulation units outstanding at
end of period (000 omitted) 295 375 526 666 590 717 658 516 219 47
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of
period $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71 $1.01
Accumulation unit value at end of period $1.24 $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71
Number of accumulation units outstanding at
end of period (000 omitted) 1,373 1,842 2,467 3,121 3,777 4,295 4,737 5,177 4,918 4,574
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.65 $1.50 $1.21 $1.94 $1.90 $1.63 $1.49 $1.34 $1.08 $1.24
Accumulation unit value at end of period $1.61 $1.65 $1.50 $1.21 $1.94 $1.90 $1.63 $1.49 $1.34 $1.08
Number of accumulation units outstanding at
end of period (000 omitted) 887 1,143 1,645 1,976 2,440 2,476 2,267 2,400 2,050 1,377
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $3.06 $2.48 $1.88 $3.03 $2.97 $2.59 $2.33 $1.87 $1.48 $1.57
Accumulation unit value at end of period $2.83 $3.06 $2.48 $1.88 $3.03 $2.97 $2.59 $2.33 $1.87 $1.48
Number of accumulation units outstanding at
end of period (000 omitted) 332 409 1,518 1,777 2,090 1,873 1,361 1,409 1,449 1,458
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.84 $0.76 $0.63 $1.02 $1.05 $0.94 $0.89 $0.79 $0.62 $0.80
Accumulation unit value at end of period $0.87 $0.84 $0.76 $0.63 $1.02 $1.05 $0.94 $0.89 $0.79 $0.62
Number of accumulation units outstanding at
end of period (000 omitted) 474 695 1,295 1,915 2,395 2,494 2,681 2,371 2,072 2,038
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (11/09/1999)
Accumulation unit value at beginning of
period $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63 $0.84
Accumulation unit value at end of period $0.74 $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63
Number of accumulation units outstanding at
end of period (000 omitted) 753 912 1,557 2,040 2,745 3,214 3,090 3,428 3,393 3,148
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its name
to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of
period $1.09 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,437 1,983 2,664 3,333 4,900 5,506 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of
period $1.04 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67 $0.86
Accumulation unit value at end of period $1.01 $1.04 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67
Number of accumulation units outstanding at
end of period (000 omitted) 447 541 857 1,180 1,240 1,379 1,483 1,582 1,661 1,578
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of
period $2.04 $1.82 $1.38 $2.24 $1.77 $1.37 $1.19 $0.92 $0.69 $0.90
Accumulation unit value at end of period $2.15 $2.04 $1.82 $1.38 $2.24 $1.77 $1.37 $1.19 $0.92 $0.69
Number of accumulation units outstanding at
end of period (000 omitted) 399 496 674 878 964 1,159 1,267 1,336 1,393 1,631
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.62 $1.42 $1.03 $1.75 $1.67 $1.44 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.47 $1.62 $1.42 $1.03 $1.75 $1.67 $1.44 $1.28 $1.09 $0.77
Number of accumulation units outstanding at
end of period (000 omitted) 570 906 1,263 1,733 2,215 2,059 1,904 1,729 788 190
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.66 $1.46 $1.25 $1.48 $1.37 $1.29 $1.28 $1.19 $1.03 $1.00
Accumulation unit value at end of period $1.65 $1.66 $1.46 $1.25 $1.48 $1.37 $1.29 $1.28 $1.19 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 1,054 1,427 8,180 6,743 6,680 3,247 1,889 1,541 1,060 212
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.19 $1.18 $0.95 $1.15 $1.18 $1.16 $1.04 $0.98 $0.84 $1.00
Accumulation unit value at end of period $1.16 $1.19 $1.18 $0.95 $1.15 $1.18 $1.16 $1.04 $0.98 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 52 55 154 203 202 243 213 209 86 52
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of
period $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73 $0.90
Accumulation unit value at end of period $0.97 $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73
Number of accumulation units outstanding at
end of period (000 omitted) 1,597 2,315 2,779 3,548 4,302 4,374 4,450 4,648 4,797 4,994
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of
period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 543 652 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 57
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of
period $1.67 $1.35 $1.00 $1.49 $1.58 $1.33 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.57 $1.67 $1.35 $1.00 $1.49 $1.58 $1.33 $1.28 $1.08 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 193 227 541 613 639 446 296 274 180 28
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.11 $1.00 $0.87 $1.25 $1.17 $1.06 $1.02 $0.95 $0.79 $0.91
Accumulation unit value at end of period $1.17 $1.11 $1.00 $0.87 $1.25 $1.17 $1.06 $1.02 $0.95 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 1,786 2,080 2,506 3,242 5,032 5,760 6,499 7,105 7,439 7,879
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.68 $1.46 $1.28 $2.22 $1.96 $1.62 $1.41 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.45 $1.68 $1.46 $1.28 $2.22 $1.96 $1.62 $1.41 $1.20 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 303 354 290 324 330 342 352 365 253 40
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.16 $1.03 $0.89 $1.43 $1.40 $1.20 $1.15 $1.05 $0.84 $1.06
Accumulation unit value at end of period $1.12 $1.16 $1.03 $0.89 $1.43 $1.40 $1.20 $1.15 $1.05 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 1,237 1,592 2,263 2,018 2,351 2,619 3,000 3,241 3,433 3,711
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.98 $1.68 $1.19 $1.65 $1.50 $1.44 $1.40 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.85 $1.98 $1.68 $1.19 $1.65 $1.50 $1.44 $1.40 $1.33 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 1,095 1,378 317 362 436 448 445 467 323 42
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of
period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 466 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $0.63 $0.50 $0.33 $0.57 $0.51 $0.42 $0.40 $0.36 $0.25 $0.42
Accumulation unit value at end of period $0.59 $0.63 $0.50 $0.33 $0.57 $0.51 $0.42 $0.40 $0.36 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 969 1,163 1,360 1,943 2,408 2,832 2,904 3,073 3,239 3,394
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.71 $1.62 $1.47 $1.45 $1.38 $1.35 $1.34 $1.30 $1.21 $1.14
Accumulation unit value at end of period $1.83 $1.71 $1.62 $1.47 $1.45 $1.38 $1.35 $1.34 $1.30 $1.21
Number of accumulation units outstanding at
end of period (000 omitted) 707 1,181 2,440 2,735 3,664 2,453 1,892 2,017 2,160 2,275
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of
period $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 4,164 3,587 19,621 8,230 5,476 2,192 1,151 399 76 --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit value at end of period $1.52 $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86
Number of accumulation units outstanding at
end of period (000 omitted) 8,456 10,953 63,435 55,414 35,371 27,624 9,764 608 392 325
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67
Accumulation unit value at end of period $0.67 $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51
Number of accumulation units outstanding at
end of period (000 omitted) 7,129 9,784 12,306 14,085 14,409 15,807 17,584 7,616 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90
Accumulation unit value at end of period $1.61 $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83
Number of accumulation units outstanding at
end of period (000 omitted) 1,679 2,244 4,591 5,601 6,703 8,935 4,144 855 325 80
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.25 $1.00 $0.73 $1.21 $1.29 $1.17 $1.14 $0.97 $0.67 $0.82
Accumulation unit value at end of period $1.13 $1.25 $1.00 $0.73 $1.21 $1.29 $1.17 $1.14 $0.97 $0.67
Number of accumulation units outstanding at
end of period (000 omitted) 33 37 48 69 330 434 444 441 399 78
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10
Accumulation unit value at end of period $1.20 $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14
Number of accumulation units outstanding at
end of period (000 omitted) 2,096 2,681 13,727 7,345 6,207 5,084 3,085 1,544 1,019 864
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
58 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC., INITIAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.69 $0.61 $0.46 $0.72 $0.68 $0.63 $0.62 $0.59 $0.48 $0.68
Accumulation unit value at end of period $0.68 $0.69 $0.61 $0.46 $0.72 $0.68 $0.63 $0.62 $0.59 $0.48
Number of accumulation units outstanding at
end of period (000 omitted) 155 226 259 265 305 318 237 244 135 71
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP DYNAMIC CAPITAL APPRECIATION PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $1.31 $1.13 $0.85 $1.47 $1.40 $1.25 $1.05 $1.06 $0.86 $0.95
Accumulation unit value at end of period $1.25 $1.31 $1.13 $0.85 $1.47 $1.40 $1.25 $1.05 $1.06 $0.86
Number of accumulation units outstanding at
end of period (000 omitted) 30 61 67 72 79 90 82 92 19 --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP HIGH INCOME PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $1.59 $1.42 $1.01 $1.37 $1.36 $1.25 $1.24 $1.15 $0.92 $0.91
Accumulation unit value at end of period $1.62 $1.59 $1.42 $1.01 $1.37 $1.36 $1.25 $1.24 $1.15 $0.92
Number of accumulation units outstanding at
end of period (000 omitted) 55 90 102 127 159 157 123 186 155 59
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06
Accumulation unit value at end of period $2.05 $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 1,684 2,096 12,835 18,330 11,091 7,570 3,100 1,208 722 290
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.76 $1.48 $1.27 $2.23 $2.87 $2.42 $2.17 $1.68 $1.26 $1.25
Accumulation unit value at end of period $1.63 $1.76 $1.48 $1.27 $2.23 $2.87 $2.42 $2.17 $1.68 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 212 258 622 854 1,179 527 512 421 292 334
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit value at end of period $1.69 $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 1,164 1,832 2,044 2,501 3,051 2,743 2,554 2,119 1,118 777
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (03/01/2002)
Accumulation unit value at beginning of
period $1.72 $1.37 $1.08 $1.63 $1.70 $1.48 $1.38 $1.14 $0.88 $1.00
Accumulation unit value at end of period $1.63 $1.72 $1.37 $1.08 $1.63 $1.70 $1.48 $1.38 $1.14 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 116 166 194 231 311 300 281 284 75 11
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35 $0.50
Accumulation unit value at end of period $0.59 $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35
Number of accumulation units outstanding at
end of period (000 omitted) 487 738 838 1,058 1,427 1,612 1,719 1,992 1,273 1,008
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01 $1.17
Accumulation unit value at end of period $1.45 $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01
Number of accumulation units outstanding at
end of period (000 omitted) 1,054 1,353 1,660 1,878 2,787 9,197 2,844 3,112 870 324
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit value at end of period $2.68 $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46
Number of accumulation units outstanding at
end of period (000 omitted) 2,277 2,833 10,008 11,967 11,638 9,377 4,128 1,284 550 386
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61 $0.79
Accumulation unit value at end of period $0.82 $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61
Number of accumulation units outstanding at
end of period (000 omitted) 266 322 468 492 587 636 956 816 519 391
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (03/03/2000)
Accumulation unit value at beginning of
period $0.53 $0.47 $0.39 $0.69 $0.63 $0.60 $0.56 $0.54 $0.42 $0.57
Accumulation unit value at end of period $0.48 $0.53 $0.47 $0.39 $0.69 $0.63 $0.60 $0.56 $0.54 $0.42
Number of accumulation units outstanding at
end of period (000 omitted) 189 205 223 331 415 423 483 662 647 503
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its name
to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of
period $1.07 $0.99 $0.79 $1.15 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.05 $1.07 $0.99 $0.79 $1.15 $1.08 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 169 269 330 358 424 575 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit value at beginning of
period $0.98 $0.90 $0.72 $1.09 $1.01 $0.91 $0.86 $0.78 $0.65 $0.84
Accumulation unit value at end of period $0.94 $0.98 $0.90 $0.72 $1.09 $1.01 $0.91 $0.86 $0.78 $0.65
Number of accumulation units outstanding at
end of period (000 omitted) 199 294 363 384 402 403 451 539 354 166
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 59
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (03/03/2000)
Accumulation unit value at beginning of
period $1.37 $1.22 $0.93 $1.53 $1.21 $0.94 $0.82 $0.64 $0.48 $0.63
Accumulation unit value at end of period $1.44 $1.37 $1.22 $0.93 $1.53 $1.21 $0.94 $0.82 $0.64 $0.48
Number of accumulation units outstanding at
end of period (000 omitted) 161 181 217 283 580 675 770 912 684 721
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 $1.00
Accumulation unit value at end of period $1.40 $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77
Number of accumulation units outstanding at
end of period (000 omitted) 320 469 582 612 831 683 680 562 136 --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 $1.00
Accumulation unit value at end of period $1.58 $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 5,377 6,880 57,951 47,806 44,474 21,466 9,445 2,076 137 5
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 $1.00
Accumulation unit value at end of period $1.11 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 7 23 97 123 136 162 175 177 188 73
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47 $0.58
Accumulation unit value at end of period $0.60 $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47
Number of accumulation units outstanding at
end of period (000 omitted) 526 877 955 1,134 1,511 1,624 1,716 1,786 1,760 1,350
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of
period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 84 125 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of
period $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.50 $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 4,522 5,828 9,670 11,364 11,900 10,097 9,125 1,935 72 20
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.05 $0.95 $0.83 $1.20 $1.13 $1.03 $0.99 $0.92 $0.77 $0.90
Accumulation unit value at end of period $1.10 $1.05 $0.95 $0.83 $1.20 $1.13 $1.03 $0.99 $0.92 $0.77
Number of accumulation units outstanding at
end of period (000 omitted) 566 822 941 1,078 1,784 2,517 2,665 2,740 2,853 2,230
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.39 $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 1,129 1,408 1,909 1,823 1,770 2,013 1,419 443 326 53
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.10 $0.98 $0.86 $1.37 $1.36 $1.17 $1.12 $1.03 $0.83 $1.05
Accumulation unit value at end of period $1.06 $1.10 $0.98 $0.86 $1.37 $1.36 $1.17 $1.12 $1.03 $0.83
Number of accumulation units outstanding at
end of period (000 omitted) 1,066 1,342 4,297 1,427 1,795 1,983 2,255 1,615 1,429 993
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96 $1.00
Accumulation unit value at end of period $1.77 $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 3,097 4,103 2,160 2,719 3,312 3,653 2,474 717 169 45
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of
period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 395 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25 $0.41
Accumulation unit value at end of period $0.56 $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 1,928 2,412 611 755 924 1,086 1,314 1,371 1,396 976
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18 $1.12
Accumulation unit value at end of period $1.72 $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 3,996 5,466 11,055 11,176 16,465 11,634 3,551 990 627 579
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
60 WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE BUILDER VARIABLE ANNUITY -- PROSPECTUS 61
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
44224 V (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
PINNACLE VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products Trust (FTVIPT) - Class 2
Invesco Variable Insurance Funds
MFS(R) Variable Insurance Trust(SM)
Putnam Variable Trust - Class IB Shares
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
State variations are covered in a special contract form used in that state. This
prospectus provides a general description of the contract. Your actual contract
and any riders or endorsements are the controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the Fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE ONE-YEAR FIXED ACCOUNT................... 18
BUYING YOUR CONTRACT......................... 18
CHARGES...................................... 20
VALUING YOUR INVESTMENT...................... 23
MAKING THE MOST OF YOUR CONTRACT............. 25
WITHDRAWALS.................................. 30
TSA -- SPECIAL PROVISIONS.................... 30
CHANGING OWNERSHIP........................... 31
BENEFITS IN CASE OF DEATH.................... 31
OPTIONAL BENEFITS............................ 34
THE ANNUITY PAYOUT PERIOD.................... 38
TAXES........................................ 39
VOTING RIGHTS................................ 43
SUBSTITUTION OF INVESTMENTS.................. 43
ABOUT THE SERVICE PROVIDERS.................. 44
ADDITIONAL INFORMATION....................... 45
APPENDIX: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)................................ 46
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION..................... 50
--------------------------------------------------------------------------------
2 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax). It may not be advantageous for you to
purchase this contract as a replacement for, or in addition to, an existing
annuity contract or life insurance policy.
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There may be restrictions on the timing of transfers from this
account. (See "The One-Year Fixed Account")
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Some states have
time limitations for making additional payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an interest sweep strategy. You may establish automated transfers
among the accounts. GPAs and one-year fixed account transfers are subject to
special restrictions. (See "Making the Most of Your Contract -- Transferring
Among Accounts")
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 7
4 6
5 5
6 4
7 2
Thereafter 0
Withdrawal charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
The death benefit you select determines the fees you pay.
ROP DEATH BENEFIT MAV DEATH BENEFIT
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE 0.15% 0.15%
MORTALITY AND EXPENSE RISK FEE 1.00 1.10
TOTAL ANNUAL VARIABLE ACCOUNT EXPENSES 1.15% 1.25%
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.60% 1.12%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Balanced Fund (Class 3) 0.64% 0.13% 0.16% --% 0.93%(1)
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(1)
(Class 3)
Fidelity(R) VIP Balanced Portfolio Service Class 0.41 0.10 0.16 0.02 0.69
Fidelity(R) VIP Growth & Income Portfolio Service Class 0.46 0.10 0.13 -- 0.69
Fidelity(R) VIP Growth Portfolio Service Class 0.56 0.10 0.11 -- 0.77
Fidelity(R) VIP Mid Cap Portfolio Service Class 0.56 0.10 0.10 -- 0.76
FTVIPT Franklin Small Cap Value Securities Fund - Class 2 0.50 0.25 0.16 0.01 0.92
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(2)
Shares
MFS(R) Investors Trust Series - Initial Class 0.75 -- 0.07 -- 0.82
MFS(R) New Discovery Series - Initial Class 0.90 -- 0.08 -- 0.98
MFS(R) Total Return Series - Initial Class 0.75 -- 0.06 -- 0.81(3)
MFS(R) Utilities Series - Initial Class 0.73 -- 0.08 -- 0.81
Putnam VT Growth and Income Fund - Class IB Shares 0.48 0.25 0.15 -- 0.88
Putnam VT Income Fund - Class IB Shares 0.40 0.25 0.18 -- 0.83
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to
--------------------------------------------------------------------------------
8 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
applicable exclusions, will not exceed the annual rate of 0.79% for
Columbia Variable Portfolio - Balanced Fund (Class 3), 0.585% for Columbia
Variable Portfolio - Cash Management Fund (Class 3), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3) and 1.055% for Columbia
Variable Portfolio - Select Smaller-Cap Value Fund (Class 3).
(2) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(3) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 0.78%.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. This example assumes the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. It assumes that you selected the MAV death benefit and the optional
Benefit Protector Plus. Although your actual costs may be lower, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,114 $1,658 $2,124 $3,391 $314 $958 $1,624 $3,391
MINIMUM EXPENSES. This example assumes the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. It assumes that you selected the optional ROP death benefit and you do
not select any optional benefits. Although your actual costs may be higher,
based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,009 $1,344 $1,601 $2,350 $209 $644 $1,101 $2,350
(1) In these examples, the contract administrative charge is $30.
--------------------------------------------------------------------------------
10 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 11
expenses because it must sell or buy securities more frequently than it
otherwise might in the absence of asset allocation program rebalancing or
reallocations. Because asset allocation programs include periodic rebalancing
and may also include reallocation, these effects may occur under any asset
allocation program we offer or under asset allocation programs used in
conjunction with the contracts and plans of other eligible purchasers of the
funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
12 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Bala- through a combination of capital growth and Investment Advisers, LLC
nced Fund (Class current income.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks income and capital growth consistent Fidelity Management &
Balanced with reasonable risk. Invests approximately Research Company (FMR)
Portfolio Service 60% of assets in stocks and other equity is the fund's manager.
Class securities and the remainder in bonds and Fidelity Investments
other debt securities, including lower- Money Management, Inc.
quality debt securities, when its outlook (FIMM), FMR Co., Inc.
is neutral. Invests at least 25% of total (FMRC), and other
assets in fixed-income senior securities investment advisers
(including debt securities and preferred serve as sub-advisers
stock). The fund invests in domestic and for the fund.
foreign issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks high total return through a Fidelity Management &
Growth & Income combination of current income and capital Research Company (FMR)
Portfolio Service appreciation. Normally invests a majority is the fund's manager.
Class of assets in common stocks with a focus on FMR Co., Inc. (FMRC) and
those that pay current dividends and show other investment
potential for capital appreciation. Invests advisers serve as sub-
in domestic and foreign issuers. The Fund advisers for the fund.
invests in either "growth" stocks or
"value" stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term total return. The fund Franklin Advisory
Small Cap Value normally invests at least 80% of its net Services, LLC
Securities assets in investments of small
Fund - Class 2 capitalization companies.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Trust Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Initial
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Initial Management
Class
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Income Seeks high current income consistent with Putnam Investment
Fund - Class IB what Putnam Investment Management, LLC Management, LLC
Shares (Putnam Management) believes to be prudent
risk.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 15
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The required
minimum investment in each GPA is $1,000. These accounts are not available in
all states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine these
future rates based on various factors including, but not limited to, the
interest rate environment, returns we earn on investments in the nonunitized
separate account we have established for the GPAs, the rates currently in effect
for new and existing RiverSource Life annuities, product design, competition and
RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the guarantee period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window, you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
--------------------------------------------------------------------------------
16 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 17
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses.
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
the one-year fixed account, GPAs and/or subaccounts in which you wanted to
invest(1);
how you wanted to make purchase payments;
the date you wanted to start receiving annuity payouts (the retirement date);
a death benefit option(2);
the optional Benefit Protector Death Benefit Rider(3);
the optional Benefit Protector Plus Death Benefit Rider(3); and
a beneficiary.
(1) Some states restrict the amount you can allocate to the GPAs and the one-
year fixed account. GPAs may not be available in some states.
(2) The MAV death benefit is available if you and the annuitant are 78 or
younger at contract issue. If either you or the annuitant are 79 or older at
contract issue the ROP death benefit will apply.
(3) Available if you and the annuitant are 75 or younger at contract issue.
Riders may not be available in all states.
The contract provides for allocation of purchase payments to the subaccounts to
the GPAs and/or to the one-year fixed account in even 1% increments subject to
the $1,000 minimum required investment for the GPAs.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive
--------------------------------------------------------------------------------
18 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
an additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date. In Massachusetts, you may make
additional purchase payments for ten years only.
THE RETIREMENT DATE
Annuity payouts are to begin on the retirement date. Your selected date can
align with your actual retirement from a job, or it can be a different future
date, depending on your needs and goals and on certain restrictions. You also
can change the retirement date, provided you send us written instructions at
least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday (or the tenth contract
anniversary, if later), or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payments
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85
$100,000 for issue ages 86 to 90
* These limits apply in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase maximum limits. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 19
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees and they total either 1.00% or 1.10% of their
average daily net assets on an annual basis depending on the death benefit
option that applies to your contract. If you select the ROP death benefit, the
mortality and expense risk fee is 1.00%. If you select the MAV death benefit,
the mortality and expense risk fee is 1.10%. These fees cover the mortality and
expense risk that we assume. These fees do not apply to the GPAs or the one-year
fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than eight years before the date of withdrawal. In addition, amounts
withdrawn from a
--------------------------------------------------------------------------------
20 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
GPA more than 30 days before the end of the applicable Guarantee Period will be
subject to a MVA. (See "The Fixed Accounts -- Market Value Adjustment (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
2%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no withdrawal charge as to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal charge. Amounts withdrawn in excess of the Total Free Amount may be
subject to a withdrawal charge as described below. The Total Free Amount is
defined as the maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value; and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment to be the prior anniversary's contract
value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of these payments by the
applicable withdrawal charge percentage, and then totaling the withdrawal
charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 21
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 7
4 6
5 5
6 4
7 2
Thereafter 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
We receive these payments:
- $10,000 initial;
- $8,000 on the sixth contract anniversary;
- $6,000 on the eighth contract anniversary; and
The owner withdraws the contract for its total withdrawal value of $38,101
during the eleventh contract year and does not make any other withdrawals
during that contract year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
400 $8,000 purchase payment is in its fifth year from receipt, withdrawn with a
5% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt, withdrawn with a
7% withdrawal charge.
----
$820
WAIVER OF WITHDRAWAL CHARGE
We do not assess a withdrawal charge for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent they exceed contract earnings;
--------------------------------------------------------------------------------
22 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
death benefits;
withdrawals you make under your contract's "Waiver of Withdrawal Charges"
provision. To the extent permitted by state law, your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
We will waive withdrawal charges that we normally assess upon full or partial
withdrawal if you provide proof satisfactory to us that, as of the date you
request the withdrawal, you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. (See your contract for
additional conditions and restrictions on this waiver); and
to the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 23
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
24 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
TIERED DOLLAR-COST AVERAGING (TIERED DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Tiered DCA program. There is no charge for Tiered DCA. Under the Tiered
DCA program, you can allocate purchase payments to one of two special Tiered DCA
accounts. We determine which Tiered DCA account you are eligible for as follows:
IF YOUR NET CONTRACT VALUE(1) IS ... WE ALLOCATE YOUR NEW PURCHASE PAYMENT TO:
$10,000--$49,999 Tier 1 DCA account
$50,000 or more Tier 2 DCA account(2)
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
(2) You cannot allocate your new purchase payments to a Tier 1 DCA account if
you are eligible to participate in a Tier 2 DCA account.
You may only allocate a new purchase payment of at least $1,000 to the Tiered
DCA account for which you are eligible. You cannot transfer existing contract
values into the Tiered DCA account. Each Tiered DCA account lasts for either six
months or twelve months from the time we receive your first purchase payment. We
make monthly transfers of your total Tiered DCA account value into the GPAs, the
one-year fixed account and/or subaccounts you select over the six-month or
twelve-month period. If you elect to transfer into a GPA, you must meet the
$1,000 minimum required investment limitation for each transfer.
We reserve the right to credit a lower interest rate to each Tiered DCA account
if you select the GPAs or the one-year fixed account as part of your Tiered DCA
transfers. We credit higher rates on the Tier 2 DCA account than on the Tier 1
DCA
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 25
account. We will change the interest rate on each Tiered DCA account from time
to time at our discretion. From time to time, we may credit interest to the
Tiered DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment, that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes. We credit each Tiered DCA account with the
current guaranteed annual rate that is in effect on the date we receive your
purchase payment. However, we credit this annual rate over the six-month or
twelve-month period on the balance remaining in your Tiered DCA account.
Therefore, the net effective interest rate you receive is less than the stated
annual rate. We do not credit this interest after we transfer the value out of
the Tiered DCA account into the accounts you selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. This
means that all purchase payments may not be in the Tiered DCA account at the
beginning of the six-month or twelve-month period. Therefore, you may receive
less total interest than you would have if all your purchase payments were in
the Tiered DCA account from the beginning. If we receive any of your multiple-
source payments after the six-month or twelve-month period ends, you can either
allocate those payments to a new Tiered DCA account (if available) or to any
other accounts available under your contract.
You cannot participate in the Tiered DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Tiered DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Tiered DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Tiered DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Tiered DCA account balance. We will transfer the remaining balance
from your Tiered DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Tiered DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Tiered DCA program at any time. Any
modifications will not affect any purchase payments that are already in a Tiered
DCA account.
The Tiered DCA program does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Tiered
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Tiered DCA program to match. We will restart the rebalancing period you selected
as of the date we record your change. You also can ask us in writing to stop
rebalancing your contract value. You must allow 30 days for us to change any
instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
--------------------------------------------------------------------------------
26 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. Until further notice, however, we have removed this
restriction, and you may transfer contract values from the one-year fixed
account to the subaccounts at any time. We will inform you at least 30 days in
advance of the day we intend to reimpose this restriction.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the
subaccounts or the GPAs will be effective on the valuation date we receive it.
Once annuity payouts begin, you may not make transfers to or from the one-year
fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 27
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
28 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your subaccounts, GPAs or the one-year fixed accounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. Until further notice, however, we
have removed this restriction, and you may transfer contract values from the
one-year fixed account to the subaccounts at any time. We will inform you at
least 30 days in advance of the day we intend to reimpose this restriction.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 29
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Plan E. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
--------------------------------------------------------------------------------
30 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. The
Benefit Protector Plus Death Benefit rider will terminate upon transfer of
ownership. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are two death benefit options under this contract: Return of Purchase
Payments (ROP) death benefit and Maximum Anniversary Value (MAV) death benefit.
If either you or the annuitant are 79 or older at contract issue, ROP death
benefit will apply. If both you and the annuitant are 78 or younger at contract
issue, you can elect either ROP death benefit or MAV death benefit on your
application. Once you elect an option, you cannot change it. We show the option
that applies in your contract. The death benefit option that applies determines
the mortality and expense risk fee that is assessed against the subaccounts.
(See "Charges -- Mortality and Expense Risk Fee.")
Under either option, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you selected when you purchased the contract. If a
contract has more than one person as the owner, we will pay benefits upon the
first to die of any owner or the annuitant.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 31
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values, minus any applicable rider changes:
1. contract value; or
2. total purchase payments minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR ROP DEATH BENEFIT OR MAV DEATH BENEFIT = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract for $25,000.
On the first contract anniversary, the contract value grows to $29,000.
During the second contract year, the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract Value at death: $20,500.00
----------
Purchase payment minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus the adjusted partial withdrawal calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATER OF THESE TWO VALUES:
$23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 78 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation. If you
or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greatest of these three values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments applied to the contract since that anniversary minus
adjusted partial withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary minus adjusted partial withdrawals since that
anniversary) to the current contract value and we reset the MAV to the higher
value. We stop resetting the MAV after you or the annuitant reach 81. However,
we continue to add subsequent purchase payments and subtract adjusted partial
withdrawals from the MAV.
EXAMPLE
You purchase the contract for $25,000.
On the first contract anniversary, the contract value grows to $29,000.
--------------------------------------------------------------------------------
32 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
During the second contract year, the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
WE CALCULATE THE MAV DEATH BENEFIT AS FOLLOWS:
Contract Value at death: $20,500.00
----------
Purchase payment minus adjusted partial withdrawals: $23,295.45
----------
The MAV immediately preceding the date of death plus any payments applied to the
contract since that anniversary minus adjusted partial withdrawals:
MAV on the prior anniversary: $29,000.00
plus purchase payments applied to the contract the prior anniversary: +0.00
minus adjusted partial withdrawals taken since that anniversary,
calculated as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$27,022.73
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Benefit Protector Plus rider, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payments begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Benefit Protector Plus rider, if selected, will terminate.
Continuance of the Benefit Protector rider is optional. (See "Optional
Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 33
beneficiary does not elect a five year payout, or if your death occurs after
attaining age 70 1/2, we will pay the beneficiary in a single sum unless the
beneficiary elects to receive payouts under any payout plan available under
this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select MAV death benefit.
--------------------------------------------------------------------------------
34 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The
death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death (MAV
death benefit minus payments not previously withdrawn): 0.40 x ($110,000 -
$100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death): 0.40 x ($110,000
- $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7% withdrawal
charge. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to an 7% withdrawal charge because your payment is two years old, so we
will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract
value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate
purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract earnings). The death
benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death): 0.40 x ($57,619 -
$55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the death benefit during the third contract year. The reduction in
contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector value. The death benefit
equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes.
The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings at death (MAV
death benefit minus payments not previously withdrawn): 0.40 x ($250,000 -
$105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 35
payments not previously withdrawn" used in calculating earnings at death. Your
spouse also has the option of discontinuing the Benefit Protector Death Benefit
Rider within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Be sure to discuss with your
sales representative whether or not the Benefit Protector Plus is appropriate
for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum
distributions. Be sure to discuss with your investment professional and tax
advisor whether or not the Benefit Protector Plus is appropriate for your
situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death") plus:
PERCENTAGE IF YOU AND THE ANNUITANT ARE UNDER PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . 70 OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, or $105,000.
You have not reached the first contract anniversary so the Benefit Protector
Plus does not provide any additional benefit at this time.
--------------------------------------------------------------------------------
36 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV death benefit minus payments not previously withdrawn): 0.40 x ($110,000 -
$100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal, including the applicable 7% withdrawal charge, of
$50,000. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to an 7% withdrawal charge because your payment is two years old, so we
will withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your contract
value. Altogether, we will withdraw $50,000 and pay you $47,235. We calculate
purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract earnings). The death
benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the death benefit paid during the third contract year. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum of
20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector Plus value. The death
benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 37
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains
constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV death benefit minus payments not previously withdrawn): 0.40 x ($250,000 -
$105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: for special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
--------------------------------------------------------------------------------
38 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E: PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific
payout period of ten to 30 years that you elect. We will make payouts only for
the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 39
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
--------------------------------------------------------------------------------
40 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 41
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
--------------------------------------------------------------------------------
42 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 43
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 6.00% as well as
service/trail commissions of up to 0.75% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
--------------------------------------------------------------------------------
44 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 45
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. The date in which operations commenced in each subaccount is
noted in parentheses. We have not provided this information for subaccounts that
were not available under your contract as of Dec. 31, 2011.
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.13 $1.01 $0.82 $1.19 $1.18 $1.05 $1.02 $0.94 $0.79 $0.92
Accumulation unit value at end of period $1.14 $1.13 $1.01 $0.82 $1.19 $1.18 $1.05 $1.02 $0.94 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 26 26 84 85 85 121 121 122 122 135
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.13 $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 734 815 827 835 334 460 205 64 72 161
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.51 $1.41 $1.25 $1.35 $1.30 $1.26 $1.24 $1.20 $1.17 $1.12
Accumulation unit value at end of period $1.59 $1.51 $1.41 $1.25 $1.35 $1.30 $1.26 $1.24 $1.20 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 507 618 1,984 2,091 2,204 1,771 120 127 31 32
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81 $1.01
Accumulation unit value at end of period $1.50 $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 3,304 3,550 4,693 4,712 4,137 4,535 2,962 25 25 25
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.09 $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,775 2,312 2,486 2,481 2,441 2,749 3,138 1,827 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.74 $1.54 $1.01 $1.37 $1.36 $1.24 $1.21 $1.10 $0.89 $0.96
Accumulation unit value at end of period $1.81 $1.74 $1.54 $1.01 $1.37 $1.36 $1.24 $1.21 $1.10 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 422 479 545 699 822 930 672 157 81 96
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.69 $1.35 $0.98 $1.61 $1.70 $1.54 $1.49 $1.27 $0.87 $1.06
Accumulation unit value at end of period $1.53 $1.69 $1.35 $0.98 $1.61 $1.70 $1.54 $1.49 $1.27 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 15 15 16 16 16 19 19 20 27 32
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.32 $1.13 $0.83 $1.27 $1.18 $1.07 $1.02 $0.98 $0.84 $0.93
Accumulation unit value at end of period $1.25 $1.32 $1.13 $0.83 $1.27 $1.18 $1.07 $1.02 $0.98 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 4 4 18 41 43 46 50 55 65 68
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.00 $0.88 $0.70 $1.22 $1.10 $0.98 $0.93 $0.89 $0.72 $0.88
Accumulation unit value at end of period $1.00 $1.00 $0.88 $0.70 $1.22 $1.10 $0.98 $0.93 $0.89 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 86 92 135 116 228 248 198 181 157 145
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $0.86 $0.70 $0.55 $1.06 $0.85 $0.80 $0.77 $0.75 $0.57 $0.83
Accumulation unit value at end of period $0.85 $0.86 $0.70 $0.55 $1.06 $0.85 $0.80 $0.77 $0.75 $0.57
Number of accumulation units outstanding at end
of period (000 omitted) 113 110 103 94 114 99 117 108 191 159
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $3.67 $2.89 $2.09 $3.49 $3.06 $2.74 $2.35 $1.90 $1.39 $1.56
Accumulation unit value at end of period $3.24 $3.67 $2.89 $2.09 $3.49 $3.06 $2.74 $2.35 $1.90 $1.39
Number of accumulation units outstanding at end
of period (000 omitted) 73 90 120 132 170 211 226 250 268 298
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $2.68 $2.11 $1.65 $2.50 $2.59 $2.24 $2.08 $1.70 $1.30 $1.45
Accumulation unit value at end of period $2.55 $2.68 $2.11 $1.65 $2.50 $2.59 $2.24 $2.08 $1.70 $1.30
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.33 $1.05 $0.74 $1.31 $1.19 $1.11 $1.07 $0.97 $0.71 $1.01
Accumulation unit value at end of period $1.25 $1.33 $1.05 $0.74 $1.31 $1.19 $1.11 $1.07 $0.97 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 126 137 178 256 345 421 465 481 495 546
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
46 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.64 $1.49 $1.20 $1.92 $1.88 $1.61 $1.47 $1.32 $1.07 $1.22
Accumulation unit value at end of period $1.60 $1.64 $1.49 $1.20 $1.92 $1.88 $1.61 $1.47 $1.32 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) 334 421 439 498 532 713 655 587 281 285
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.42 $1.33 $0.98 $1.66 $1.46 $1.21 $1.11 $0.95 $0.73 $0.90
Accumulation unit value at end of period $1.26 $1.42 $1.33 $0.98 $1.66 $1.46 $1.21 $1.11 $0.95 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 38 39 67 117 100 102 122 97 102 89
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (11/11/1999)
Accumulation unit value at beginning of period $0.83 $0.73 $0.61 $1.07 $0.96 $0.92 $0.85 $0.81 $0.63 $0.84
Accumulation unit value at end of period $0.75 $0.83 $0.73 $0.61 $1.07 $0.96 $0.92 $0.85 $0.81 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 81 90 141 143 156 173 129 140 150 131
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.10 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.10 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 75 108 149 170 220 254 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.05 $0.96 $0.77 $1.16 $1.06 $0.95 $0.90 $0.81 $0.67 $0.86
Accumulation unit value at end of period $1.02 $1.05 $0.96 $0.77 $1.16 $1.06 $0.95 $0.90 $0.81 $0.67
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- 2 2 2 2 2
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - INITIAL CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.88 $1.40 $0.86 $1.44 $1.42 $1.27 $1.22 $1.16 $0.88 $1.30
Accumulation unit value at end of period $1.67 $1.88 $1.40 $0.86 $1.44 $1.42 $1.27 $1.22 $1.16 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 10 11 13 16 16 19 27 26 30 27
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - INITIAL CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.52 $1.40 $1.20 $1.56 $1.51 $1.37 $1.35 $1.22 $1.06 $1.14
Accumulation unit value at end of period $1.53 $1.52 $1.40 $1.20 $1.56 $1.51 $1.37 $1.35 $1.22 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 29 29 33 48 47 47 52 51 46 45
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (11/11/1999)
Accumulation unit value at beginning of period $2.06 $1.83 $1.39 $2.26 $1.79 $1.38 $1.19 $0.93 $0.69 $0.90
Accumulation unit value at end of period $2.18 $2.06 $1.83 $1.39 $2.26 $1.79 $1.38 $1.19 $0.93 $0.69
Number of accumulation units outstanding at end
of period (000 omitted) 25 25 28 31 31 33 34 35 34 36
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (11/11/1999)
Accumulation unit value at beginning of period $1.03 $0.91 $0.71 $1.17 $1.26 $1.10 $1.06 $0.96 $0.77 $0.96
Accumulation unit value at end of period $0.97 $1.03 $0.91 $0.71 $1.17 $1.26 $1.10 $1.06 $0.96 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 73 89 166 196 221 242 304 323 363 405
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND - CLASS IB SHARES (11/11/1999)
Accumulation unit value at beginning of period $1.64 $1.51 $1.04 $1.39 $1.34 $1.29 $1.28 $1.24 $1.20 $1.12
Accumulation unit value at end of period $1.71 $1.64 $1.51 $1.04 $1.39 $1.34 $1.29 $1.28 $1.24 $1.20
Number of accumulation units outstanding at end
of period (000 omitted) 19 19 20 22 16 15 15 15 28 29
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (11/11/1999)
Accumulation unit value at beginning of period $1.19 $1.10 $0.89 $1.61 $1.50 $1.19 $1.07 $0.93 $0.73 $0.90
Accumulation unit value at end of period $0.98 $1.19 $1.10 $0.89 $1.61 $1.50 $1.19 $1.07 $0.93 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 55 56 59 69 101 103 122 127 179 219
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 78 91 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.11 $1.00 $0.82 $1.18 $1.17 $1.04 $1.01 $0.94 $0.79 $0.92
Accumulation unit value at end of period $1.13 $1.11 $1.00 $0.82 $1.18 $1.17 $1.04 $1.01 $0.94 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 84 85 114 218 292 275 210 176 177 179
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 47
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.12 $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 2,256 2,075 3,153 2,711 1,073 1,203 1,149 1,454 1,720 2,516
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.50 $1.40 $1.24 $1.34 $1.29 $1.25 $1.24 $1.20 $1.16 $1.11
Accumulation unit value at end of period $1.58 $1.50 $1.40 $1.24 $1.34 $1.29 $1.25 $1.24 $1.20 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) 453 549 9,460 7,975 7,765 4,332 1,045 999 593 179
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81 $1.01
Accumulation unit value at end of period $1.49 $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 653 957 8,590 7,188 4,908 3,199 1,284 1,141 861 536
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52 $0.67
Accumulation unit value at end of period $0.71 $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 1,928 2,512 3,082 3,503 4,303 4,701 1,109 1,250 172 141
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88 $0.96
Accumulation unit value at end of period $1.79 $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 174 280 582 944 1,284 1,320 1,059 1,262 1,212 1,027
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87 $1.06
Accumulation unit value at end of period $1.51 $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 141 164 220 278 307 338 394 445 419 366
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $1.30 $1.12 $0.82 $1.26 $1.17 $1.06 $1.01 $0.97 $0.84 $0.93
Accumulation unit value at end of period $1.24 $1.30 $1.12 $0.82 $1.26 $1.17 $1.06 $1.01 $0.97 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 172 183 216 342 435 452 468 481 526 511
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $0.99 $0.87 $0.69 $1.21 $1.09 $0.98 $0.92 $0.88 $0.72 $0.88
Accumulation unit value at end of period $0.99 $0.99 $0.87 $0.69 $1.21 $1.09 $0.98 $0.92 $0.88 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 117 145 191 286 380 396 386 441 436 435
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $0.85 $0.69 $0.55 $1.05 $0.84 $0.80 $0.76 $0.75 $0.57 $0.83
Accumulation unit value at end of period $0.84 $0.85 $0.69 $0.55 $1.05 $0.84 $0.80 $0.76 $0.75 $0.57
Number of accumulation units outstanding at end
of period (000 omitted) 26 31 41 53 73 144 164 173 195 208
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $3.63 $2.86 $2.07 $3.46 $3.03 $2.73 $2.34 $1.90 $1.39 $1.56
Accumulation unit value at end of period $3.20 $3.63 $2.86 $2.07 $3.46 $3.03 $2.73 $2.34 $1.90 $1.39
Number of accumulation units outstanding at end
of period (000 omitted) 438 578 766 1,075 1,633 1,627 1,723 1,897 1,802 1,810
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $2.64 $2.09 $1.64 $2.47 $2.57 $2.22 $2.07 $1.69 $1.30 $1.45
Accumulation unit value at end of period $2.51 $2.64 $2.09 $1.64 $2.47 $2.57 $2.22 $2.07 $1.69 $1.30
Number of accumulation units outstanding at end
of period (000 omitted) 295 375 526 666 590 717 658 516 219 47
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71 $1.01
Accumulation unit value at end of period $1.24 $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 1,373 1,842 2,467 3,121 3,777 4,295 4,737 5,177 4,918 4,574
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.62 $1.48 $1.19 $1.91 $1.87 $1.60 $1.46 $1.32 $1.06 $1.22
Accumulation unit value at end of period $1.58 $1.62 $1.48 $1.19 $1.91 $1.87 $1.60 $1.46 $1.32 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 1,695 2,272 2,966 3,954 5,507 6,011 5,328 5,621 4,198 2,393
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.41 $1.31 $0.97 $1.65 $1.45 $1.21 $1.11 $0.95 $0.73 $0.90
Accumulation unit value at end of period $1.24 $1.41 $1.31 $0.97 $1.65 $1.45 $1.21 $1.11 $0.95 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 147 172 183 240 311 368 420 400 371 296
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
48 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (11/09/1999)
Accumulation unit value at beginning of period $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63 $0.84
Accumulation unit value at end of period $0.74 $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 753 912 1,557 2,040 2,745 3,214 3,090 3,428 3,393 3,148
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.09 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,437 1,983 2,664 3,333 4,900 5,506 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of period $1.04 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67 $0.86
Accumulation unit value at end of period $1.01 $1.04 $0.95 $0.76 $1.15 $1.05 $0.94 $0.89 $0.81 $0.67
Number of accumulation units outstanding at end
of period (000 omitted) 447 541 857 1,180 1,240 1,379 1,483 1,582 1,661 1,578
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of period $1.86 $1.38 $0.86 $1.43 $1.41 $1.26 $1.22 $1.16 $0.88 $1.30
Accumulation unit value at end of period $1.65 $1.86 $1.38 $0.86 $1.43 $1.41 $1.26 $1.22 $1.16 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 1 1 1 12 21 22 33 31 32 32
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of period $1.51 $1.39 $1.19 $1.55 $1.50 $1.36 $1.34 $1.22 $1.06 $1.13
Accumulation unit value at end of period $1.51 $1.51 $1.39 $1.19 $1.55 $1.50 $1.36 $1.34 $1.22 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 106 113 100 270 247 117 100 88 89 74
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - INITIAL CLASS (11/09/1999)
Accumulation unit value at beginning of period $2.04 $1.82 $1.38 $2.24 $1.77 $1.37 $1.19 $0.92 $0.69 $0.90
Accumulation unit value at end of period $2.15 $2.04 $1.82 $1.38 $2.24 $1.77 $1.37 $1.19 $0.92 $0.69
Number of accumulation units outstanding at end
of period (000 omitted) 399 496 674 878 964 1,159 1,267 1,336 1,393 1,631
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of period $1.02 $0.90 $0.70 $1.16 $1.25 $1.09 $1.05 $0.96 $0.76 $0.95
Accumulation unit value at end of period $0.96 $1.02 $0.90 $0.70 $1.16 $1.25 $1.09 $1.05 $0.96 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 340 400 600 892 1,305 1,443 1,621 1,596 1,635 1,583
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of period $1.63 $1.50 $1.04 $1.38 $1.33 $1.28 $1.27 $1.23 $1.19 $1.12
Accumulation unit value at end of period $1.69 $1.63 $1.50 $1.04 $1.38 $1.33 $1.28 $1.27 $1.23 $1.19
Number of accumulation units outstanding at end
of period (000 omitted) 4 5 14 16 20 23 28 34 31 79
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of period $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73 $0.90
Accumulation unit value at end of period $0.97 $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 1,597 2,315 2,779 3,548 4,302 4,374 4,450 4,648 4,797 4,994
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 543 652 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS 49
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
50 RIVERSOURCE PINNACLE VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
44179 V (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
GALAXY PREMIER VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
NEW CONTRACTS ARE NOT CURRENTLY BEING OFFERED.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Fidelity(R) Variable Insurance Products - Service Class
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
MFS(R) Variable Insurance Trust(SM)
Putnam Variable Trust - Class IB Shares
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
State variations are covered in a special contract form used in that state. This
prospectus provides a general description of the contract. Your actual contract
and any riders or endorsements are the controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the Fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 1
TABLE OF CONTENTS
KEY TERMS.................................... 3
THE CONTRACT IN BRIEF........................ 5
EXPENSE SUMMARY.............................. 7
CONDENSED FINANCIAL INFORMATION (UNAUDITED).. 11
FINANCIAL STATEMENTS......................... 11
THE VARIABLE ACCOUNT AND THE FUNDS........... 11
THE GUARANTEE PERIOD ACCOUNTS (GPAS)......... 16
THE ONE-YEAR FIXED ACCOUNT................... 19
BUYING YOUR CONTRACT......................... 19
CHARGES...................................... 21
VALUING YOUR INVESTMENT...................... 24
MAKING THE MOST OF YOUR CONTRACT............. 25
WITHDRAWALS.................................. 31
TSA -- SPECIAL PROVISIONS.................... 31
CHANGING OWNERSHIP........................... 32
BENEFITS IN CASE OF DEATH.................... 32
OPTIONAL BENEFITS............................ 35
THE ANNUITY PAYOUT PERIOD.................... 39
TAXES........................................ 41
VOTING RIGHTS................................ 44
SUBSTITUTION OF INVESTMENTS.................. 45
ABOUT THE SERVICE PROVIDERS.................. 45
ADDITIONAL INFORMATION....................... 46
APPENDIX: CONDENSED
FINANCIAL INFORMATION (UNAUDITED).......... 48
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION........ 53
--------------------------------------------------------------------------------
2 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 3
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
SIMPLE IRAs under Section 408(p) of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: This contract allows you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account and/or
subaccounts of the variable account under the contract; however you risk losing
amounts you invest in the subaccounts of the variable account. These accounts,
in turn, may earn returns that increase the value of a contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. You may be able to purchase an optional benefit
to reduce the investment risk you assume. Beginning at a specified time in the
future called the retirement date, these contracts provide lifetime or other
forms of payouts your contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There may be restrictions on the timing of transfers from this
account. (See "The One-Year Fixed Account")
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments to your contract. Some states have
time limitations for making additional payments. (See "Buying Your Contract")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. (See "Making the Most
of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers optional features that are available for
additional charges if you meet certain criteria. (See "Optional Benefits")
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (see "Benefits in Case of Death")
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 5
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU PAID AT THE TIME THAT YOU BOUGHT THE
CONTRACT AND WILL PAY WHEN YOU MAKE A WITHDRAWAL FROM THE CONTRACT. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 7
4 6
5 5
6 4
7 2
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
THE DEATH BENEFIT YOU SELECT DETERMINES THE FEES YOU PAY.
VARIABLE ACCOUNT MORTALITY AND TOTAL ANNUAL VARIABLE
ADMINISTRATIVE CHARGE EXPENSE RISK FEE ACCOUNT EXPENSES
ROP Death Benefit 0.15% 1.00 1.15%
MAV Death Benefit 0.15 1.10 1.25
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR) FEE 0.25%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS) FEE 0.40%*
(As a percentage of the contract value charged annually on the contract
anniversary.)
* This fee applies only if you elect this optional feature.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 7
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM TOTAL ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.45%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Columbia Variable Portfolio - Asset Allocation Fund (Class 0.05% --% 0.20% 0.85% 1.10%(1)
1)
Columbia Variable Portfolio - Balanced Fund (Class 3) 0.64 0.13 0.16 -- 0.93(2)
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(2)
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(2)
Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 1) 0.63 -- 0.15 -- 0.78(2),(3)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(2)
3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 -- 0.17 -- 0.88(2)
1)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Smaller-Cap Value Fund 0.79 0.13 0.19 -- 1.11(2)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 -- 0.15 -- 0.51
Government Fund (Class 1)
Columbia Variable Portfolio - Small Company Growth Fund 0.87 -- 0.34 -- 1.21(2),(4)
(Class 1)
Fidelity(R) VIP Balanced Portfolio Service Class 0.41 0.10 0.16 0.02 0.69
Fidelity(R) VIP Growth & Income Portfolio Service Class 0.46 0.10 0.13 -- 0.69
Fidelity(R) VIP Mid Cap Portfolio Service Class 0.56 0.10 0.10 -- 0.76
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Foreign Securities Fund - Class 2 0.64 0.25 0.15 0.01 1.05
Invesco V.I. Core Equity Fund, Series I Shares 0.61 -- 0.28 -- 0.89
Invesco Van Kampen V.I. American Franchise Fund, Series I 0.67 -- 0.28 -- 0.95(5)
Shares
Janus Aspen Series Enterprise Portfolio: Service Shares 0.64 0.25 0.05 -- 0.94
Janus Aspen Series Global Technology Portfolio: Service 0.64 0.25 0.16 -- 1.05
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
MFS(R) Investors Trust Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(6)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
--------------------------------------------------------------------------------
8 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12B-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Putnam VT Growth and Income Fund - Class IB Shares 0.48% 0.25% 0.15% --% 0.88%
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administrative fee rates. Other expenses have
been restated to reflect contractual changes to certain other fees.
Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, investment advisory fees, and extraordinary expenses) until April
30, 2013, unless sooner terminated at the sole discretion of the Fund's
Board of Trustees. Under this agreement, the Fund's net operating expenses,
subject to applicable exclusions, will not exceed the annual rate of 0.13%.
(2) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.79% for Columbia Variable
Portfolio - Balanced Fund (Class 3), 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.72% for Columbia
Variable Portfolio - High Income Fund (Class 1), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 1), 1.055% for Columbia
Variable Portfolio - Select Smaller-Cap Value Fund (Class 3) and 1.00% for
Columbia Variable Portfolio - Small Company Growth Fund (Class 1).
(3) Other expenses have been restated to reflect contractual changes to certain
other fees.
(4) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(5) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series I
shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series I shares to 0.90% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(6) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 9
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. This example assumes the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. It assumes that you selected the MAV death benefit and the optional
Benefit Protector Plus. Although your actual costs may be lower, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR
IF YOU WITHDRAW YOUR CONTRACT AT THE IF YOU SELECT AN ANNUITY PAYOUT PLAN AT
END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,148 $1,758 $2,288 $3,705 $348 $1,058 $1,788 $3,705
MINIMUM EXPENSES. This example assumes the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. It assumes that you selected the optional ROP death benefit and you do
not select any optional benefits. Although your actual costs may be higher,
based on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR
IF YOU WITHDRAW YOUR CONTRACT AT THE IF YOU SELECT AN ANNUITY PAYOUT PLAN AT
END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$999 $1,313 $1,548 $2,242 $199 $613 $1,048 $2,242
(1) In these examples, the contract administrative charge is $30.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
10 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in the Appendix.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 11
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under any asset allocation program we offer or under asset
allocation programs used in conjunction with the contracts and plans of other
eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making a withdrawal from the contract (see "Expense Summary"). However,
the revenue we or our affiliates receive from a fund or its affiliates may
come, at least in part, from the fund's fees and expenses you pay indirectly
when you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
12 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 13
YOU MAY ALLOCATE PURCHASE PAYMENTS AND TRANSFERS TO ANY OR ALL OF THE
SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF THE FOLLOWING
FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks total return, consisting of current Columbia Management
Portfolio - Asset income and long-term capital appreciation. Investment Advisers, LLC
Allocation Fund
(Class 1)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum total investment return Columbia Management
Portfolio - Bala- through a combination of capital growth and Investment Advisers, LLC
nced Fund (Class current income.
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Seeks total return, consisting of a high Columbia Management
Portfolio - High level of income and capital appreciation. Investment Advisers, LLC
Income Fund
(Class 1)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 1)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Smaller-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 1)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Small Investment Advisers, LLC
Company Growth
Fund (Class 1)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
14 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks income and capital growth consistent Fidelity Management &
Balanced with reasonable risk. Invests approximately Research Company (FMR)
Portfolio Service 60% of assets in stocks and other equity is the fund's manager.
Class securities and the remainder in bonds and Fidelity Investments
other debt securities, including lower- Money Management, Inc.
quality debt securities, when its outlook (FIMM), FMR Co., Inc.
is neutral. Invests at least 25% of total (FMRC), and other
assets in fixed-income senior securities investment advisers
(including debt securities and preferred serve as sub-advisers
stock). The fund invests in domestic and for the fund.
foreign issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks high total return through a Fidelity Management &
Growth & Income combination of current income and capital Research Company (FMR)
Portfolio Service appreciation. Normally invests a majority is the fund's manager.
Class of assets in common stocks with a focus on FMR Co., Inc. (FMRC) and
those that pay current dividends and show other investment
potential for capital appreciation. Invests advisers serve as sub-
in domestic and foreign issuers. The Fund advisers for the fund.
invests in either "growth" stocks or
"value" stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Investment
Foreign normally invests at least 80% of its net Counsel, LLC
Securities assets in investments of issuers located
Fund - Class 2 outside the U.S., including those in
emerging markets.
----------------------------------------------------------------------------------------
Invesco V.I. Core Seeks long-term growth of capital. Invesco Advisers, Inc.
Equity Fund,
Series I Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series I Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Enterprise LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Global LLC
Technology
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Janus LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 15
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Trust Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Putnam VT Growth Seeks capital growth and current income. Putnam Investment
and Income Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
You may allocate purchase payments to one or more of the GPAs with guarantee
periods ranging from two to ten years. The minimum required investment in each
GPA is $1,000. These accounts are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion ("future rates"). We will determine these
Future Rates based on various factors including, but not limited to, the
interest rate environment, returns we earn on investments in the nonunitized
separate account we have established for the GPAs, the rates currently in effect
for new and existing RiverSource Life annuities, product design, competition and
RiverSource Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
You may transfer or withdraw contract value out of the GPAs within 30 days
before the end of the Guarantee Period without receiving a MVA (see "Market
Value Adjustment (MVA)" below.) During this 30 day window, you may choose to
start a new guarantee period of the same length, transfer the contract value to
another GPA, transfer the contract value to any of the subaccounts, or withdraw
the contract value from the contract (subject to applicable withdrawal
provisions). If we do not receive any instructions at the end of your guarantee
period our current practice is to automatically transfer the contract value into
the one-year fixed account.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
--------------------------------------------------------------------------------
16 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch (formerly
Duff & Phelps) -- or are rated in the two highest grades by the National
Association of Insurance Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We guarantee the contract value allocated to your GPA, including the interest
credited, if you do not make any transfers or withdrawals from that GPA prior to
30 days before the end of the Guarantee Period. However, we will apply an MVA if
a transfer or withdrawal occurs prior to this time, unless the transfer is an
automated transfer from the two-year GPA as part of a dollar-cost averaging
program or an Interest Sweep strategy. The MVA also affects amounts withdrawn
from a GPA prior to 30 days before the end of the Guarantee Period that are used
to purchase payouts under an annuity payout plan. We will refer to all of these
transactions as "early withdrawals" in the discussion below.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your Guarantee Period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the Guarantee Period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
GENERAL EXAMPLES
As the examples below demonstrate, the application of an MVA may result in
either a gain or loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUME:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your Guarantee Period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the Guarantee Period remaining on your GPA. In this
case, that is seven years.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 17
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year Guarantee Period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new Guaranteed Period equal to the
remaining term in the current Guarantee Period.
n = number of months remaining in the current Guarantee Period
(rounded up).
EXAMPLES
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA.
We guarantee an interest rate of 3.0% annually for your ten-year Guarantee
Period.
After three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your Guarantee Period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year Guarantee Period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
Guarantee Period, your withdrawal charge percentage is 6%. (See
"Charges -- Withdrawal Charge.") We do not apply MVAs to the amounts we deduct
for withdrawal charges, so we would deduct the withdrawal charge from your early
withdrawal after we applied the MVA. Also note that when you request an early
withdrawal, we withdraw an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable withdrawal
charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for Guarantee Period durations
equaling the remaining Guarantee Period of the GPA to which the formula is being
applied.
We will not apply MVAs to amounts withdrawn for annual contract charges, to
amounts we pay as death claims or to automatic transfers from the two-year GPA
as part of a dollar-cost averaging program or an Interest Sweep strategy. In
some states, the MVA is limited.
--------------------------------------------------------------------------------
18 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
THE ONE-YEAR FIXED ACCOUNT
You may allocate purchase payments or transfer accumulated value to the one-year
fixed account. Some states may restrict the amount you can allocate to this
account. We back the principal and interest guarantees relating to the one-year
fixed account. These guarantees are based on the continued claims-paying ability
of the company's general account. You should be aware that our general account
is exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account. The value of the
one-year fixed account increases as we credit interest to the account. Purchase
payments and transfers to the one-year fixed account become part of our general
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. Thereafter we will change the rates
from time-to-time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses.
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. You can
become an owner if you are 90 or younger. (The age limit may be younger for
qualified annuities in some states.)
When you applied, you selected (if available in your state):
the one-year fixed account, GPAs and/or subaccounts in which you wanted to
invest(1);
how you wanted to make purchase payments;
the date you wanted to start receiving annuity payouts (the retirement date);
a death benefit option(2);
the optional Benefit Protector Death Benefit Rider(3);
the optional Benefit Protector Plus Death Benefit Rider(3); and
a beneficiary.
(1) Some states restrict the amount you can allocate to the GPAs and the one-
year fixed account. GPAs may not be available in some states.
(2) The MAV death benefit is available if you and the annuitant are 78 or
younger at contract issue. If either you or the annuitant are 79 or older at
contract issue the ROP death benefit will apply.
(3) Available if you and the annuitant are 75 or younger at contract issue.
Riders may not be available in all states.
The contract provides for allocation of purchase payments to the subaccounts to
the GPAs and/or to the one-year fixed account in even 1% increments subject to
the $1,000 minimum required investment for the GPAs.
We apply your purchase payments to the GPAs, one-year fixed account and
subaccounts you select. If we receive your purchase payment at our corporate
office before the close of business, we will credit any portion of that payment
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). To begin the SIP, you will complete and send a form and your first
SIP payment along with your application. There is no charge for SIP. You can
stop your SIP payments at any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date. In Massachusetts, you may make
additional purchase payments for ten years only.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 19
THE RETIREMENT DATE
Annuity payouts are to begin on the retirement date. Your selected date can
align with your actual retirement from a job, or it can be a different future
date, depending on your needs and goals and on certain restrictions. You also
can change the retirement date, provided you send us written instructions at
least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday (or the tenth contract
anniversary, if later), or such other date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs, by April 1 of the year following the calendar year when the
annuitant reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payments
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000 for issue ages up to 85
$100,000 for issue ages 86 to 90
* These limits apply in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase maximum limits. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
--------------------------------------------------------------------------------
20 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the subaccounts, the
GPAs and the one-year fixed account in the same proportion your interest in each
account bears to your total contract value. Some states limit the amount of any
contract charge allocated to the one-year fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct this charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees and they total either 1.00% or 1.10% of their
average daily net assets on an annual basis depending on the death benefit
option that applies to your contract. If you select the ROP death benefit, the
mortality and expense risk fee is 1.00%. If you select the MAV death benefit,
the mortality and expense risk fee is 1.10%. These fees cover the mortality and
expense risk that we assume. These fees do not apply to the GPAs or the one-year
fixed account.
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value, a withdrawal charge applies
if all or part of the withdrawal amount is from any purchase payment we received
less than eight years before the date of withdrawal. In addition, amounts
withdrawn from a GPA more than 30 days before the end of the applicable
Guarantee Period will be subject to a MVA. (See "The Fixed Accounts -- Market
Value Adjustment (MVA).")
Each time you make a purchase payment under the contract, a withdrawal charge
attaches to that purchase payment. The withdrawal charge percentage for each
purchase payment declines according to a schedule shown in the contract. For
example, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
2%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no withdrawal charge as to that payment.
You may withdraw an amount during any contract year without incurring a
withdrawal charge. We call this amount the Total Free Amount ("TFA"). The TFA is
the amount of your contract value that you may withdraw without incurring a
withdrawal
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 21
charge. Amounts withdrawn in excess of the Total Free Amount may be subject to a
withdrawal charge as described below. The Total Free Amount is defined as the
maximum of (a) and (b) where:
(a) is 10% of your prior anniversary's contract value; and
(b) is current contract earnings.
NOTE: We determine current contract earnings (CE) by looking at the entire
contract value (CV), not the earnings of any particular subaccount, GPA or the
one-year fixed account. If the contract value is less than purchase payments
received and not previously withdrawn (PPNPW) then contract earnings are zero.
We consider your initial purchase payment to be the prior anniversary's contract
value during the first contract year.
For purposes of calculating any withdrawal charge, we treat amounts withdrawn
from your contract value in the following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value. We do not assess a withdrawal charge on
this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
NOTE: After withdrawing earnings in numbers one and two above, we next withdraw
enough additional contract value (ACV) to meet your requested withdrawal amount.
If the amount described in number one above was greater than contract earnings
prior to the withdrawal, the excess (XSF) will be excluded from the purchase
payments being withdrawn that were received most recently when calculating the
withdrawal charge. We determine the amount of purchase payments being withdrawn
(PPW) in numbers three and four above as:
(ACV - XSF)
PPW = XSF + (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine your withdrawal charge by multiplying each of these payments by the
applicable withdrawal charge percentage, and then totaling the withdrawal
charges.
The withdrawal charge percentage depends on the number of years since you made
the payments that are withdrawn.
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1 8%
2 8
3 7
4 6
5 5
6 4
7 2
Thereafter 0
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. The withdrawal charge percentage is applied to
this total amount. We pay you the amount you requested.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
--------------------------------------------------------------------------------
22 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
WITHDRAWAL CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
withdrawal charge on a contract with this history:
We receive these payments:
- $10,000 initial;
- $8,000 on the sixth contract anniversary;
- $6,000 on the eighth contract anniversary; and
The owner withdraws the contract for its total withdrawal value of $38,101
during the eleventh contract year and does not make any other withdrawals
during that contract year; and
The prior anniversary contract value is $38,488.
WITHDRAWAL
CHARGE EXPLANATION
$ 0 $3,848.80 is 10% of the prior anniversary's contract value withdrawn without
withdrawal charge; and
0 $10,252.20 is contract earnings in excess of the 10% TFA withdrawal amount
withdrawn without withdrawal charge; and
0 $10,000 initial purchase payment was received eight or more years before
withdrawal and is withdrawn without withdrawal charge; and
400 $8,000 purchase payment is in its fifth year from receipt, withdrawn with a
5% withdrawal charge; and
420 $6,000 purchase payment is in its third year from receipt, withdrawn with a
7% withdrawal charge.
----
$820
WAIVER OF WITHDRAWAL CHARGE
We do not assess a withdrawal charge for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of your prior contract anniversary's
contract value to the extent they exceed contract earnings;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan;
death benefits;
withdrawals you make under your contract's "Waiver of Withdrawal Charges"
provision. To the extent permitted by state law, your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
We will waive withdrawal charges that we normally assess upon full or partial
withdrawal if you provide proof satisfactory to us that, as of the date you
request the withdrawal, you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. (See your contract for
additional conditions and restrictions on this waiver); and
to the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 23
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocated to the GPAs and the one-year fixed account
directly in dollars. The value of these accounts equals:
the sum of your purchase payments and transfer amounts allocated to the one-
year fixed account and the GPAs (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
--------------------------------------------------------------------------------
24 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge;
the fee for any of the following optional benefits you have selected:
- Benefit Protector rider
- Benefit Protector Plus rider
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or the two-year GPA (without a MVA) to one or more subaccounts. The three to ten
year GPAs are not available for automated transfers. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments
or by establishing an Interest Sweep strategy. Interest Sweeps are a monthly
transfer of the interest earned from either the one-year fixed account or the
two-year GPA into the subaccounts of your choice. If you participate in an
Interest Sweep strategy the interest you earn will be less than the annual
interest rate we apply because there will be no compounding. There is no charge
for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 25
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month ... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
TIERED DOLLAR-COST AVERAGING (TIERED DCA) PROGRAM
If your net contract value(1) is at least $10,000, you can choose to participate
in the Tiered DCA program. There is no charge for Tiered DCA. Under the Tiered
DCA program, you can allocate a new purchase payment to one of two special
Tiered DCA accounts. We determine which Tiered DCA account you are eligible for
as follows:
IF YOUR NET CONTRACT VALUE(1) IS... WE ALLOCATE YOUR NEW PURCHASE PAYMENT TO:
$10,000-$49,999 Tier 1 DCA account
$50,000 or more Tier 2 DCA account(2)
(1) "Net contract value" equals your current contract value plus any new
purchase payment. If this is a new contract funded by purchase payments from
multiple sources, we determine your net contract value based on the purchase
payments, withdrawal requests and exchange requests submitted with your
application.
(2) You cannot allocate your new purchase payments to a Tier 1 DCA account if
you are eligible to participate in a Tier 2 DCA account.
You may only allocate a new purchase payment of at least $1,000 to the Tiered
DCA account for which you are eligible. You cannot transfer existing contract
values into the Tiered DCA account. Each Tiered DCA account lasts for either six
months or twelve months from the time we receive your first purchase payment. We
make monthly transfers of your total Tiered DCA account value into the GPAs, the
one-year fixed account and/or subaccount you select over the six-month or
twelve-month period. If you elect to transfer into a GPA, you must meet the
$1,000 minimum required investment limitation for each transfer.
We reserve the right to credit a lower interest rate to each Tiered DCA account
if you select the GPAs or the one-year fixed account as part of your Tiered DCA
transfers. We will change the interest rate on each Tiered DCA account from time
to time at our discretion. From time to time, we may credit interest to the
Tiered DCA account at promotional rates that are higher than those we credit to
the one-year fixed account. We base these rates on competition and on the
interest rate we are crediting to the one-year fixed account at the time of the
change. Once we credit interest to a particular purchase payment, that rate does
not change even if we change the rate we credit on new purchase payments or if
your net contract value changes.
We credit each Tiered DCA account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment. However, we credit
this annual rate over the six-month or twelve-month period on the balance
remaining in your Tiered DCA account. Therefore, the net effective interest rate
you receive is less than the stated annual rate. We do not credit this interest
after we transfer the value out of the Tiered DCA account into the accounts you
selected.
If you make additional purchase payments while a Special DCA account term is in
progress, the amounts you allocate to an existing Special DCA account will be
transferred out of the Special DCA account over the reminder of the term. If you
are funding a Tiered DCA account from multiple sources, we apply each purchase
payment to the account and credit interest on that purchase payment on the date
we receive it. This means that all purchase payments may not be in the Tiered
DCA
--------------------------------------------------------------------------------
26 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
account at the beginning of the six-month or twelve-month period. Therefore, you
may receive less total interest than you would have if all your purchase
payments were in the Tiered DCA account from the beginning. If we receive any of
your multiple-source payments after the six-month or twelve-month period ends,
you can either allocate those payments to a new Tiered DCA account (if
available) or to any other accounts available under your contract.
You cannot participate in the Tiered DCA program if you are making payments
under a Systematic Investment Plan. You may simultaneously participate in the
Tiered DCA program and the asset-rebalancing program as long as your subaccount
allocation is the same under both programs. If you elect to change your
subaccount allocation under one program, we automatically will change it under
the other program so they match. If you participate in more than one Tiered DCA
account, the asset allocation for each account may be different as long as you
are not also participating in the asset-rebalancing program.
You may terminate your participation in the Tiered DCA program at any time. If
you do, we will not credit the current guaranteed annual interest rate on any
remaining Tiered DCA account balance. We will transfer the remaining balance
from your Tiered DCA account to the other accounts you selected for your DCA
transfers or we will allocate it in any manner you specify. Similarly, if we
cannot accept any additional purchase payments into the Tiered DCA program, we
will allocate the purchase payments to the other accounts you selected for your
DCA transfers or in any other manner you specify.
We can modify the terms or discontinue the Tiered DCA program at any time. Any
modifications will not affect any purchase payments that are already in a Tiered
DCA account.
The Tiered DCA program does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. Asset rebalancing does not apply to the GPAs or the one-year fixed
account. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. If you are also participating in the Tiered
DCA program and you change your subaccount asset allocation for the asset
rebalancing program, we will change your subaccount asset allocation under the
Tiered DCA program to match. We will restart the rebalancing period you selected
as of the date we record your change. You also can ask us in writing to stop
rebalancing your contract value. You must allow 30 days for us to change any
instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
TRANSFERRING AMONG ACCOUNTS
You may transfer contract value from any one subaccount, GPAs or the one-year
fixed account, to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period unless the transfer is an automated transfer from the two-year GPA as
part of a dollar-cost averaging program or an Interest Sweep strategy.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 27
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer.
It is our general policy to allow you to transfer contract values from the
one-year fixed account to the subaccounts or the GPAs once a year on or within
30 days before or after the contract anniversary (except for automated
transfers, which can be set up at any time for certain transfer periods
subject to certain minimums). Transfers from the one-year fixed account are
not subject to a MVA. Until further notice, however, we have removed this
restriction, and you may transfer contract values from the one-year fixed
account to the subaccounts at any time. We will inform you at least 30 days in
advance of the day we intend to reimpose this restriction.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive a MVA*, which may result in a
gain or loss of contract value.
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the
subaccounts or the GPAs will be effective on the valuation date we receive it.
Once annuity payouts begin, you may not make transfers to or from the one-year
fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs.
* Unless the transfer is an automated transfer from the two-year GPA as part
of a dollar-cost averaging program or an Interest Sweep strategy.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
--------------------------------------------------------------------------------
28 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 29
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your subaccounts, GPAs or the one-year fixed accounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months. Until further notice, however, we
have removed this restriction, and you may transfer contract values from the
one-year fixed account to the subaccounts at any time. We will inform you at
least 30 days in advance of the day we intend to reimpose this restriction.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
--------------------------------------------------------------------------------
30 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
WITHDRAWALS
You may withdraw all or part of your contract at any time before annuity payouts
begin by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Plan E. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced (see "Optional Benefits"). In addition,
withdrawals you are required to take to satisfy RMDs under the Code may reduce
the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 31
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. The
Benefit Protector Plus Death Benefit rider will terminate upon transfer of
ownership. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are two death benefit options under this contract: Return of Purchase
Payments (ROP) death benefit and Maximum Anniversary Value (MAV) death benefit.
If either you or the annuitant are 79 or older at contract issue, ROP death
benefit will apply. If both you and the annuitant are 78 or younger at contract
issue, you can elect either ROP death benefit or MAV death benefit on your
application. Once you elect an option, you cannot change it. We show the option
that applies in your contract. The death benefit option that applies determines
the mortality and expense risk fee that is assessed against the subaccounts.
(See "Charges -- Mortality and Expense Risk Fee.")
Under either option, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death if you die before the retirement
start date while this contract is in force. We will base the benefit paid on the
death benefit coverage you selected when you purchased the contract. If a
contract has more than one person as the owner, we will pay benefits upon the
first to die of any owner or the annuitant.
--------------------------------------------------------------------------------
32 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
RETURN OF PURCHASE PAYMENTS DEATH BENEFIT
The ROP death benefit is intended to help protect your beneficiaries financially
in that they will never receive less than your purchase payments adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin while this
contract is in force, we will pay the beneficiary the greater of these two
values, minus any applicable rider changes:
1. contract value; or
2. total purchase payments minus adjusted partial withdrawals.
PW X DB
ADJUSTED PARTIAL WITHDRAWALS FOR ROP DEATH BENEFIT OR MAV DEATH BENEFIT = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
EXAMPLE
You purchase the contract for $25,000.
On the first contract anniversary, the contract value grows to $29,000.
During the second contract year, the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract Value at death: $20,500.00
----------
Purchase payment minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus the adjusted partial withdrawal calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATER OF THESE TWO VALUES:
$23,295.45
MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT
The MAV death benefit is intended to help protect your beneficiaries financially
while your investments have the opportunity to grow. The MAV death benefit does
not provide any additional benefit before the first contract anniversary and it
may not be appropriate for issue ages 75 to 78 because the benefit values may be
limited after age 81. Be sure to discuss with your investment professional
whether or not the MAV death benefit is appropriate for your situation. If you
or the annuitant die before annuity payouts begin while this contract is in
force, we will pay the beneficiary the greatest of these three values, minus any
applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the maximum anniversary value immediately preceding the date of death plus
any purchase payments applied to the contract since that anniversary minus
adjusted partial withdrawals since that anniversary.
MAXIMUM ANNIVERSARY VALUE (MAV): We calculate the MAV on each contract
anniversary through age 80. There is no MAV prior to the first contract
anniversary. On the first contract anniversary we set the MAV equal to the
highest of: (a) your current contract value, or (b) total purchase payments
minus adjusted partial withdrawals. Every contract anniversary after that,
through age 80, we compare the previous anniversary's MAV (plus any purchase
payments since that anniversary minus adjusted partial withdrawals since that
anniversary) to the current contract value and we reset the MAV to the higher
value. We stop resetting the MAV after you or the annuitant reach 81. However,
we continue to add subsequent purchase payments and subtract adjusted partial
withdrawals from the MAV.
EXAMPLE
You purchase the contract for $25,000.
On the first contract anniversary, the contract value grows to $29,000.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 33
During the second contract year, the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal, leaving a contract value of
$20,500.
WE CALCULATE THE MAV DEATH BENEFIT AS FOLLOWS:
Contract Value at death: $20,500.00
----------
Purchase payment minus adjusted partial withdrawals: $23,295.45
----------
The MAV immediately preceding the date of death plus any payments applied to the
contract since that anniversary minus adjusted partial withdrawals:
MAV on the prior anniversary: $29,000.00
plus purchase payments applied to the contract the prior anniversary: +0.00
minus adjusted partial withdrawals taken since that anniversary,
calculated as:
$1,500 x $29,000
---------------- = -1,977.27
$22,000
----------
for a death benefit of: $27,022.73
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES:
$27,022.73
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
If requested, we will mail payment to the beneficiary within seven days after
our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Benefit Protector Plus rider, if selected, will
terminate. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payments begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Benefit Protector Plus rider, if selected, will terminate.
Continuance of the Benefit Protector rider is optional. (See "Optional
Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your
--------------------------------------------------------------------------------
34 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
beneficiary does not elect a five year payout, or if your death occurs after
attaining age 70 1/2, we will pay the beneficiary in a single sum unless the
beneficiary elects to receive payouts under any payout plan available under
this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are 70 or older at the rider effective date and
it does not provide any additional benefit before the first rider anniversary.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus Rider. We
reserve the right to discontinue offering the Benefit Protector for new
contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
contract anniversary, but before annuity payouts begin, and while this contract
is in force, we will pay the beneficiary:
the applicable death benefit (see "Benefits in Case of Death), plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were 70 or older on
the rider effective date, up to a maximum of 37.5% of purchase payments not
previously withdrawn that are one or more years old.
EARNINGS AT DEATH: for purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 35
EXAMPLE OF THE BENEFIT PROTECTOR
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select MAV death benefit.
During the first contract year the contract value grows to $105,000. The MAV
death benefit equals the contract value. You have not reached the first
contract anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The
death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death (MAV
death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to an 7% withdrawal charge because your payment is two
years old, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal
charges) from your contract value. Altogether, we will withdraw $50,000 and
pay you $47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal
is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
-------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the death benefit during the third contract year. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of
$50,000. Your new contract value is now $250,000. The new purchase payment is
less than one year old and so it has no effect on the Benefit Protector value.
The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
36 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old and the value of the Benefit Protector
changes. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings at death (MAV
death benefit minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
NOTE: For special tax considerations associated with the Benefit Protector, see
"Taxes."
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date and it does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Be sure to discuss with
your sales representative whether or not the Benefit Protector Plus is
appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is available only for purchase through a transfer, exchange or
rollover from another annuity or life insurance policy. You may not select this
rider if you select the Benefit Protector Rider. We reserve the right to
discontinue offering the Benefit Protector Plus for new contracts.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract. Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking required minimum distributions
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). Be sure
to discuss with your investment professional and tax advisor whether or not the
Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first contract anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
CONTRACT YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit (see "Benefits in Case of Death") plus:
PERCENTAGE IF YOU AND THE ANNUITANT ARE UNDER
CONTRACT YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase payment*)
Five or more 40% x (earnings at death + 50% of initial purchase payment*)
PERCENTAGE IF YOU OR THE ANNUITANT ARE 70
CONTRACT YEAR OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase payment*)
Five or more 15% x (earnings at death + 50% of initial purchase payment*)
* Initial purchase payments are payments made within 60 days of contract issue
not previously withdrawn.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 37
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the MAV death benefit.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV death benefit, which is the contract value, or $105,000.
You have not reached the first contract anniversary so the Benefit Protector
Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You
have not reached the second contract anniversary so the Benefit Protector Plus
does not provide any additional benefit beyond what is provided by the Benefit
Protector at this time. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn:
0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charge. We will withdraw $10,500 from your contract value free of
charge (10% of your prior anniversary's contract value). The remainder of the
withdrawal is subject to an 7% withdrawal charge because your payment is two
years old, so we will withdraw $39,500 ($36,735 + $2,765 in withdrawal
charges) from your contract value. Altogether, we will withdraw $50,000 and
pay you $47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal
is contract earnings). The death benefit equals:
MAV death benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn:
0.10 x $55,000 = +5,500
-------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the death benefit paid during the third contract year. The
reduction in contract value has no effect.
--------------------------------------------------------------------------------
38 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. Because we are beyond
the fourth contract anniversary the Benefit Protector Plus also reaches its
maximum of 20%. The death benefit equals:
MAV death benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of
$50,000. Your new contract value is now $250,000. The new purchase payment is
less than one year old and so it has no effect on the Benefit Protector Plus
value. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $250,000 and the
"new" purchase payment is one year old. The value of the Benefit Protector
Plus remains constant. The death benefit equals:
MAV death benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn:
0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
NOTE: for special tax considerations associated with the Benefit Protector Plus,
see "Taxes."
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 39
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are used to purchase the
payout plan. Generally, you may select one of the Plans A through E below or
another plan agreed to by us.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires. We
calculate the guaranteed payout period from the retirement date. If the
annuitant outlives the elected guaranteed payout period, we will continue to
make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until the
annuitant's death, with our guarantee that payouts will continue for some
period of time. We will make payouts for at least the number of months
determined by dividing the amount applied under this option by the first
monthly payout, whether or not the annuitant is living.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly
payouts while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of the
second annuitant.
PLAN E: PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a specific
payout period of ten to 30 years that you elect. We will make payouts only for
the number of years specified whether the annuitant is living or not.
Depending on the selected time period, it is foreseeable that an annuitant can
outlive the payout period selected. During the payout period, you can elect to
have us determine the present value of any remaining variable payouts and pay
it to you in a lump sum. We determine the present value of the remaining
annuity payouts which are assumed to remain level at the initial payout. The
discount rate we use in the calculation is 5.17% for the assumed investment
return of 3.5% and 6.67% for the assumed investment return of 5.0%. (See
"Charges -- Withdrawal charge under Annuity Payout Plan E.") You can also take
a portion of the discounted value once a year. If you do so, your monthly
payouts will be reduced by the proportion of your withdrawal to the full
discounted value. A 10% IRS penalty tax could apply if you take a withdrawal.
(See "Taxes.")
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
--------------------------------------------------------------------------------
40 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 41
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
--------------------------------------------------------------------------------
42 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 43
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
--------------------------------------------------------------------------------
44 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 6.00% as well as
service/trail commissions of up to 0.75% based on annual total contract value
for as long as the contract remains in effect. We also may pay an additional
sales commission of up to 1.00% of purchase payments for a period of time we
select. These commissions do not change depending on which subaccounts you
choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 45
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference
--------------------------------------------------------------------------------
46 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
Room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330. The SEC also maintains an Internet site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC. In addition to this prospectus, the SAI and
information about the contract, information incorporated by reference is
available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 47
APPENDIX: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. The date in which operations commenced in each subaccount is
noted in parentheses. We have not provided this information for subaccounts that
were not available under your contract as of Dec. 31, 2011.
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - ASSET ALLOCATION FUND (CLASS 1) (04/07/2003)
Accumulation unit value at beginning of period $1.60 $1.42 $1.16 $1.64 $1.52 $1.38 $1.31 $1.20 $1.00 --
Accumulation unit value at end of period $1.57 $1.60 $1.42 $1.16 $1.64 $1.52 $1.38 $1.31 $1.20 --
Number of accumulation units outstanding at end
of period (000 omitted) 6 26 69 117 87 70 135 142 222 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.13 $1.01 $0.82 $1.19 $1.18 $1.05 $1.02 $0.94 $0.79 $0.92
Accumulation unit value at end of period $1.14 $1.13 $1.01 $0.82 $1.19 $1.18 $1.05 $1.02 $0.94 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 26 26 84 85 85 121 121 122 122 135
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.13 $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 734 815 827 835 334 460 205 64 72 161
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81 $1.01
Accumulation unit value at end of period $1.50 $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 3,304 3,550 4,693 4,712 4,137 4,535 2,962 25 25 25
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.09 $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,775 2,312 2,486 2,481 2,441 2,749 3,138 1,827 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of period $3.20 $2.70 $1.57 $3.43 $2.51 $1.90 $1.43 $1.17 $0.84 $0.90
Accumulation unit value at end of period $2.50 $3.20 $2.70 $1.57 $3.43 $2.51 $1.90 $1.43 $1.17 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 704 659 891 1,256 981 1,358 1,275 363 18 27
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 1) (04/28/2006)
Accumulation unit value at beginning of period $1.26 $1.14 $0.80 $1.08 $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.33 $1.26 $1.14 $0.80 $1.08 $1.07 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 10 16 39 84 100 106 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.74 $1.54 $1.01 $1.37 $1.36 $1.24 $1.21 $1.10 $0.89 $0.96
Accumulation unit value at end of period $1.81 $1.74 $1.54 $1.01 $1.37 $1.36 $1.24 $1.21 $1.10 $0.89
Number of accumulation units outstanding at end
of period (000 omitted) 422 479 545 699 822 930 672 157 81 96
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 1) (04/29/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $0.88 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 189 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of period $0.93 $0.82 $0.66 $1.06 $1.02 $0.89 $0.86 $0.79 $0.63 $0.82
Accumulation unit value at end of period $0.93 $0.93 $0.82 $0.66 $1.06 $1.02 $0.89 $0.86 $0.79 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 177 175 202 177 235 343 380 355 418 377
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of period $1.69 $1.35 $0.98 $1.61 $1.70 $1.54 $1.49 $1.27 $0.87 $1.06
Accumulation unit value at end of period $1.53 $1.69 $1.35 $0.98 $1.61 $1.70 $1.54 $1.49 $1.27 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 15 15 16 16 16 19 19 20 27 32
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 1) (04/29/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $0.99 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 84 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL COMPANY GROWTH FUND (CLASS 1) (04/14/2003)
Accumulation unit value at beginning of period $1.93 $1.52 $1.22 $2.09 $1.87 $1.68 $1.65 $1.50 $1.00 --
Accumulation unit value at end of period $1.80 $1.93 $1.52 $1.22 $2.09 $1.87 $1.68 $1.65 $1.50 --
Number of accumulation units outstanding at end
of period (000 omitted) 2 4 22 23 26 42 42 50 49 --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
48 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.32 $1.13 $0.83 $1.27 $1.18 $1.07 $1.02 $0.98 $0.84 $0.93
Accumulation unit value at end of period $1.25 $1.32 $1.13 $0.83 $1.27 $1.18 $1.07 $1.02 $0.98 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 4 4 18 41 43 46 50 55 65 68
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $1.00 $0.88 $0.70 $1.22 $1.10 $0.98 $0.93 $0.89 $0.72 $0.88
Accumulation unit value at end of period $1.00 $1.00 $0.88 $0.70 $1.22 $1.10 $0.98 $0.93 $0.89 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 86 92 135 116 228 248 198 181 157 145
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (11/11/1999)
Accumulation unit value at beginning of period $3.67 $2.89 $2.09 $3.49 $3.06 $2.74 $2.35 $1.90 $1.39 $1.56
Accumulation unit value at end of period $3.24 $3.67 $2.89 $2.09 $3.49 $3.06 $2.74 $2.35 $1.90 $1.39
Number of accumulation units outstanding at end
of period (000 omitted) 73 90 120 132 170 211 226 250 268 298
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.33 $1.05 $0.74 $1.31 $1.19 $1.11 $1.07 $0.97 $0.71 $1.01
Accumulation unit value at end of period $1.25 $1.33 $1.05 $0.74 $1.31 $1.19 $1.11 $1.07 $0.97 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 126 137 178 256 345 421 465 481 495 546
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.64 $1.49 $1.20 $1.92 $1.88 $1.61 $1.47 $1.32 $1.07 $1.22
Accumulation unit value at end of period $1.60 $1.64 $1.49 $1.20 $1.92 $1.88 $1.61 $1.47 $1.32 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) 334 421 439 498 532 713 655 587 281 285
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (11/11/1999)
Accumulation unit value at beginning of period $1.42 $1.33 $0.98 $1.66 $1.46 $1.21 $1.11 $0.95 $0.73 $0.90
Accumulation unit value at end of period $1.26 $1.42 $1.33 $0.98 $1.66 $1.46 $1.21 $1.11 $0.95 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 38 39 67 117 100 102 122 97 102 89
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (11/11/1999)
Accumulation unit value at beginning of period $0.83 $0.73 $0.61 $1.07 $0.96 $0.92 $0.85 $0.81 $0.63 $0.84
Accumulation unit value at end of period $0.75 $0.83 $0.73 $0.61 $1.07 $0.96 $0.92 $0.85 $0.81 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 81 90 141 143 156 173 129 140 150 131
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.10 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.10 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 75 108 149 170 220 254 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES ENTERPRISE PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.75 $0.61 $0.43 $0.77 $0.64 $0.57 $0.51 $0.43 $0.32 $0.46
Accumulation unit value at end of period $0.73 $0.75 $0.61 $0.43 $0.77 $0.64 $0.57 $0.51 $0.43 $0.32
Number of accumulation units outstanding at end
of period (000 omitted) 37 37 39 67 241 296 327 331 345 312
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.56 $0.46 $0.30 $0.53 $0.44 $0.42 $0.38 $0.38 $0.26 $0.45
Accumulation unit value at end of period $0.51 $0.56 $0.46 $0.30 $0.53 $0.44 $0.42 $0.38 $0.38 $0.26
Number of accumulation units outstanding at end
of period (000 omitted) 32 32 32 46 46 51 82 84 88 89
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.72 $0.64 $0.48 $0.80 $0.70 $0.64 $0.62 $0.61 $0.47 $0.64
Accumulation unit value at end of period $0.67 $0.72 $0.64 $0.48 $0.80 $0.70 $0.64 $0.62 $0.61 $0.47
Number of accumulation units outstanding at end
of period (000 omitted) 124 173 1,443 1,405 1,248 116 148 194 221 283
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $0.98 $0.90 $0.72 $1.08 $1.00 $0.89 $0.85 $0.77 $0.64 $0.82
Accumulation unit value at end of period $0.95 $0.98 $0.90 $0.72 $1.08 $1.00 $0.89 $0.85 $0.77 $0.64
Number of accumulation units outstanding at end
of period (000 omitted) 55 70 88 71 150 162 164 153 193 194
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $1.23 $0.92 $0.57 $0.95 $0.94 $0.84 $0.81 $0.77 $0.59 $0.87
Accumulation unit value at end of period $1.09 $1.23 $0.92 $0.57 $0.95 $0.94 $0.84 $0.81 $0.77 $0.59
Number of accumulation units outstanding at end
of period (000 omitted) 18 28 30 34 41 42 40 45 43 42
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $1.38 $1.27 $1.09 $1.42 $1.38 $1.25 $1.24 $1.13 $0.98 $1.05
Accumulation unit value at end of period $1.38 $1.38 $1.27 $1.09 $1.42 $1.38 $1.25 $1.24 $1.13 $0.98
Number of accumulation units outstanding at end
of period (000 omitted) 112 135 249 311 490 541 651 617 696 688
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 49
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $1.68 $1.50 $1.14 $1.85 $1.47 $1.14 $0.99 $0.77 $0.57 $0.75
Accumulation unit value at end of period $1.77 $1.68 $1.50 $1.14 $1.85 $1.47 $1.14 $0.99 $0.77 $0.57
Number of accumulation units outstanding at end
of period (000 omitted) 34 36 67 81 182 167 168 150 143 140
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (11/11/1999)
Accumulation unit value at beginning of period $1.03 $0.91 $0.71 $1.17 $1.26 $1.10 $1.06 $0.96 $0.77 $0.96
Accumulation unit value at end of period $0.97 $1.03 $0.91 $0.71 $1.17 $1.26 $1.10 $1.06 $0.96 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 73 89 166 196 221 242 304 323 363 405
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (11/11/1999)
Accumulation unit value at beginning of period $1.19 $1.10 $0.89 $1.61 $1.50 $1.19 $1.07 $0.93 $0.73 $0.90
Accumulation unit value at end of period $0.98 $1.19 $1.10 $0.89 $1.61 $1.50 $1.19 $1.07 $0.93 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 55 56 59 69 101 103 122 127 179 219
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 78 91 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - ASSET ALLOCATION FUND (CLASS 1) (04/07/2003)
Accumulation unit value at beginning of period $1.59 $1.42 $1.16 $1.63 $1.51 $1.37 $1.30 $1.20 $1.00 --
Accumulation unit value at end of period $1.55 $1.59 $1.42 $1.16 $1.63 $1.51 $1.37 $1.30 $1.20 --
Number of accumulation units outstanding at end
of period (000 omitted) 36 45 111 144 443 469 476 498 507 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - BALANCED FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.11 $1.00 $0.82 $1.18 $1.17 $1.04 $1.01 $0.94 $0.79 $0.92
Accumulation unit value at end of period $1.13 $1.11 $1.00 $0.82 $1.18 $1.17 $1.04 $1.01 $0.94 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 84 85 114 218 292 275 210 176 177 179
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.12 $1.13 $1.15 $1.16 $1.15 $1.11 $1.08 $1.06 $1.07 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 2,256 2,075 3,153 2,711 1,073 1,203 1,149 1,454 1,720 2,516
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81 $1.01
Accumulation unit value at end of period $1.49 $1.58 $1.37 $1.09 $1.85 $1.74 $1.47 $1.31 $1.12 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 653 957 8,590 7,188 4,908 3,199 1,284 1,141 861 536
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of period $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52 $0.67
Accumulation unit value at end of period $0.71 $0.68 $0.59 $0.48 $0.84 $0.82 $0.72 $0.69 $0.66 $0.52
Number of accumulation units outstanding at end
of period (000 omitted) 1,928 2,512 3,082 3,503 4,303 4,701 1,109 1,250 172 141
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of period $3.17 $2.68 $1.56 $3.40 $2.50 $1.89 $1.43 $1.17 $0.84 $0.90
Accumulation unit value at end of period $2.47 $3.17 $2.68 $1.56 $3.40 $2.50 $1.89 $1.43 $1.17 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 64 65 1,086 1,372 790 428 49 48 42 67
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 1) (04/28/2006)
Accumulation unit value at beginning of period $1.26 $1.14 $0.80 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.32 $1.26 $1.14 $0.80 $1.07 $1.07 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 241 264 325 407 553 540 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88 $0.96
Accumulation unit value at end of period $1.79 $1.72 $1.53 $1.00 $1.36 $1.35 $1.23 $1.20 $1.09 $0.88
Number of accumulation units outstanding at end
of period (000 omitted) 174 280 582 944 1,284 1,320 1,059 1,262 1,212 1,027
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 1) (04/29/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $0.88 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 104 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of period $0.92 $0.81 $0.65 $1.05 $1.01 $0.89 $0.86 $0.79 $0.63 $0.82
Accumulation unit value at end of period $0.92 $0.92 $0.81 $0.65 $1.05 $1.01 $0.89 $0.86 $0.79 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 119 123 173 342 478 539 565 639 728 711
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
50 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT SMALLER-CAP VALUE FUND (CLASS 3) (11/09/1999)
Accumulation unit value at beginning of period $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87 $1.06
Accumulation unit value at end of period $1.51 $1.68 $1.34 $0.97 $1.60 $1.69 $1.53 $1.48 $1.26 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 141 164 220 278 307 338 394 445 419 366
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 1) (04/29/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $0.99 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 574 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL COMPANY GROWTH FUND (CLASS 1) (04/14/2003)
Accumulation unit value at beginning of period $1.92 $1.51 $1.22 $2.08 $1.86 $1.68 $1.65 $1.50 $1.00 --
Accumulation unit value at end of period $1.79 $1.92 $1.51 $1.22 $2.08 $1.86 $1.68 $1.65 $1.50 --
Number of accumulation units outstanding at end
of period (000 omitted) 40 57 63 69 81 90 108 108 107 --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP BALANCED PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $1.30 $1.12 $0.82 $1.26 $1.17 $1.06 $1.01 $0.97 $0.84 $0.93
Accumulation unit value at end of period $1.24 $1.30 $1.12 $0.82 $1.26 $1.17 $1.06 $1.01 $0.97 $0.84
Number of accumulation units outstanding at end
of period (000 omitted) 172 183 216 342 435 452 468 481 526 511
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH & INCOME PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $0.99 $0.87 $0.69 $1.21 $1.09 $0.98 $0.92 $0.88 $0.72 $0.88
Accumulation unit value at end of period $0.99 $0.99 $0.87 $0.69 $1.21 $1.09 $0.98 $0.92 $0.88 $0.72
Number of accumulation units outstanding at end
of period (000 omitted) 117 145 191 286 380 396 386 441 436 435
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS (11/09/1999)
Accumulation unit value at beginning of period $3.63 $2.86 $2.07 $3.46 $3.03 $2.73 $2.34 $1.90 $1.39 $1.56
Accumulation unit value at end of period $3.20 $3.63 $2.86 $2.07 $3.46 $3.03 $2.73 $2.34 $1.90 $1.39
Number of accumulation units outstanding at end
of period (000 omitted) 438 578 766 1,075 1,633 1,627 1,723 1,897 1,802 1,810
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71 $1.01
Accumulation unit value at end of period $1.24 $1.32 $1.04 $0.74 $1.30 $1.18 $1.10 $1.06 $0.96 $0.71
Number of accumulation units outstanding at end
of period (000 omitted) 1,373 1,842 2,467 3,121 3,777 4,295 4,737 5,177 4,918 4,574
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.62 $1.48 $1.19 $1.91 $1.87 $1.60 $1.46 $1.32 $1.06 $1.22
Accumulation unit value at end of period $1.58 $1.62 $1.48 $1.19 $1.91 $1.87 $1.60 $1.46 $1.32 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 1,695 2,272 2,966 3,954 5,507 6,011 5,328 5,621 4,198 2,393
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON FOREIGN SECURITIES FUND - CLASS 2 (11/09/1999)
Accumulation unit value at beginning of period $1.41 $1.31 $0.97 $1.65 $1.45 $1.21 $1.11 $0.95 $0.73 $0.90
Accumulation unit value at end of period $1.24 $1.41 $1.31 $0.97 $1.65 $1.45 $1.21 $1.11 $0.95 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 147 172 183 240 311 368 420 400 371 296
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES I SHARES* (11/09/1999)
Accumulation unit value at beginning of period $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63 $0.84
Accumulation unit value at end of period $0.74 $0.82 $0.72 $0.60 $1.06 $0.96 $0.91 $0.85 $0.80 $0.63
Number of accumulation units outstanding at end
of period (000 omitted) 753 912 1,557 2,040 2,745 3,214 3,090 3,428 3,393 3,148
*Invesco V.I. Capital Appreciation Fund, Series I Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series I Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series I Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series I Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CORE EQUITY FUND, SERIES I SHARES (04/28/2006)
Accumulation unit value at beginning of period $1.09 $1.01 $0.80 $1.16 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 $1.01 $0.80 $1.16 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,437 1,983 2,664 3,333 4,900 5,506 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES ENTERPRISE PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.75 $0.60 $0.42 $0.76 $0.63 $0.57 $0.51 $0.43 $0.32 $0.45
Accumulation unit value at end of period $0.72 $0.75 $0.60 $0.42 $0.76 $0.63 $0.57 $0.51 $0.43 $0.32
Number of accumulation units outstanding at end
of period (000 omitted) 112 110 122 126 176 199 254 313 293 270
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.56 $0.45 $0.29 $0.53 $0.44 $0.41 $0.38 $0.38 $0.26 $0.45
Accumulation unit value at end of period $0.50 $0.56 $0.45 $0.29 $0.53 $0.44 $0.41 $0.38 $0.38 $0.26
Number of accumulation units outstanding at end
of period (000 omitted) 76 77 77 78 79 79 108 126 125 131
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (10/23/2000)
Accumulation unit value at beginning of period $0.71 $0.63 $0.47 $0.79 $0.70 $0.64 $0.62 $0.60 $0.46 $0.64
Accumulation unit value at end of period $0.67 $0.71 $0.63 $0.47 $0.79 $0.70 $0.64 $0.62 $0.60 $0.46
Number of accumulation units outstanding at end
of period (000 omitted) 319 360 12,338 9,449 7,227 503 514 632 722 759
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 51
VARIABLE ACCOUNT CHARGES OF 1.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS TRUST SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $0.97 $0.89 $0.71 $1.08 $0.99 $0.89 $0.84 $0.77 $0.64 $0.82
Accumulation unit value at end of period $0.94 $0.97 $0.89 $0.71 $1.08 $0.99 $0.89 $0.84 $0.77 $0.64
Number of accumulation units outstanding at end
of period (000 omitted) 230 230 276 386 451 471 505 526 535 530
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.22 $0.91 $0.56 $0.94 $0.94 $0.84 $0.81 $0.77 $0.58 $0.87
Accumulation unit value at end of period $1.08 $1.22 $0.91 $0.56 $0.94 $0.94 $0.84 $0.81 $0.77 $0.58
Number of accumulation units outstanding at end
of period (000 omitted) 212 277 470 582 647 658 783 901 707 441
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.36 $1.26 $1.08 $1.41 $1.38 $1.25 $1.23 $1.12 $0.98 $1.05
Accumulation unit value at end of period $1.37 $1.36 $1.26 $1.08 $1.41 $1.38 $1.25 $1.23 $1.12 $0.98
Number of accumulation units outstanding at end
of period (000 omitted) 1,555 2,358 3,001 4,112 5,505 6,062 5,779 6,230 5,443 3,949
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (10/23/2000)
Accumulation unit value at beginning of period $1.66 $1.48 $1.13 $1.84 $1.46 $1.13 $0.98 $0.76 $0.57 $0.75
Accumulation unit value at end of period $1.75 $1.66 $1.48 $1.13 $1.84 $1.46 $1.13 $0.98 $0.76 $0.57
Number of accumulation units outstanding at end
of period (000 omitted) 145 195 251 275 323 304 241 287 264 209
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of period $1.02 $0.90 $0.70 $1.16 $1.25 $1.09 $1.05 $0.96 $0.76 $0.95
Accumulation unit value at end of period $0.96 $1.02 $0.90 $0.70 $1.16 $1.25 $1.09 $1.05 $0.96 $0.76
Number of accumulation units outstanding at end
of period (000 omitted) 340 400 600 892 1,305 1,443 1,621 1,596 1,635 1,583
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (11/09/1999)
Accumulation unit value at beginning of period $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73 $0.90
Accumulation unit value at end of period $0.97 $1.18 $1.09 $0.88 $1.59 $1.49 $1.18 $1.07 $0.93 $0.73
Number of accumulation units outstanding at end
of period (000 omitted) 1,597 2,315 2,779 3,548 4,302 4,374 4,450 4,648 4,797 4,994
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 543 652 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
52 RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE GALAXY PREMIER VARIABLE ANNUITY -- PROSPECTUS 53
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45211 T (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
NEW SOLUTIONS SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Series Trust II
Dreyfus Variable Investment Fund, Service Share Class
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Invesco Van Kampen Variable Insurance Funds
Morgan Stanley UIF
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Wells Fargo Variable Trust
NEW EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY CONTRACTS ARE NOT CURRENTLY
BEING OFFERED.
Please read the prospectuses carefully and keep them for future reference.
Contracts with a seven-year withdrawal charge schedule receive a purchase
payment credit for each payment made to the contract. Expense charges for
contracts with purchase payment credits may be higher than expenses for
contracts without such credits. The amount of the credit may be more than offset
by any additional fees and charges associated with the credit. The credits may
be reversed. Purchase payment credits are not available for contracts with a
five-year withdrawal charge schedule. (See "Buying Your Contract -- Purchase
Payment Credits").
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 14
FINANCIAL STATEMENTS........................ 14
THE VARIABLE ACCOUNT AND THE FUNDS.......... 14
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 22
THE ONE-YEAR FIXED ACCOUNT.................. 23
BUYING YOUR CONTRACT........................ 23
CHARGES..................................... 27
VALUING YOUR INVESTMENT..................... 31
MAKING THE MOST OF YOUR CONTRACT............ 32
WITHDRAWALS................................. 40
TSA -- SPECIAL PROVISIONS................... 41
CHANGING OWNERSHIP.......................... 42
BENEFITS IN CASE OF DEATH................... 42
OPTIONAL BENEFITS........................... 45
THE ANNUITY PAYOUT PERIOD................... 58
TAXES....................................... 60
VOTING RIGHTS............................... 64
SUBSTITUTION OF INVESTMENTS................. 64
ABOUT THE SERVICE PROVIDERS................. 65
ADDITIONAL INFORMATION...................... 66
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 68
APPENDIX B: EXAMPLE --
INCOME ASSURER BENEFIT RIDER FEE.......... 70
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES... 71
APPENDIX D: EXAMPLE -- DEATH BENEFITS....... 76
APPENDIX E: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 79
APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL
BENEFIT -- RIDER B DISCLOSURE............. 81
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT
RIDER -- ADDITIONAL RMD DISCLOSURE........ 86
APPENDIX H: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT RIDER........ 87
APPENDIX I: EXAMPLE --
INCOME ASSURER BENEFIT RIDERS............. 89
APPENDIX J: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 94
APPENDIX K: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 96
APPENDIX L: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 98
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION....... 106
--------------------------------------------------------------------------------
2 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
ONE-YEAR FIXED ACCOUNT: An account to which you may make allocations. Amounts
you allocate to this account earn interest at rates that we declare
periodically.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: This contract allows you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the one-year fixed account, GPAs and/or
subaccounts of the variable account under the contract; however you risk losing
amounts you invest in the subaccounts of the variable account. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. These accounts, in turn, may earn returns that
increase the value of a contract. You may be able to purchase an optional
benefit to reduce the investment risk you assume. Beginning at a specified time
in the future called the retirement date, these contracts provide lifetime or
other forms of payouts your contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account").
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to a MVA, unless an exception applies.
You may establish automated transfers among the accounts. We reserve the right
to limit transfers to the GPAs and the one-year fixed account if the interest
rate we are then currently crediting is equal to the minimum interest rate
stated in the contract. (See "Making the Most of Your Contract -- Transferring
Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer
optional death benefits. Optional benefits vary by state and may have
eligibility requirements. (See "Optional Benefits").
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 5
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE*
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
* The five-year withdrawal charge schedule may not be available in all states.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
Return of Purchase Payment (ROP) Death 1.00% 0.15% 1.15%
Benefit
Maximum Anniversary Value (MAV) Death 1.20 0.15 1.35
Benefit
5% Accumulation Death Benefit 1.35 0.15 1.50
Enhanced Death Benefit 1.40 0.15 1.55
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.15% 0.15% 1.30%
MAV Death Benefit 1.35 0.15 1.50
5% Accumulation Death Benefit 1.50 0.15 1.65
Enhanced Death Benefit 1.55 0.15 1.70
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP Death Benefit 1.20% 0.15% 1.35%
MAV Death Benefit 1.40 0.15 1.55
5% Accumulation Death Benefit 1.55 0.15 1.70
Enhanced Death Benefit 1.60 0.15 1.75
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.35 0.15 1.50
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
--------------------------------------------------------------------------------
8 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits. Each optional living benefit requires participation in the PN program.
The fees apply only if you have selected one of these benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: CURRENT:
1.75% 0.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: CURRENT:
1.50% 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: CURRENT:
1.50% 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: CURRENT:
FEE 1.75% 0.60%(1)
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: CURRENT:
BENEFIT BASE RIDER FEE 2.00% 0.65%(1)
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 9
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.50% 1.50%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55% 0.25% 0.05% --% 0.85%
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(3)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(4)
Shares
--------------------------------------------------------------------------------
10 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80% 0.35% 0.29% --% 1.44%(5)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(6)
Service Shares
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(7)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(7)
3)
Wanger USA 0.86 -- 0.08 -- 0.94(8)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(9)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(9)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(10)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(9)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(9)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.915% for
Columbia Variable Portfolio - Large Cap Growth Fund (Class 3), 1.005% for
Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund (Class 3) and
0.925% for Columbia Variable Portfolio - Select Large-Cap Value Fund (Class
3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(5) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.35%. The
fee waivers and/or expense reimbursements will continue for at least one
year or until such time as the Fund's Board of Directors acts to
discontinue all or a portion of such waivers and/or reimbursements when it
deems that such action is appropriate.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 11
(6) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(7) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
(8) Other expenses have been restated to reflect contractual changes to certain
other fees.
(9) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
(10) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
12 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV Death Benefit, the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,318 $2,448 $3,608 $6,331 $598 $1,816 $3,065 $6,331
Five-year
withdrawal charge
schedule 1,339 2,416 3,339 6,493 619 1,875 3,158 6,493
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $1,303 $2,403 $3,537 $6,208 $583 $1,772 $2,995 $6,208
Five-year
withdrawal charge
schedule 1,323 2,372 3,269 6,372 603 1,831 3,088 6,372
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $967 $1,375 $1,775 $2,494 $225 $689 $1,175 $2,494
Five-year
withdrawal charge
schedule 985 1,335 1,479 2,705 245 751 1,279 2,705
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule $952 $1,331 $1,696 $2,333 $209 $642 $1,096 $2,333
Five-year
withdrawal charge
schedule 971 1,291 1,401 2,547 230 704 1,201 2,547
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 13
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix L.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. These
relationships may influence recommendations your investment professional makes
regarding whether you should invest in the contract, and whether you should
allocate purchase payments or contract values to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a
--------------------------------------------------------------------------------
14 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
redemption request. These losses can be greater if the fund holds securities
that are not as liquid as others, for example, various types of bonds, shares
of smaller companies and securities of foreign issuers. A fund may also
experience higher expenses because it must sell or buy securities more
frequently than it otherwise might in the absence of asset allocation program
rebalancing or reallocations. Because asset allocation programs include
periodic rebalancing and may also include reallocation, these effects may
occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 15
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
16 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS International
Value Portfolio
(Class B)
----------------------------------------------------------------------------------------
American Century Seeks long-term total return using a American Century
VP Inflation strategy that seeks to protect against U.S. Investment Management,
Protection, Class inflation. Inc.
II
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. American Century
VP Ultra(R), Investment Management,
Class II Inc.
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Value, Class secondary objective. Investment Management,
II Inc.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Non-diversified fund that seeks total Columbia Management
Portfolio - Glob- return that exceeds the rate of inflation Investment Advisers, LLC
al Inflation over the long term.
Protected
Securities Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high total return through current Columbia Management
Portfolio - Inco- income and capital appreciation. Investment Advisers, LLC
me Opportunities
Fund (Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 17
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Large-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Dreyfus Seeks capital appreciation. The Dreyfus Corporation
Investment
Portfolios
Technology Growth
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth. The Dreyfus Corporation
Investment Fund
International
Value Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks as high level of current income as is Fidelity Management &
Investment Grade consistent with the preservation of Research Company (FMR)
Bond Portfolio capital. Normally invests at least 80% of is the fund's manager.
Service Class 2 assets in investment-grade debt securities Fidelity Investments
(those of medium and high quality) of all Money Management, Inc.
types and repurchase agreements for those (FIMM) and other
securities. investment advisers
serve as sub-advisers
for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks high current income, consistent with Franklin Advisers, Inc.
Global Bond preservation of capital, with capital
Securities appreciation as a secondary consideration.
Fund - Class 2 The fund normally invests at least 80% of
its net assets in bonds, which include debt
securities of any maturity, such as bonds,
notes, bills and debentures.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide above average current Morgan Stanley
UIF U.S. Real income and long-term capital appreciation Investment Management
Estate Portfolio, by investing primarily in equity securities Inc.
Class II Shares of companies in the U.S. real estate
industry, including real estate investment
trusts.
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Small Seeks capital appreciation. Putnam Investment
Cap Value Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 2) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 19
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 4) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
2) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
4) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Gold- Investment Advisers,
man Sachs Mid Cap LLC, adviser; Goldman
Value Fund (Class Sachs Asset Management,
3) L.P., subadviser.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 2) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 4) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
2) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
4) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
2) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
4) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 21
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The required
minimum investment in each GPA is $1,000. These accounts are not offered after
annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns earned on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. Interest rates offered may vary by state,
but will not be lower than state law allows. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or withdraw the contract value (subject to
applicable withdrawal provisions). If we do not receive any instructions at the
end of your guarantee period, our current practice is to automatically transfer
the contract value into the shortest GPA term offered in your state.
--------------------------------------------------------------------------------
22 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30 day rule). At all other
times, and unless one of the exceptions to the 30 day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under the Guarantor Withdrawal Benefit rider, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early withdrawals." The application of an
MVA may result in either a gain or loss of principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; or
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE ONE-YEAR FIXED ACCOUNT
Unless the PN program is in effect, you may allocate purchase payments or
transfer accumulated value to the one-year fixed account. We back the principal
and interest guarantees relating to the one-year fixed account. These guarantees
are based on the continued claims-paying ability of the company's general
account. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. The financial statements
contained in the SAI include a further discussion of the risks inherent within
the investments of the general account. The value of the one-year fixed account
increases as we credit interest to the account. Purchase payments and transfers
to the one-year fixed account become part of our general account. We credit and
compound interest daily based on a 365-day year (366 in a leap year) so as to
produce the annual effective rate which we declare. The interest rate we apply
to each purchase payment or transfer to the one-year fixed account is guaranteed
for one year. Thereafter we will change the rates from time-to-time at our
discretion. These rates will be based on various factors including, but not
limited to, the interest rate environment, returns earned on investments backing
these annuities, the rates currently in effect for new and existing RiverSource
Life annuities, product design, competition, and RiverSource Life's revenues and
expenses. The guaranteed minimum interest rate offered may vary by state but
will not be lower than state law allows.
There are restrictions on the amount you can allocate to this account as well as
on transfers from this account (see "Making the Most of Your
Contract -- Transfer policies").
The one-year fixed account is not required to be registered with the SEC. The
SEC staff does not review the disclosures in this prospectus on the one-year
fixed account, however, disclosures regarding the one-year fixed account may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 23
other steps we deem reasonable. As the owner, you have all rights and may
receive all benefits under the contract. You can own a qualified or nonqualified
annuity. Generally, you can own a nonqualified annuity in joint tenancy with
rights of survivorship only in spousal situations. You cannot own a qualified
annuity in joint tenancy. You can become an owner if you are 85 or younger. (The
age limit may be younger for qualified annuities in some states.)
When you applied, you could have selected (if available in your state):
GPAs, the one-year fixed account and/or subaccounts in which you want to
invest;
how you want to make purchase payments;
the length of the withdrawal charge schedule (5 or 7 years);
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit;
- MAV Death Benefit;
- 5% Accumulation Death Benefit(2); or
- Enhanced Death Benefit(2).
In addition, you also could have selected (if available in your state):
ANY ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PN
PROGRAM):
Accumulation Protector Benefit rider
Guarantor Withdrawal Benefit rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature.
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account and/or the subaccounts of the variable account in even 1%
increments subject to the $1,000 required minimum investment for the GPAs. The
amount of any purchase payment allocated to the one-year fixed account in total
cannot exceed 30% of the purchase payment. More than 30% of a purchase payment
may be so allocated if you establish a dollar-cost averaging arrangement with
respect to the purchase payment according to procedures currently in effect. We
reserve the right to further limit purchase payment allocations to the one-year
fixed account if the interest rate we are then crediting on new purchase
payments allocated to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
If we receive your purchase payment at our corporate office before the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the valuation date
we received the payment. If we receive your purchase payment at our corporate
office at or after the close of business, we will credit any portion of that
payment allocated to the subaccounts using the accumulation unit value we
calculate on the next valuation date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different future
--------------------------------------------------------------------------------
24 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
date, depending on your needs and goals and on certain restrictions. You also
can change the retirement date, provided you send us written instructions at
least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply. Additional purchase payments are restricted during
the waiting period after the first 180 days immediately following the
effective date of the Accumulation Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider and Enhanced Guarantor
Withdrawal Benefit rider, subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans.
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 25
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
Contracts with a seven-year withdrawal charge schedule will receive a purchase
payment credit with any payment made to the contract. If you have a seven-year
withdrawal charge schedule, we apply a credit to your contract of 1% of your
current payment. We apply this credit immediately. We allocate the credit to the
GPAs, the one-year fixed account and the subaccounts in the same proportions as
your purchase payment.
Purchase payment credits are not available for contracts with a five-year
withdrawal charge schedule.
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit payment under this contract; or (2) a
request for withdrawal charge waiver due to "Contingent events" (see
"Charges -- Contingent events"), we will assess a charge, similar to a
withdrawal charge, equal to the amount of the purchase payment credits. The
amount we pay to you under these circumstances will always equal or exceed your
withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available through revenue from higher withdrawal charges and
contract administrative charges than would otherwise be charged. In general, we
do not profit from the higher charges assessed to cover the cost of the purchase
payment credit. We use all the revenue from these higher charges to pay for the
cost of the credits. However, we could profit from the higher charges if market
appreciation is higher than expected or if contract owners hold their contracts
for longer than expected.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
--------------------------------------------------------------------------------
26 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contact is fully withdrawn. We prorate this charge among the GPAs, the one-year
fixed account, and the subaccounts in the same proportion your interest in each
account bears to your total contract value. Some states also limit any contract
charge allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the one-year fixed
account. We cannot increase these fees.
The mortality and expense risk fee you pay is based on the death benefit
guarantee you select, whether the contract is a qualified annuity or a
nonqualified annuity and the withdrawal charge schedule that applies to your
contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP Death Benefit 1.00% 1.15%
MAV Death Benefit 1.20 1.35
5% Accumulation Death Benefit 1.35 1.50
Enhanced Death Benefit 1.40 1.55
FIVE-YEAR WITHDRAWAL SCHEDULE
ROP Death Benefit 1.20 1.35
MAV Death Benefit 1.40 1.55
5% Accumulation Death Benefit 1.55 1.70
Enhanced Death Benefit 1.60 1.75
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 27
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value before annuity payouts begin,
we may deduct a withdrawal charge. As described below, a withdrawal charge
applies to each purchase payment you make. The withdrawal charge lasts for 7
years or 5 years from the receipt of each purchase payment, depending on which
withdrawal charge schedule you select when you purchase the contract (See
"Expense Summary").
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract includes the Guarantor Withdrawal Benefit rider:
CONTRACTS WITHOUT GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary*; or
current contract earnings.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary*;
current contract earnings; or
the Remaining Benefit Payment.
* We consider your initial purchase payment and purchase payment credit to be
the prior contract anniversary's contract value during the first contract
year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal
charge schedule attaches to that purchase payment. The withdrawal charge
percentage for each purchase payment declines according to the withdrawal charge
schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 5-
YEAR AND 7-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select the 7-Year withdrawal charge
schedule, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
3%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a withdrawal charge as to that payment.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix C.
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
--------------------------------------------------------------------------------
28 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge.)
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct a charge of 0.55% of the greater of your contract value or the minimum
contract accumulation value on your contract anniversary for this optional
benefit only if you select it. We deduct the charge from the contract value on
the contract anniversary. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion as your interest in
each bears to your total contract value. We will modify this prorated approach
to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each investment option. The Accumulation Protector Benefit rider
fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 29
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee;
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each investment
option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE
THIS FEE INFORMATION APPLIES TO BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER
B (SEE APPENDIX H) UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the charge that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you select it. We determine
the charge by multiplying the guaranteed income benefit base by the charge of
the Income Assurer Benefit rider you select. There are three Income Assurer
Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
30 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
We deduct the charge from the contract value on your contract anniversary at the
end of each contract year. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion your interest in each
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
rider fee after the rider effective date, unless you change your PN program
investment option after we have exercised our rights to increase the rider
charge and/or charge a separate fee for PN program each investment option. If
you choose to change your investment option after we have exercised our rights
to increase the rider fee for new contract owners, you will pay the fee that is
in effect on the valuation date we receive your written request to change your
PN program investment option. On the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
For an example of how each Income Assurer Benefit fee is calculated, see
Appendix B.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS AND ONE-YEAR FIXED ACCOUNT
We value the amounts you allocate to the GPAs and the one-year fixed account
directly in dollars. The value of the GPAs and the one-year fixed account
equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs
and the one-year fixed account (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account);
plus any purchase payment credits allocated to the GPAs and one-year fixed
account;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 31
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more
--------------------------------------------------------------------------------
32 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
aggressive one, or to several others, or from the one-year GPA or one-year fixed
account to one or more subaccounts. Automated transfers are not available for
GPA terms of two or more years. You can also obtain the benefits of dollar-cost
averaging by setting up regular automatic SIP payments or by establishing an
interest sweep strategy. Interest sweeps are a monthly transfer of the interest
earned from either the one-year GPA or one-year fixed account into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year GPA or the one-year fixed account will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Automated dollar-cost averaging is not available when the PN program is in
effect (see "Portfolio Navigator Program" below).
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Asset
Allocation Program" below).
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program called Portfolio Navigator. You could elect to participate in
the asset allocation program, and there is no additional charge. If you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you are required to participate
in the PN program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 33
various asset classes. By spreading your contract value among these various
asset classes, you may be able to reduce the volatility in your contract value,
but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Currently, there are five model portfolios ranging from conservative to
aggressive. You may not use more than one model portfolio at a time. You are
allowed to request a change to another model portfolio twice per contract year.
Each model portfolio specifies allocation percentages to each of the subaccounts
and any GPAs and/or the one-year fixed account that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs and/or one-year fixed
account (if included) according to the allocation percentages stated for the
specific model portfolio you have selected. You also authorize us to
automatically rebalance your contract value quarterly beginning three months
after the effective date of your contract in order to maintain alignment with
the allocation percentages specified in the model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account (if included) that make up the model portfolio you selected
and the allocation percentages to those subaccounts, any GPAs and/or the one-
year fixed account (if included) will not change unless we adjust the
composition of the model portfolio to reflect the liquidation, substitution or
merger of an underlying fund, a change of investment objective by an underlying
fund or when an underlying fund stops selling its shares to the variable
account. We reserve the right to change the terms and conditions of the asset
allocation program upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT
RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER
If you are required to participate in the asset allocation program because you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you may not discontinue your
participation in the asset allocation program unless permitted by the terms of
the rider as summarized below:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the model
portfolios. The Accumulation Protector Benefit rider automatically ends at the
end of the waiting period as does the requirement that you participate in the
asset allocation program. At all other times, if you do not want to
participate in any of the model portfolios, you must terminate your contract
by requesting a full withdrawal. Withdrawal charges and tax penalties may
apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL
PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit
rider requires that your contract value be invested in one of the model
portfolios for the life of the contract, and you cannot terminate the
Guarantor Withdrawal Benefit rider once you have selected it, you must
terminate your contract by requesting a full withdrawal if you do not want to
participate in any of the model portfolios. Withdrawal charges and tax
penalties may apply. THEREFORE, YOU SHOULD NOT
--------------------------------------------------------------------------------
34 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
SELECT THE GUARANTOR WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE
PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit
rider during a 30-day period after the first rider anniversary and at any time
after the expiration of the waiting period. At all other times, if you do not
want to participate in any of the model portfolios, you must terminate your
contract by requesting a full withdrawal. Withdrawal charges and tax penalties
may apply. As long as the Income Assurer Benefit rider is in effect, your
contract value must be invested in one of the model portfolios. THEREFORE, YOU
SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF
TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 35
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
36 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or to another subaccount before annuity payouts begin. Certain
restrictions apply to transfers involving the GPAs and the one-year fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the one-year
fixed account if the interest rate we are then currently crediting to the one-
year fixed account is equal to the minimum interest rate stated in the
contract.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. We reserve the right to further limit
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 37
transfers to or from the one-year fixed account if the interest rate we are
then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
If you select a variable annuity payout, once annuity payouts begin, you may
make transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to the GPAs or the
one-year fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
--------------------------------------------------------------------------------
38 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 39
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
GPAs, one-year fixed account or the subaccounts or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months.
Transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA Fixed Account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have a Guarantor Withdrawal Benefit rider, you may set up automated
partial withdrawals up to the benefit available for withdrawal under the
rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office before the close of business, we will
process your withdrawal using the accumulation unit value we calculate on the
valuation date we received your withdrawal request. If we receive your
withdrawal request at our corporate office at or after the close of business, we
will process your withdrawal using the accumulation unit value we calculate on
the next valuation date after we received your withdrawal request. We may ask
you to return the contract. You may have to pay a contract administrative
charge, withdrawal charges or any applicable optional rider charges (see
"Charges"), federal income taxes and penalties. State and local income taxes may
also apply (see "Taxes"). In
--------------------------------------------------------------------------------
40 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
addition, purchase payment credits may be reversed. You cannot make withdrawals
after annuity payouts begin except under Annuity Payout Plan E. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the Guarantor Withdrawal
Benefit rider and your partial withdrawals in any contract year exceed the
permitted withdrawal amount under the terms of the Guarantor Withdrawal Benefit
rider, your benefits under the rider may be reduced (see "Optional Benefits").
Any partial withdrawal request that exceeds the amount allowed under the riders
and impacts the guarantees provided will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the withdrawal on the rider benefits or a verbal acknowledgement that
you understand and accept the impacts that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs
and/or the one-year fixed account in the same proportion as your value in each
account correlates to your total contract value, unless requested otherwise.
After executing a partial withdrawal, the value in the one-year fixed account
and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 41
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding on us when we receive and record it. We will honor any
change of ownership request received in good order that we believe is authentic
and we will use reasonable procedures to confirm authenticity. If we follow
these procedures, we will not take any responsibility for the validity of the
change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit and/or Benefit Protector Plus rider, the
rider will terminate upon transfer of ownership of the annuity contract. The
Accumulation Protector Benefit, and the Guarantor Withdrawal Benefit riders will
continue upon transfer of ownership of your annuity contract. Continuance of the
Benefit Protector is optional. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit;
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit, less any purchase payment
credits subject to reversal, to your beneficiary upon the earlier of your death
or the annuitant's death. We will base the benefit paid on the death benefit
coverage you chose when you purchased the contract. If a contract has more than
one person as the owner, we will pay benefits upon the first to die of any owner
or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
--------------------------------------------------------------------------------
42 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial withdrawals.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%;
plus any subsequent amounts allocated to the subaccounts;
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts and subtract adjusted transfers and
partial withdrawals from the subaccounts. On each contract anniversary after the
first, through age 80, we add an amount to the variable account floor equal to
5% of the prior anniversary's variable account floor. We stop adding this amount
after you or the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT the amount by which the contract value in the subaccounts is reduced as a
= result of the partial withdrawal or transfer from the subaccounts.
VAF variable account floor on the date of (but prior to) the transfer or partial
= withdrawal.
SV value of the subaccounts on the date of (but prior to) the transfer of partial
= withdrawal.
The amount of purchase payments and any purchase payment credits withdrawn or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts that have not been withdrawn or transferred out of
the subaccounts.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for withdrawals. If you or the annuitant die before annuity
payouts begin and while this contract is in force, the death benefit will be the
greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 43
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix D.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus
riders, if selected, will terminate. The Accumulation Protector Benefit and
Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance of
the Benefit Protector rider is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in
--------------------------------------------------------------------------------
44 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
which you would have reached age 70 1/2. If you attained age 70 1/2 at the
time of death, payouts must begin no later than Dec. 31 of the year following
the year of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and the Benefit Protector Plus riders, if
selected, will terminate. The Accumulation Protector Benefit rider and
Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance
of the Benefit Protector is optional. (See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 45
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
Guarantor Withdrawal Benefit rider or any Income Assurer Benefit rider.
The Accumulation Protector Benefit may not be available in all states.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
available investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Asset Allocation Program" and "Portfolio
Navigator Program.");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those used to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit(R) rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the Elective Step Up Option (described below) or your
surviving spouse exercises the spousal continuation Elective Step Up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program model portfolio or
investment option to one that causes the Accumulation Protector Benefit rider
charge to increase (see "Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credit. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
--------------------------------------------------------------------------------
46 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix E.
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that you may
select for an additional annual charge if:
your contract application was signed on or after April 29, 2005(1),(2);
you and the annuitant are 79 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) In previous disclosures, we have referred to this rider as Rider A. We also
offered an earlier version of this rider, previously referred to as Rider B.
See Appendix F for information regarding Rider B which is no longer offered.
See the rider attached to your contract for the actual terms of the benefit
you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 47
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: If you selected this Guarantor
Withdrawal Benefit rider before May 1, 2006, you must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"), however, you may have elected to participate in the Portfolio
Navigator program after May 1, 2006. The Portfolio Navigator program and the
asset allocation program limit your choice of investments. This means you will
not be able to allocate contract value to all of the subaccounts, GPAs or the
one-year fixed account that are available under the contract to contract
owners who do not elect this rider. (See "Making the Most of Your
Contract -- Asset Allocation Program and Portfolio Navigator Program.");
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may also
incur a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change. See Appendix G for additional information. RMD rules
follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
--------------------------------------------------------------------------------
48 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current purchase payment restrictions, please
see "Buying Your Contract -- Purchase Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups;
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 49
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary (see "Elective Step Up" below). The GBP is equal to 7% of the
GBA.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
If you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
If you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
If you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA
--------------------------------------------------------------------------------
50 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
excess withdrawal procedures discussed under the "Guaranteed Benefit Amount"
and "Remaining Benefit Amount" headings above; and
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 51
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix H.
INCOME ASSURER BENEFIT RIDERS
There are three optional Income Assurer Benefit riders available under your
contract:
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders,
--------------------------------------------------------------------------------
52 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
you will receive the higher standard payout option. The guaranteed income
benefit base does not create contract value or guarantee the performance of any
investment option.
The general information in this section applies to each Income Assurer Benefit
rider. This section is followed by a description of each specific Income Assurer
Benefit rider and how it is calculated.
You should consider whether an Income Assurer Benefit rider is appropriate for
you because:
you must participate in the PN program (see "Making the Most of Your
Contract -- Asset Allocation Program"), however, you may have elected to
participate in the PN program after May 1, 2006 (see "Making the Most of Your
Contract -- Portfolio Navigator Program"). The PN program and the asset
allocation program limit your choice of investments. This means you will not
be able to allocate contract value to all of the subaccounts, GPAs or the one-
year fixed account that are available under the contract to other contract
owners who do not elect this rider.
if you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the Code must begin, you should consider whether an
Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals you take
from the contract, including those used to satisfy RMDs, will reduce the
guaranteed income benefit base (defined below), which in turn may reduce or
eliminate the amount of any annuity payouts available under the rider. Consult
a tax advisor before you purchase any Income Assurer Benefit rider with a
qualified annuity;
you must hold the Income Assurer Benefit for 10 years unless you elect to
terminate the rider within 30 days following the first anniversary after the
effective date of the rider;
the 10-year waiting period may be restarted if you elect to change the
Portfolio Navigator investment option to one that causes the rider charge to
increase (see "Charges -- Income Assurer Benefit");
the Income Assurer Benefit rider terminates* 30 days following the contract
anniversary after the annuitant's 86th birthday; and
you can only exercise the Income Assurer Benefit within 30 days after a
contract anniversary following the expiration of the 10-year waiting period.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
If the Income Assurer Benefit rider is available in your state and the annuitant
is 75 or younger at contract issue, you may choose this optional benefit at the
time you purchase your contract for an additional charge. The amount of the
charge is determined by the Income Assurer Benefit you select (see
"Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider
will be the contract issue date. The Guarantor Withdrawal Benefit and the
Accumulation Protector Benefit riders are not available with any Income Assurer
Benefit rider. If the annuitant is between age 73 and age 75 at contract issue,
you should consider whether an Income Assurer Benefit rider is appropriate for
your situation because of the 10-year waiting period requirement. Be sure to
discuss with your investment professional whether an Income Assurer Benefit
rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as excluded investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 53
calculation of the variable account floor for the Income Assurer Benefit - 5%
Accumulation Benefit Base and the Income Assurer Benefit - Greater of MAV or 5%
Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the Waiting Period;
the annuitant on the retirement date must be between 50 to 86 years old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
-- Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. Exception: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate. These are the same rates used
in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables.")
Your annuity payouts remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your annuity variable payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
--------------------------------------------------------------------------------
54 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments and purchase payment credits made to the contract
minus proportionate adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and purchase payment credits made to the contract minus
proportionate adjustments for partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and purchase
payment credits and reduce the MAV by proportionate adjustments for partial
withdrawals. Every contract anniversary after that prior to the earlier of your
or the annuitant's 81st birthday, we compare the MAV to the current contract
value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and purchase payment credit multiplied by the ratio of
the current contract value over the estimated contract value on the anniversary
prior to such purchase payment. The estimated contract value at such anniversary
is calculated by assuming that payments, credits, and partial withdrawals
occurring in a contract year take place at the beginning of the year for that
anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and purchase payment credits made to the contract
minus proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and purchase payment credits made to the protected
investment options minus adjusted partial withdrawals and transfers from the
protected investment options; plus
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 55
an amount equal to 5% of your initial purchase payment and purchase payment
credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and purchase payment
credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and purchase payment credit and subtracting adjusted withdrawals and
adjusted transfers. On each subsequent contract anniversary after the first
anniversary of the effective date of this rider, prior to the earlier of your or
the annuitant's 81st birthday, we increase the variable account floor by adding
the amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
The amount of purchase payment and purchase payment credits withdrawn from or
transferred between the excluded investment options and the protected investment
options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current withdrawal or transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the
value from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments and purchase payment credits, less excluded payments,
less proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and purchase payment credits made to the contract
minus proportionate adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
--------------------------------------------------------------------------------
56 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
2. total purchase payments and purchase payment credits, less excluded payments,
less proportionate adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% variable account floor (described above), less 5% adjusted excluded
payments (described above).
For an example of how each Income Assurer Benefit is calculated, see Appendix I.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective
date. The Benefit Protector does not provide any additional benefit before the
first rider anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus rider, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
For an example, see Appendix J.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are age 70 or older at the rider
effective date. It does not provide any additional benefit before the first
rider anniversary and it does not provide any benefit beyond what is offered
under the Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector
Plus to you contract. You must elect the Benefit Protector Plus at the time you
purchase your
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 57
contract and your rider effective date will be the contract issue date. This
rider is only available for transfers, exchanges or rollovers from another
annuity or life insurance policy. You may not select this rider if you select
the Benefit Protector Rider, 5% Accumulation Death Benefit or the Enhanced Death
Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix K.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
--------------------------------------------------------------------------------
58 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
retirement date. If the annuitant outlives the elected guaranteed payout
period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 59
determine the present value of any remaining variable payouts and pay it to
you in a lump sum. (Exception: If you have an Income Assurer Benefit rider and
elect this annuity payout plan based on the Guaranteed Income Benefit Base, a
lump sum payout is unavailable.) We determine the present value of the
remaining annuity payouts which are assumed to remain level at the amount of
the payout that would have been made 7 days prior to the date we determine the
present value. The discount rate we use in the calculation is 5.71% for the
assumed investment return of 3.5% and 6.67% for the assumed investment return
of 5.0%. (See "Charges -- Withdrawal charge under Annuity Payout Plan E.") You
can also take a portion of the discounted value once a year. If you do so,
your monthly payouts will be reduced by the proportion of your withdrawal to
the full discounted value. A 10% IRS penalty tax could apply if you take a
withdrawal. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT RIDER): This annuity payout
option is an alternative to the above annuity payout plans. This option may
not be available if the contract is a qualified annuity. For such contracts,
this option will be available only if the guaranteed payment period is less
than the life expectancy of the owner at the time the option becomes
effective. Such life expectancy will be computed using a life expectancy table
published by the IRS. Under this option, the amount payable each year will be
equal to the remaining schedule of GBPs, but the total amount paid over the
life of the annuity will not exceed the total RBA at the time you begin this
fixed payout option (see "Guarantor Withdrawal Benefit Rider"). The amount
paid in the current contract year will be reduced for any prior withdrawals in
that year. These annualized amounts will be paid in the frequency that you
elect. The frequencies will be among those offered by us at the time but will
be no less frequent than annually. If, at the death of the owner, total
payouts have been made for less than the RBA, the remaining payouts will be
paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion
--------------------------------------------------------------------------------
60 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
of the unrecovered investment may be available as a federal income tax deduction
to the taxpayer for the tax year in which the payouts end. (See "The Annuity
Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 61
and also may be subject to the 10% IRS penalty discussed earlier. In this case,
the new owner's investment in the contract will be the value of the contract at
the time of the transfer. In general, this rule does not apply to transfers
between spouses or former spouses. Similar rules apply if you transfer ownership
for full consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
62 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 63
contract. However, the IRS may determine that these charges should be treated as
partial withdrawals subject to taxation to the extent of any gain as well as the
10% tax penalty for withdrawals before the age of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
--------------------------------------------------------------------------------
64 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.00% each time a purchase
payment is made as well as service/trail commissions of up to 1.00% of the
contract value based on annual total contract value for as long as the contract
remains in effect. We also may pay an additional sales commission of up to 1.00%
of purchase payments for a period of time we select. These commissions do not
change depending on which subaccounts you choose to allocate your purchase
payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 65
marketing practices (including sales to older consumers and disclosure
practices), claims handling, and unclaimed property and escheatment practices
and procedures. With regard to an industry-wide investigation of unclaimed
property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
66 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value p. 68 Guarantee Period Accounts (GPAs) p. 22
Adjustment (MVA)
Appendix B: Example -- Income Assurer p. 70 Charges -- Income Assurer Benefit Rider p. 30
Benefit Rider Fee Fee
Appendix C: Example -- Withdrawal p. 71 Charges -- Withdrawal Charges p. 28
Charges
Appendix D: Example -- Death Benefits p. 76 Benefits in Case of Death p. 42
Appendix E: Example -- Accumulation p. 79 Optional Benefits -- Accumulation p. 45
Protector Benefit Rider Protector Benefit Rider
Appendix F: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal p. 47
Withdrawal Benefit -- p. 81 Benefit Rider
Rider B Disclosure
Appendix G: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
Rider -- p. 86 Benefit Rider and Appendix F p. 81
Additional RMD Disclosure
Appendix H: Example -- Guarantor p. 87 Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit Rider Benefit Rider and Appendix F p. 81
Appendix I: Example -- Income Assurer p. 89 Optional Benefits -- Income Assurer p. 52
Benefit Riders Benefit Riders
Appendix J: Example -- Benefit Protector p. 94 Optional Benefits -- Benefit Protector p. 57
Death Benefit Rider Death Benefit Rider
Appendix K: Example -- Benefit Protector p. 96 Optional Benefits -- Benefit Protector p. 57
Plus Death Benefit Rider Plus Death Benefit Rider
Appendix L: Condensed Financial p. 98 Condensed Financial Information p. 14
Information (Unaudited) (Unaudited)
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs and one-year fixed account and
the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices D through F and
H through K include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 67
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 7%, if you elected the
seven-
--------------------------------------------------------------------------------
68 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
year withdrawal charge schedule and 4% if you elected a five-year withdrawal
charge schedule. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to
the amounts we deduct for withdrawal charges, so we would deduct the withdrawal
charge from your early withdrawal after we applied the MVA. Also note that when
you request an early withdrawal, we withdraw an amount from your GPA that will
give you the net amount you requested after we apply the MVA and any applicable
withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 69
APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
ASSUMPTIONS:
You purchase the contract with a payment of $50,000 and we add a $500 purchase
payment credit. You allocate all of your payment to the Protected Investment
Options and make no transfers, add-ons or withdrawals. You select a seven-year
withdrawal charge schedule; and
On the first contract anniversary your total contract value is $55,545; and
On the second contract anniversary your total contract value is $53,270.
WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER
BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS:
THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments and purchase payment credits less adjusted partial
withdrawals: $50,500
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS
THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments and purchase payment credits less adjusted partial
withdrawals: $50,500
Contract value on the second anniversary: $53,270
5% Variable Account Floor = 1.05 x 1.05 x $50,500 $55,676
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,676
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME
BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments and purchase payment credits less adjusted partial
withdrawals: $50,500
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,676
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE $55,676
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE:
INCOME ASSURER BENEFIT - MAV FEE = 0.30% X $55,545 = $166.64
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = 0.60% X $55,676 = $334.06
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION
BENEFIT BASE FEE = 0.65% X $55,676 = $361.89
--------------------------------------------------------------------------------
70 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for a contract with a four-year withdrawal charge
schedule. Each example illustrates the amount of the withdrawal charge for both
a contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value or your contract's remaining benefit
payment if you elected the Guarantor Withdrawal Benefit rider and your
remaining benefit payment is greater than 10% of your prior anniversary's
contract value. We do not assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA or the one-year
fixed account. If the contract value is less than purchase payments received and
not previously withdrawn (PPNPW) then contract earnings are zero.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 71
FULL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we add a purchase payment
credit of $500;
During the fourth contract year you withdraw the contract for its total value.
The withdrawal charge percentage in the fourth year after a purchase payment
is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
72 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you request
to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
--------- ---------
NET FULL WITHDRAWAL PROCEEDS: 56,460.00 36,754.00
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 73
PARTIAL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we add a purchase payment
credit of $500;
During the fourth contract year you request a net partial withdrawal of
$15,000.00. The withdrawal charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings available
in the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,376.34 16,062.31
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 5,376.34 16,062.31
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
74 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 5,376.34 19,375.80
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you request
to withdraw:
PPW: 5,376.34 19,375.80
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 5,376.34 15,175.80
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,376.34 16,062.31
WITHDRAWAL CHARGE: (376.34) (1,062.31)
--------- ---------
NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 75
APPENDIX D: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000 and select a seven-year
withdrawal charge schedule. We add a $200 purchase payment credit; and
On the first contract anniversary you make an additional purchase payment of
$5,000 and we add a purchase payment credit of $50; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal (including withdrawal charges); and
On the third contract anniversary the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS PLUS PURCHASE PAYMENT CREDITS, MINUS ADJUSTED PARTIAL
WITHDRAWALS:
Total purchase payments and purchase payment credits: $25,250.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,250
---------------- = -1,721.59
$22,000
----------
for a death benefit of: $23,528.41
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,528.41
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000 and select a seven-year
withdrawal charge schedule. We add a purchase payment credit of $200; and
On the first contract anniversary the contract value grows to $24,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 partial withdrawal (including withdrawal charges),
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
WITHDRAWALS:
Total purchase payments and purchase payment credits: $20,200.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $20,200
---------------- = -1,377.27
$22,000
----------
for a death benefit of: $18,822.73
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary contract values: $24,000.00
plus purchase payments and credits made since that anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $24,000
---------------- = -1,636.36
$22,000
----------
for a death benefit of: $22,363.64
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $22,363.64
--------------------------------------------------------------------------------
76 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and select a seven-year
withdrawal charge schedule. We add a purchase payment credit of $250 to your
contract. You allocate $5,100 to the one-year fixed account and $20,150 to the
subaccounts; and
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial withdrawal (including withdrawal charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $ 22,800.00
-----------
2. PURCHASE PAYMENTS PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
WITHDRAWALS:
Total purchase payments and purchase payment credits: $ 25,250.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,250
------------------- = -1,558.64
$24,300
-----------
for a death benefit of: $ 23,691.36
-----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $ 21,157.50
1.05 x $20,150 =
plus purchase payments and purchase payment credits allocated to the
subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,157.50
------------------- = -$1,670.33
$19,000
-----------
variable account floor benefit: $ 19,487.17
plus the one-year fixed account value: +$5,300.00
-----------
5% variable account floor (value of the GPAs, the one-year fixed account
and the variable account floor): $ 24,787.17
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,787.17
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 77
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and select a seven-year
withdrawal charge schedule. We add a $250 purchase payment credit. You
allocate $5,000 to the one-year fixed account and $20,250 to the subaccounts;
and
On the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $22,200; and
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial withdrawal (including withdrawal charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
WITHDRAWALS:
Total purchase payments and purchase payment credits: $25,250.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,250
------------------- = -1,558.64
$24,300
----------
for a death benefit of: $23,691.36
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,250.00
plus purchase payments and purchase payment credits made since that
anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,250
------------------- = -1,558.64
$24,300
----------
for a MAV Death Benefit of: $23,691.36
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated as:
1.05 x $20,250 = $21,262.50
plus purchase payments and purchase payment credits allocated to the
subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,262.50
------------------- = -1,678.62
$19,000
----------
variable account floor benefit: $19,583.88
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the GPAs, one-year fixed account and the $24,883.88
variable account floor):
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE
ACCOUNT FLOOR: $24,883.88
--------------------------------------------------------------------------------
78 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
AUTOMATIC STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
in the second, third and seventh contract anniversaries. These increases occur
because of the automatic step up feature of the rider. The automatic step up
does not create contract value, guarantee the performance of any underlying fund
in which a subaccount invests, or provide a benefit that can be withdrawn or
paid upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV which determines whether a benefit will be paid under
the rider on the Benefit Date.
ASSUMPTIONS:
You purchase a contract with a seven-year withdrawal schedule with a payment
of $123,762 and receive a purchase payment credit of $1,238; and
you make no additional purchase payments to the contract; and
you take partial withdrawals from the contract on the fifth and eighth
contract anniversaries in the amounts of $2,000 and $5,000, respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and
you do not exercise the elective step up option available under the rider; and
you do not change PN program investment options.
Based on these assumptions, the waiting period expires at the end of the 10th
contract year. The rider then ends. On the benefit date, the hypothetical
assumed contract value is $108,118 and the MCAV is $136,513, so the contract
value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT ADJUSTED ASSUMED ASSUMED
DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 0 0 0 12.0% 140,000 125,000
2 0 0 0 15.0% 161,000 128,800(2)
3 0 0 0 3.0% 165,830 132,664(2)
4 0 0 0 -8.0% 152,564 132,664
5 0 2,000 2,046 -15.0% 127,679 130,618
6 0 0 0 20.0% 153,215 130,618
7 0 0 0 15.0% 176,197 140,958(2)
8 0 5,000 4,444 -10.0% 153,577 136,513
9 0 0 0 -20.0% 122,862 136,513
10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date.
(2) These values indicate where the automatic step up feature increased the
MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the waiting period causes the contract
value to equal or exceed the MCAV on the benefit date, no benefit is paid
under this rider.
Even if a benefit is paid under the rider on the benefit date, contract value
allocated to the variable account after the benefit date continues to vary
with the market and may go up or go down.
ELECTIVE STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
on the first, second, third and seventh contract anniversaries. These increases
occur only if you exercise the elective step up option within 30 days following
the contract anniversary. The contract value on the date we receive your written
request to step up must be greater than the MCAV on that date. The elective step
up does not create contract value, guarantee the performance of any underlying
fund in which a subaccount invests, or provide a benefit that can be withdrawn
or paid upon death. Rather, the Elective Step Up is an interim calculation used
to arrive at the final MCAV which determines whether a benefit will be paid
under the rider on the Benefit Date.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 79
ASSUMPTIONS:
You purchase a contract with a seven-year withdrawal schedule with a payment
of $123,762 and receive a purchase payment credit of $1,238; and
you make no additional purchase payments to the contract; and
you take partial withdrawals from the contract on the fifth, eighth and
thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500,
respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and,
the Elective Step up is exercised on the first, second, third and seventh
contract anniversaries; and
you do not change asset allocation models.
Based on these assumptions, the 10 year waiting period restarts each time you
exercise the elective step up option (on the first, second, third and seventh
contract anniversaries in this example). The waiting period expires at the end
of the 10th contract year following the last exercise of the elective step up
option. When the waiting period expires, the rider ends. On the benefit date the
hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the
contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED
DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 10(2) 0 0 0 12.0% 140,000 140,000(3)
2 10(2) 0 0 0 15.0% 161,000 161,000(3)
3 10(2) 0 0 0 3.0% 165,830 165,830(3)
4 9 0 0 0 -8.0% 152,564 165,830
5 8 0 2,000 2,558 -15.0% 127,679 163,272
6 7 0 0 0 20.0% 153,215 163,272
7 10(2) 0 0 0 15.0% 176,197 176,197(3)
8 9 0 5,000 5,556 -10.0% 153,577 170,642
9 8 0 0 0 -20.0% 122,862 170,642
10 7 0 0 0 -12.0% 108,118 170,642
11 6 0 0 0 3.0% 111,362 170,642
12 5 0 0 0 4.0% 115,817 170,642
13 4 0 7,500 10,524 5.0% 114,107 160,117
14 3 0 0 0 6.0% 120,954 160,117
15 2 0 0 0 -5.0% 114,906 160,117
16 1 0 0 0 -11.0% 102,266 160,117
17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB Benefit Date.
(2) The Waiting Period restarts when the Elective Step Up is exercised.
(3) These values indicate when the Elective Step Up feature increased the MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the Waiting Period causes the contract
value to equal or exceed the MCAV on the Benefit Date, no benefit is paid
under this rider.
Exercising the Elective Step up provision may result in an increase in the
charge that you pay for this rider.
Even if a benefit is paid under the rider on the Benefit Date, contract value
allocated to the variable account after the Benefit Date continues to vary
with the market and may go up or go down.
--------------------------------------------------------------------------------
80 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that was offered
for an additional annual charge if:
your contract application was signed prior to April 29, 2005(1),(2);
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) In previous disclosure, we have referred to this rider as Rider B. This
rider is no longer available for purchase. See the Guarantor Withdrawal
Benefit sections in this prospectus for information about currently offered
versions of this benefit. See the rider attached to your contract for the
actual terms of the benefit you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"), however, you may have elected to participate in the PN program
after May 1, 2006 (see "Making the Most of Your Contract -- Portfolio
Navigator Program"). The PN program and the asset allocation program limit
your choice of investments. This means you will not be able to allocate
contract value to all of the subaccounts, GPAs or the one-year fixed account
that are available under the contract to contract owners who do not elect this
rider;
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 81
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may also
incur a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change. See Appendix G for additional information. RMD rules
follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current purchase payment restrictions, please
see "Buying Your Contract -- Purchase Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups:
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
--------------------------------------------------------------------------------
82 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- the following excess withdrawal procedure will be applied to
the RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of
the GBA; or (b) the RBA.
If you withdraw less than the GBP in a contract year, there is no carry over to
the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 83
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
if you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract anniversary value is greater than the RBA.
The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
--------------------------------------------------------------------------------
84 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A spousal continuation step up occurs automatically when the spouse elects to
continue the contract. The rider charge will not change upon this automatic step
up.
Under this step up, the RBA will be reset to the greater of the RBA on the
valuation date we receive the spouse's written request to continue the contract
and the death benefit that would otherwise have been paid; the GBA will be reset
to the greater of the GBA on the valuation date we receive the spouse's written
request to continue the contract and the death benefit that would otherwise have
been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 85
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT RIDER --
ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit rider (including Riders A and B) to satisfy the RMD
rules under 401(a)(9) of the Code without application of the excess withdrawal
procedures described in the rider. We reserve the right to modify this
administrative practice at any time upon 30 days' written notice to you.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules will not prompt excess
withdrawal processing, subject to the following rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current contract
year, an Additional Benefit Amount (ABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and reduce
the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any additional
amounts withdrawn will count against and reduce any ABA. These withdrawals
will not be considered excess withdrawals as long as they do not exceed the
remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit rider is attached as of the date we make the determination; and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable, on the effective date of this
prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit rider may not be sufficient to satisfy the requirements under
the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your RBP amount
and may result in the reduction of your GBA and RBA as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g. ownership
by a trust or a charity), we will calculate the life expectancy RMD amount
calculated by us as zero in all years. The life expectancy required minimum
distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
86 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH
RIDER A AND RIDER B (SEE "OPTIONAL BENEFITS").
ASSUMPTIONS:
You purchase the contract with a payment of $100,000, and you select a 7-year
withdrawal charge schedule.
We add a purchase payment credit of $1,000 to your contract.
The Guaranteed Benefit Amount (GBA) equals your purchase payment
plus the purchase payment credit: $101,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $101,000 = $ 7,070
The Remaining Benefit Amount (RBA) equals your purchase payment plus
the purchase payment credit: $101,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
We add a purchase payment credit of $500 to your contract.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment and purchase payment credit:
$102,300 + $50,500 = $152,800
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment and purchase payment credit:
$110,000 + $50,500 = $160,500
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment and purchase payment credit:
$7,700 + $3,535 = $ 11,235
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 87
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
88 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX I: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "Protected Investment Options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (Protected Investment Options). Some PN program investment options
include Protected Investment Options and Excluded Investment Options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and/or the one-year fixed account). Excluded Investment Options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in the PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2005 calendar year with a payment of
$100,000 and elect the seven-year withdrawal charge schedule; and
we immediately add a $1,000 purchase payment credit; and
you invest all contract value in the subaccounts (Protected Investment
Options); and
you make no additional purchase payments, partial withdrawals or changes in
the PN program investment options; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED PURCHASE MAXIMUM GUARANTEED
CONTRACT CONTRACT PAYMENTS ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE AND CREDITS VALUE (MAV)(1) BASE - MAV(2)
----------------------------------------------------------------------------------
1 $109,000 $101,000 $109,000 $109,000
2 127,000 none 127,000 127,000
3 134,000 none 134,000 134,000
4 153,000 none 153,000 153,000
5 86,000 none 153,000 153,000
6 122,000 none 153,000 153,000
7 141,000 none 153,000 153,000
8 155,000 none 155,000 155,000
9 142,000 none 155,000 155,000
10 176,000 none 176,000 176,000
11 143,000 none 176,000 176,000
12 150,000 none 176,000 176,000
13 211,000 none 211,000 211,000
14 201,000 none 211,000 211,000
15 206,000 none 211,000 211,000
----------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 89
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan B
Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT(R) - MAV
CONTRACT ----------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
-------------------------------------------------------------------------------------------------
10 $176,000 $ 784.96 $176,000 $ 784.96
11 143,000 654.94 176,000 806.08
12 150,000 703.50 176,000 825.44
13 211,000 1,017.02 211,000 1,017.02
14 201,000 992.94 211,000 1,042.34
15 206,000 1,046.48 211,000 1,071.88
-------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan D
Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT(R) - MAV
CONTRACT ---------------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST SURVIVOR GUARANTEED INCOME PLAN D - LAST SURVIVOR
AT EXERCISE CONTRACT VALUE NO REFUND* BENEFIT BASE NO REFUND*
------------------------------------------------------------------------------------------------------------
10 $176,000 $631.84 $176,000 $631.84
11 143,000 524.81 176,000 645.92
12 150,000 562.50 176,000 660.00
13 211,000 810.24 211,000 810.24
14 201,000 791.94 211,000 831.34
15 206,000 832.24 211,000 852.44
------------------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
90 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED PURCHASE BENEFIT BASE -
CONTRACT CONTRACT PAYMENTS 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE AND CREDITS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------------
1 $109,000 $101,000 $106,050 $109,000
2 127,000 none 111,353 127,000
3 134,000 none 116,920 134,000
4 153,000 none 122,766 153,000
5 86,000 none 128,904 128,904
6 122,000 none 135,350 135,350
7 141,000 none 142,117 142,117
8 155,000 none 149,223 155,000
9 142,000 none 156,684 156,684
10 176,000 none 164,518 176,000
11 143,000 none 172,744 172,744
12 150,000 none 181,381 181,381
13 211,000 none 190,451 211,000
14 201,000 none 199,973 201,000
15 206,000 none 209,972 209,972
----------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan B
Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT(R) -
STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE
CONTRACT -------------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
----------------------------------------------------------------------------------------------------------
10 $176,000 $ 784.96 $176,000 $ 784.96
11 143,000 654.94 172,744 791.17
12 150,000 703.50 181,381 850.68
13 211,000 1,017.02 211,000 1,017.02
14 201,000 992.94 201,000 992.94
15 206,000 1,046.48 209,972 1,066.66
----------------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 91
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan D
Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT -
STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE
CONTRACT ---------------------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST SURVIVOR GUARANTEED INCOME PLAN D - LAST SURVIVOR
AT EXERCISE CONTRACT VALUE NO REFUND* BENEFIT BASE NO REFUND*
------------------------------------------------------------------------------------------------------------------
10 $176,000 $631.84 $176,000 $631.84
11 143,000 524.81 172,744 633.97
12 150,000 562.50 181,381 680.18
13 211,000 810.24 211,000 810.24
14 201,000 791.94 201,000 791.94
15 206,000 832.24 209,972 848.29
------------------------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED PURCHASE MAXIMUM MAV OR 5%
CONTRACT CONTRACT PAYMENTS ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE AND CREDITS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
------------------------------------------------------------------------------------------------------
1 $109,000 $101,000 $109,000 $106,050 $109,000
2 127,000 none 127,000 111,353 127,000
3 134,000 none 134,000 116,920 134,000
4 153,000 none 153,000 122,766 153,000
5 86,000 none 153,000 128,904 153,000
6 122,000 none 153,000 135,350 153,000
7 141,000 none 153,000 142,117 153,000
8 155,000 none 155,000 149,223 155,000
9 142,000 none 155,000 156,684 156,684
10 176,000 none 176,000 164,518 176,000
11 143,000 none 176,000 172,744 176,000
12 150,000 none 176,000 181,381 181,381
13 211,000 none 211,000 190,451 211,000
14 201,000 none 211,000 199,973 211,000
15 206,000 none 211,000 209,972 211,000
------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
92 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan B
Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT - GREATER OF MAV
STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE
CONTRACT -------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
----------------------------------------------------------------------------------------------
10 $176,000 $ 784.96 $176,000 $ 784.96
11 143,000 654.94 176,000 806.08
12 150,000 703.50 181,381 850.68
13 211,000 1,017.02 211,000 1,017.02
14 201,000 992.94 211,000 1,042.34
15 206,000 1,046.48 211,000 1,071.88
----------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan D
Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT - GREATER OF MAV
STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE
CONTRACT ---------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST SURVIVOR GUARANTEED INCOME PLAN D - LAST SURVIVOR
AT EXERCISE CONTRACT VALUE NO REFUND* BENEFIT BASE NO REFUND*
------------------------------------------------------------------------------------------------------
10 $176,000 $631.84 $176,000 $631.84
11 143,000 524.81 176,000 645.92
12 150,000 562.50 181,381 680.18
13 211,000 810.24 211,000 810.24
14 201,000 791.94 211,000 831.34
15 206,000 832.24 211,000 852.44
------------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 93
APPENDIX J: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
You have selected the seven-year withdrawal charge schedule; and
We add a $1,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $105,000. The
death benefit under the MAV Death Benefit equals the contract value, less
any purchase payment credits added to the contract in the last 12 months, or
$104,000. You have not reached the first contract anniversary so the Benefit
Protector does not provide any additional benefit at this time
On the first contract anniversary the contract value grows to $110,000. The
death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The
death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and
you request a partial withdrawal of $50,000, including the applicable 7%
withdrawal charges. We will withdraw $10,500 from your contract value free
of charge (10% of your prior anniversary's contract value). The remainder of
the withdrawal is subject to a 7% withdrawal charge because your payment is
in the third year of the withdrawal charge schedule, so we will withdraw
$39,500 ($36,735 + $2,765 in withdrawal charges) from your contract value.
Altogether, we will withdraw $50,000 and pay you $47,235. We calculate
purchase payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract earnings). The
death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The
death benefit equals the previous death benefit. The reduction in contract
value has no effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments
not previously withdrawn that are one or more years old. The death benefit
equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a
maximum of 100% of purchase payments not previously withdrawn that are
one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
94 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase payment of
$50,000 and we add a purchase payment credit of $500. Your new contract
value is now $250,000. The new purchase payment is less than one year old
and so it has no effect on the Benefit Protector value. The death benefit
equals:
MAV Death Benefit (contract value less any purchase payment credits added
in the last 12 months): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up to a
maximum of 100% of purchase payments not previously withdrawn that are
one or more years old) +55,000
--------
Total death benefit of: $304,500
During the eleventh contract year the contract value remains $250,000 and
the "new" purchase payment is one year old and the value of the Benefit
Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up to a
maximum of 100% of purchase payments not previously withdrawn that are
one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX K: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You have selected the seven-year withdrawal charge schedule;
and
We add a $1,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $105,000.
The death benefit equals MAV Death Benefit, which is the contract
value, less any purchase payment credits added to the contract in
the last 12 months, or $104,000. You have not reached the first
contract anniversary so the Benefit Protector Plus does not provide
any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any additional benefit
beyond what is provided by the Benefit Protector at this time. The
death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000.
The death benefit equals the previous death benefit. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
96 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000 and we add a purchase payment credit of $500.
Your new contract value is now $250,000. The new purchase payment is
less than one year old and so it has no effect on the Benefit
Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value less any purchase payment
credits added in the last 12 months): $249,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $315,500
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDIX L: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.04 $0.94 $0.79 $1.34 $1.29 $1.12 $1.08 $1.00 -- --
Accumulation unit value at end of period $1.09 $1.04 $0.94 $0.79 $1.34 $1.29 $1.12 $1.08 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 7 81 73 7 7 7 4 4 -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.22 $1.18 $0.89 $1.93 $1.85 $1.38 $1.20 $1.00 -- --
Accumulation unit value at end of period $0.97 $1.22 $1.18 $0.89 $1.93 $1.85 $1.38 $1.20 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,034 2,872 3,062 3,533 2,657 2,757 2,505 620 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.27 $1.22 $1.12 $1.15 $1.06 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.40 $1.27 $1.22 $1.12 $1.15 $1.06 $1.06 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,410 4,240 4,109 3,849 6,168 6,843 5,789 1,416 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.08 $0.94 $0.71 $1.23 $1.03 $1.07 $1.07 $1.00 -- --
Accumulation unit value at end of period $1.07 $1.08 $0.94 $0.71 $1.23 $1.03 $1.07 $1.07 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,731 1,994 2,142 2,162 2,228 3,255 1,738 450 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.19 $1.06 $0.90 $1.24 $1.33 $1.13 $1.09 $1.00 -- --
Accumulation unit value at end of period $1.19 $1.19 $1.06 $0.90 $1.24 $1.33 $1.13 $1.09 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 40 51 61 2 2 2 2 2 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of
period $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08 $1.08
Accumulation unit value at end of period $1.13 $1.15 $1.16 $1.17 $1.16 $1.12 $1.08 $1.07 $1.07 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) 734 815 827 835 334 460 205 64 72 161
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of
period $1.51 $1.41 $1.25 $1.35 $1.30 $1.26 $1.24 $1.20 $1.17 $1.12
Accumulation unit value at end of period $1.59 $1.51 $1.41 $1.25 $1.35 $1.30 $1.26 $1.24 $1.20 $1.17
Number of accumulation units outstanding
at end of period (000 omitted) 507 618 1,984 2,091 2,204 1,771 120 127 31 32
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/11/1999)
Accumulation unit value at beginning of
period $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81 $1.01
Accumulation unit value at end of period $1.50 $1.60 $1.39 $1.10 $1.87 $1.75 $1.48 $1.32 $1.13 $0.81
Number of accumulation units outstanding
at end of period (000 omitted) 3,304 3,550 4,693 4,712 4,137 4,535 2,962 25 25 25
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.09 $1.05 $0.90 $0.73 $1.29 $1.26 $1.11 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,775 2,312 2,486 2,481 2,441 2,749 3,138 1,827 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of
period $3.20 $2.70 $1.57 $3.43 $2.51 $1.90 $1.43 $1.17 $0.84 $0.90
Accumulation unit value at end of period $2.50 $3.20 $2.70 $1.57 $3.43 $2.51 $1.90 $1.43 $1.17 $0.84
Number of accumulation units outstanding
at end of period (000 omitted) 704 659 891 1,256 981 1,358 1,275 363 18 27
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.18 $1.15 $1.09 $1.10 $1.03 $1.00 -- -- -- --
Accumulation unit value at end of period $1.28 $1.18 $1.15 $1.09 $1.10 $1.03 -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 277 352 1,468 1,135 1,300 1,312 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of
period $1.52 $1.36 $0.97 $1.20 $1.19 $1.11 $1.09 $1.00 -- --
Accumulation unit value at end of period $1.59 $1.52 $1.36 $0.97 $1.20 $1.19 $1.11 $1.09 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 93 131 790 664 632 504 -- 15,000 -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
98 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.11 $0.96 $0.71 $1.29 $1.27 $1.15 $1.07 $1.00 -- --
Accumulation unit value at end of period $1.07 $1.11 $0.96 $0.71 $1.29 $1.27 $1.15 $1.07 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 66 74 263 390 302 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.14 $0.71 $1.30 $1.15 $1.17 $1.07 $1.00 -- --
Accumulation unit value at end of period $1.20 $1.42 $1.14 $0.71 $1.30 $1.15 $1.17 $1.07 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 116 139 162 215 199 234 240 145 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (10/23/2000)
Accumulation unit value at beginning of
period $0.93 $0.82 $0.66 $1.06 $1.02 $0.89 $0.86 $0.79 $0.63 $0.82
Accumulation unit value at end of period $0.93 $0.93 $0.82 $0.66 $1.06 $1.02 $0.89 $0.86 $0.79 $0.63
Number of accumulation units outstanding
at end of period (000 omitted) 177 175 202 177 235 343 380 355 418 377
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.17 $0.99 $0.79 $1.32 $1.34 $1.14 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.14 $1.17 $0.99 $0.79 $1.32 $1.34 $1.14 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4 4 4 4 4 4 4 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.10 $1.08 $1.03 $1.07 $1.03 $1.01 $1.00 $1.00 -- --
Accumulation unit value at end of period $1.10 $1.10 $1.08 $1.03 $1.07 $1.03 $1.01 $1.00 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 494 553 839 589 537 573 342 24 -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.11 $0.71 $1.23 $1.09 $1.06 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.29 $1.42 $1.11 $0.71 $1.23 $1.09 $1.06 $1.03 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 523 582 715 862 874 1,176 864 204 -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.29 $1.25 $0.97 $1.57 $1.53 $1.26 $1.14 $1.00 -- --
Accumulation unit value at end of period $1.04 $1.29 $1.25 $0.97 $1.57 $1.53 $1.26 $1.14 -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.44 $1.24 $0.93 $1.64 $1.41 $1.28 $1.11 $1.00 -- --
Accumulation unit value at end of period $1.38 $1.44 $1.24 $0.93 $1.64 $1.41 $1.28 $1.11 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 5,112 5,777 6,351 7,155 7,060 8,517 5,857 1,194 -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.28 $1.20 $1.05 $1.11 $1.07 $1.04 $1.04 $1.00 -- --
Accumulation unit value at end of period $1.35 $1.28 $1.20 $1.05 $1.11 $1.07 $1.04 $1.04 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,888 2,223 2,984 2,975 4,000 3,220 2,391 560 -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.89 $1.48 $1.07 $1.80 $1.58 $1.42 $1.22 $1.00 -- --
Accumulation unit value at end of period $1.66 $1.89 $1.48 $1.07 $1.80 $1.58 $1.42 $1.22 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 667 687 1,113 1,311 1,141 1,202 715 1 -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.21 $0.97 $1.75 $1.51 $1.30 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.10 $1.35 $1.21 $0.97 $1.75 $1.51 $1.30 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 721 762 824 936 822 962 1,107 628 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.41 $1.26 $0.94 $1.36 $1.32 $1.13 $1.13 $1.00 -- --
Accumulation unit value at end of period $1.42 $1.41 $1.26 $0.94 $1.36 $1.32 $1.13 $1.13 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 252 320 320 322 349 365 374 300 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.90 $1.68 $1.43 $1.36 $1.24 $1.12 $1.16 $1.00 -- --
Accumulation unit value at end of period $1.86 $1.90 $1.68 $1.43 $1.36 $1.24 $1.12 $1.16 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,103 1,323 1,888 1,892 2,787 2,962 2,190 575 -- --
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.59 $1.28 $0.98 $1.57 $1.54 $1.34 $1.20 $1.00 -- --
Accumulation unit value at end of period $1.47 $1.59 $1.28 $0.98 $1.57 $1.54 $1.34 $1.20 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,512 1,698 2,218 2,351 2,480 2,618 1,915 505 -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 99
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $1.29 $1.10 $0.78 $1.50 $1.37 $1.20 $1.11 $1.00 -- --
Accumulation unit value at end of period $1.18 $1.29 $1.10 $0.78 $1.50 $1.37 $1.20 $1.11 -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.19 $1.04 $0.82 $1.29 $1.34 $1.17 $1.13 $1.00 -- --
Accumulation unit value at end of period $1.15 $1.19 $1.04 $0.82 $1.29 $1.34 $1.17 $1.13 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 6,409 7,214 7,754 8,226 8,387 9,048 7,239 1,714 -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.77 $1.38 $1.09 $1.77 $2.17 $1.59 $1.38 $1.00 -- --
Accumulation unit value at end of period $1.84 $1.77 $1.38 $1.09 $1.77 $2.17 $1.59 $1.38 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 102 122 193 206 204 132 155 69 -- --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.09 $1.01 $0.71 $1.32 $1.17 $1.10 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.06 $1.09 $1.01 $0.71 $1.32 $1.17 $1.10 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,842 2,133 2,047 2,333 2,161 2,648 2,022 561 -- --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.47 $1.29 $0.94 $1.59 $1.51 $1.30 $1.16 $1.00 -- --
Accumulation unit value at end of period $1.33 $1.47 $1.29 $0.94 $1.59 $1.51 $1.30 $1.16 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 8 41 47 21 20 17 18 19 -- --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.16 $0.86 $1.40 $1.44 $1.27 $1.17 $1.00 -- --
Accumulation unit value at end of period $1.37 $1.42 $1.16 $0.86 $1.40 $1.44 $1.27 $1.17 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 18 19 25 16 18 19 18 16 -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.19 $1.18 $0.95 $1.15 $1.17 $1.16 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.17 $1.19 $1.18 $0.95 $1.15 $1.17 $1.16 $1.03 -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.22 $0.98 $0.75 $1.26 $1.46 $1.26 $1.19 $1.00 -- --
Accumulation unit value at end of period $1.15 $1.22 $0.98 $0.75 $1.26 $1.46 $1.26 $1.19 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 11 11 12 14 12 194 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,997 3,063 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 353 168 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 597 614 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.34 $1.11 $0.82 $1.31 $1.25 $1.09 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.24 $1.34 $1.11 $0.82 $1.31 $1.25 $1.09 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 1 1 1 1 1 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 101 86 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
100 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.15% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 8,468 8,331 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 568 410 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,986 4,256 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 385 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,237 1,915 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.51 $1.23 $0.91 $1.35 $1.43 $1.21 $1.15 $1.00 -- --
Accumulation unit value at end of period $1.43 $1.51 $1.23 $0.91 $1.35 $1.43 $1.21 $1.15 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,723 1,908 2,350 2,596 2,791 2,698 2,395 610 -- --
---------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of
period $1.45 $1.19 $0.84 $1.42 $1.36 $1.27 $1.16 $1.00 -- --
Accumulation unit value at end of period $1.38 $1.45 $1.19 $0.84 $1.42 $1.36 $1.27 $1.16 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,131 1,309 1,726 1,875 1,858 1,824 1,445 363 -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.38 $1.19 $1.05 $1.81 $1.60 $1.32 $1.15 $1.00 -- --
Accumulation unit value at end of period $1.18 $1.38 $1.19 $1.05 $1.81 $1.60 $1.32 $1.15 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 645 637 813 667 657 741 652 5 -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.49 $1.26 $0.89 $1.24 $1.12 $1.07 $1.05 $1.00 -- --
Accumulation unit value at end of period $1.39 $1.49 $1.26 $0.89 $1.24 $1.12 $1.07 $1.05 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,312 1,504 1,159 1,258 1,531 1,651 1,365 279 -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of
period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 83 -- -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.67 $1.33 $0.88 $1.53 $1.36 $1.12 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.58 $1.67 $1.33 $0.88 $1.53 $1.36 $1.12 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 222 267 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of
period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.22 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 17 18 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.33 $1.26 $1.14 $1.12 $1.07 $1.04 $1.04 $1.00 -- --
Accumulation unit value at end of period $1.43 $1.33 $1.26 $1.14 $1.12 $1.07 $1.04 $1.04 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,179 1,481 495 500 719 668 432 87 -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.03 $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) 130 124 89 113 168 170 126 90
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 101
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.92 $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19
Number of accumulation units outstanding
at end of period (000 omitted) 6,871 7,882 19,909 27,146 17,556 13,071 8,418 3,162
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05 $1.00
Accumulation unit value at end of period $1.32 $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05
Number of accumulation units outstanding
at end of period (000 omitted) 7,945 11,844 13,423 13,696 23,067 24,580 21,086 7,249
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06 $1.00
Accumulation unit value at end of period $1.01 $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) 2,936 4,147 5,039 6,040 6,538 19,124 6,266 2,495
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09 $1.00
Accumulation unit value at end of period $1.12 $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) 87 16 16 19 24 29 15 26
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99 $1.00
Accumulation unit value at end of period $1.00 $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99
Number of accumulation units outstanding
at end of period (000 omitted) 2,045 2,910 11,536 5,320 3,584 1,771 839 136
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.25 $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 2,517 3,451 52,732 52,913 49,906 27,709 237 220
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.25 $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 7,706 10,251 47,600 45,615 31,206 25,297 8,506 34
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.03 $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of accumulation units outstanding
at end of period (000 omitted) 5,131 7,801 9,323 10,215 10,759 11,734 14,054 9,019
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17 $1.00
Accumulation unit value at end of period $1.93 $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17
Number of accumulation units outstanding
at end of period (000 omitted) 2,042 2,330 8,001 12,125 7,826 7,742 4,979 2,159
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.14 $1.12 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.23 $1.14 $1.12 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,527 2,123 39,552 22,934 24,803 19,914 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of
period $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.52 $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) 724 967 23,958 16,287 14,534 6,780 8 8
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.01 $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) 258 361 910 3,801 2,883 38 38 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07 $1.00
Accumulation unit value at end of period $1.13 $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) 430 548 702 933 906 1,023 1,088 697
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.11 $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) 198 211 155 94 147 142 132 48
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.12 $0.94 $0.76 $1.29 $1.32 $1.13 $1.10 $1.00
Accumulation unit value at end of period $1.08 $1.12 $0.94 $0.76 $1.29 $1.32 $1.13 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 14 23 23 24 --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
102 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00 $1.00
Accumulation unit value at end of period $1.04 $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00
Number of accumulation units outstanding
at end of period (000 omitted) 1,924 2,722 10,350 5,772 5,294 3,802 1,781 218
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03 $1.00
Accumulation unit value at end of period $1.22 $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 1,184 1,653 2,265 2,987 3,110 6,310 2,901 1,117
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14 $1.00
Accumulation unit value at end of period $0.98 $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) 24 21 19 38 24 24 26 7
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11 $1.00
Accumulation unit value at end of period $1.30 $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11
Number of accumulation units outstanding
at end of period (000 omitted) 10,938 14,844 26,124 44,134 42,111 45,962 19,309 6,485
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 3,767 5,353 28,571 28,234 30,874 10,450 8,474 3,024
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.57 $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21
Number of accumulation units outstanding
at end of period (000 omitted) 1,681 2,112 10,749 15,569 9,998 6,670 2,154 194
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10 $1.00
Accumulation unit value at end of period $1.04 $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) 2,343 2,808 4,655 4,812 4,606 5,282 5,025 3,210
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12 $1.00
Accumulation unit value at end of period $1.35 $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12
Number of accumulation units outstanding
at end of period (000 omitted) 1,057 1,140 1,013 1,631 1,849 1,382 1,066 516
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.76 $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) 3,114 4,186 21,774 22,313 26,747 18,800 7,744 2,656
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.39 $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19
Number of accumulation units outstanding
at end of period (000 omitted) 3,562 4,764 13,524 16,698 17,019 14,517 6,833 2,746
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.12 $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) 9 9 17 70 73 19 19 12
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.09 $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13
Number of accumulation units outstanding
at end of period (000 omitted) 13,815 18,929 34,501 43,308 39,815 41,096 23,606 8,260
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37 $1.00
Accumulation unit value at end of period $1.74 $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37
Number of accumulation units outstanding
at end of period (000 omitted) 257 328 604 694 728 573 619 292
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06 $1.00
Accumulation unit value at end of period $1.00 $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) 4,615 6,424 7,178 8,981 8,700 10,182 8,509 3,218
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 103
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.26 $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 113 127 149 169 231 209 177 72
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.29 $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) 89 24 25 61 71 75 59 31
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03 $1.00
Accumulation unit value at end of period $1.10 $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 23 44 56 84 144 142 109 57
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18 $1.00
Accumulation unit value at end of period $1.09 $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18
Number of accumulation units outstanding
at end of period (000 omitted) 69 84 147 179 192 4,666 76 17
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 242 2,128 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 37,081 45,459 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,605 2,840 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 37,774 34,075 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10 $1.00
Accumulation unit value at end of period $1.17 $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) 8 8 -- 28 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4,056 2,407 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 206,439 248,214 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,555 774 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 118,725 154,365 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,095 1,480 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 34,697 43,744 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
104 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.35 $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 4,585 6,248 9,697 11,631 12,674 11,121 10,647 4,456
---------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of
period $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15 $1.00
Accumulation unit value at end of period $1.30 $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 2,605 3,655 12,068 12,713 11,339 6,970 5,234 2,030
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.31 $1.14 $1.01 $1.76 $1.57 $1.30 $1.14 $1.00
Accumulation unit value at end of period $1.12 $1.31 $1.14 $1.01 $1.76 $1.57 $1.30 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) 1,513 1,967 2,695 2,459 2,309 2,433 1,444 79
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.21 $0.86 $1.21 $1.10 $1.06 $1.04 $1.00
Accumulation unit value at end of period $1.32 $1.42 $1.21 $0.86 $1.21 $1.10 $1.06 $1.04
Number of accumulation units outstanding
at end of period (000 omitted) 3,649 5,238 3,799 4,435 5,394 5,524 3,401 1,048
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of
period $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 281 -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.59 $1.28 $0.85 $1.48 $1.33 $1.10 $1.06 $1.00
Accumulation unit value at end of period $1.49 $1.59 $1.28 $0.85 $1.48 $1.33 $1.10 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) 593 844 2 2 1 1 1 1
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of
period $1.22 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.22 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 238 253 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.27 $1.21 $1.10 $1.09 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.35 $1.27 $1.21 $1.10 $1.09 $1.05 $1.03 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 4,101 5,623 8,408 8,640 12,231 8,454 2,629 789
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 105
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
106 EVERGREEN NEW SOLUTIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45308 M (4/12)
PROSPECTUS
APRIL 30, 2012
EVERGREEN
PATHWAYS(SM) SELECT VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing in
Evergreen Pathways Select Variable Annuity Contract Option L and Contract Option
C. The information in this prospectus applies to both contracts unless stated
otherwise.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Series Trust II
Dreyfus Variable Investment Fund, Service Share Class
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Invesco Van Kampen Variable Insurance Funds
Morgan Stanley UIF
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Wells Fargo Variable Trust
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers several different annuities which your investment
professional may or may not be authorized to offer to you. Each annuity has
different features and benefits that may be appropriate for you based on your
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges may
also be different between each annuity.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 13
FINANCIAL STATEMENTS........................ 13
THE VARIABLE ACCOUNT AND THE FUNDS.......... 13
THE GUARANTEE PERIOD ACCOUNTS (GPAS)........ 21
BUYING YOUR CONTRACT........................ 22
CHARGES..................................... 24
VALUING YOUR INVESTMENT..................... 29
MAKING THE MOST OF YOUR CONTRACT............ 30
WITHDRAWALS................................. 38
TSA -- SPECIAL PROVISIONS................... 39
CHANGING OWNERSHIP.......................... 39
BENEFITS IN CASE OF DEATH................... 40
OPTIONAL BENEFITS........................... 43
THE ANNUITY PAYOUT PERIOD................... 56
TAXES....................................... 58
VOTING RIGHTS............................... 62
SUBSTITUTION OF INVESTMENTS................. 62
ABOUT THE SERVICE PROVIDERS................. 62
ADDITIONAL INFORMATION...................... 63
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 66
APPENDIX B: EXAMPLE --
INCOME ASSURER BENEFIT RIDER FEE.......... 68
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES... 69
APPENDIX D: EXAMPLE -- DEATH BENEFITS....... 74
APPENDIX E: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 77
APPENDIX F: GUARANTOR WITHDRAWAL BENEFIT
RIDER -- RIDER B DISCLOSURE............... 79
APPENDIX G: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT RIDER........ 84
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT
RIDER -- ADDITIONAL RMD DISCLOSURE........ 86
APPENDIX I: EXAMPLE --
INCOME ASSURER BENEFIT RIDERS............. 87
APPENDIX J: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 92
APPENDIX K: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 94
APPENDIX L:
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 96
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION....... 104
--------------------------------------------------------------------------------
2 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. Unless
an exception applies, transfers or withdrawals from a GPA done more than 30 days
before the end of the guarantee period will receive a Market Value Adjustment,
which may result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 3
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Contract Option L offers a four year
withdrawal charge schedule. Contract Option C eliminates the withdrawal charge
schedule in exchange for a higher mortality and expense risk fee. Your
investment professional can help you determine which contract is best suited to
your needs based on factors such as your investment goals and how long you
intend to invest.
PURPOSE: These contracts allow you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs and/or subaccounts of the variable
account under the contract; however you risk losing amounts you invest in the
subaccounts of the variable account. These accounts, in turn, may earn returns
that increase the value of a contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. You may be able to purchase an optional benefit to reduce the
investment risk you assume. Beginning at a specified time in the future called
the retirement date, these contracts provide lifetime or other forms of payouts
of your contract value (less any applicable premium tax).
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. (See "Making the Most
of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers features that are available for
additional charges if you meet certain criteria. Optional benefits may require
the use of a Portfolio Navigator program (PN program) investment option which
may limit transfers and
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 5
allocations; may limit the timing, amount and allocation of purchase payments;
and may limit the amount of partial withdrawals that can be taken under the
optional benefit during a contract year. (See "Optional Benefits").
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
are not available during the payout period. (See "The Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payment withdrawn)
You select either contract Option L or Option C at the time of application.
Option C has no withdrawal charge schedule but carries a higher mortality and
expense risk fee than Option L.
CONTRACT OPTION L
YEARS FROM PURCHASE PAYMENT RECEIPT WITHDRAWAL CHARGE PERCENTAGE
1-2 8%
3 7
4 6
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE DEATH
BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND
EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO
THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
Return of Purchase Payment (ROP) Death 0.15% 1.70%
Benefit 1.55%
Maximum Anniversary Value (MAV) Death 0.15 1.90
Benefit 1.75
5% Accumulation Death Benefit 1.90 0.15 2.05
Enhanced Death Benefit 1.95 0.15 2.10
IF YOU SELECT CONTRACT OPTION C AND:
ROP Death Benefit 1.65% 0.15% 1.80%
MAV Death Benefit 1.85 0.15 2.00
5% Accumulation Death Benefit 2.00 0.15 2.15
Enhanced Death Benefit 2.05 0.15 2.20
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits. Each optional living benefit requires participation in the PN program.
The fees apply only if you have selected one of these benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: CURRENT:
1.75% 0.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: CURRENT:
1.50% 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: CURRENT:
1.50% 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: CURRENT:
FEE 1.75% 0.60%(1)
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: CURRENT:
BENEFIT BASE RIDER FEE 2.00% 0.65%(1)
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
8 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.50%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55% 0.25% 0.05% --% 0.85%
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(3)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(4)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(5)
Shares
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68% 0.25% 0.12% --% 1.05%
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(6)
Service Shares
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(7)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(7)
3)
Wanger USA 0.86 -- 0.08 -- 0.94(8)
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(9)
2
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(9)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(10)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 0.75 0.25 0.39 0.01 1.40(9)
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(9)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.915% for
Columbia Variable Portfolio - Large Cap Growth Fund (Class 3), 1.005% for
Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund (Class 3) and
0.925% for Columbia Variable Portfolio - Select Large-Cap Value Fund (Class
3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(4) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(5) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.35%. The
fee waivers and/or expense reimbursements will continue for at least one
year or until such time as the Fund's Board of Directors acts to
discontinue all or a portion of such waivers and/or reimbursements when it
deems that such action is appropriate.
(6) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
--------------------------------------------------------------------------------
10 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
(7) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
(8) Other expenses have been restated to reflect contractual changes to certain
other fees.
(9) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Omega Growth Fund - Class 2, 1.14% for
Wells Fargo Advantage VT Small Cap Value Fund - Class 2 and 0.90% for Wells
Fargo Advantage VT Total Return Bond Fund - Class 2.
(10) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 11
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV Death Benefit, the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,359 $2,565 $3,251 $6,651 $639 $1,933 $3,251 $6,651
Contract Option C 649 1,962 3,297 6,729 649 1,962 3,297 6,729
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,004 $1,490 $1,382 $2,911 $266 $813 $1,382 $2,911
Contract Option C 276 843 1,433 3,013 276 843 1,433 3,013
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
12 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix L.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates (see "Revenue we
receive from the funds may create conflicts of interest"). These relationships
may influence recommendations your
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 13
investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under the asset allocation program we
offer (see "Making the Most of Your Contract -- Portfolio Navigator Program")
or under asset allocation programs used in conjunction with the contracts and
plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
14 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 15
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS International
Value Portfolio
(Class B)
----------------------------------------------------------------------------------------
American Century Seeks long-term total return using a American Century
VP Inflation strategy that seeks to protect against U.S. Investment Management,
Protection, Class inflation. Inc.
II
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. American Century
VP Ultra(R), Investment Management,
Class II Inc.
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Value, Class secondary objective. Investment Management,
II Inc.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Non-diversified fund that seeks total Columbia Management
Portfolio - Glob- return that exceeds the rate of inflation Investment Advisers, LLC
al Inflation over the long term.
Protected
Securities Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high total return through current Columbia Management
Portfolio - Inco- income and capital appreciation. Investment Advisers, LLC
me Opportunities
Fund (Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Large-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Dreyfus Seeks capital appreciation. The Dreyfus Corporation
Investment
Portfolios
Technology Growth
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth. The Dreyfus Corporation
Investment Fund
International
Value Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks as high level of current income as is Fidelity Management &
Investment Grade consistent with the preservation of Research Company (FMR)
Bond Portfolio capital. Normally invests at least 80% of is the fund's manager.
Service Class 2 assets in investment-grade debt securities Fidelity Investments
(those of medium and high quality) of all Money Management, Inc.
types and repurchase agreements for those (FIMM) and other
securities. investment advisers
serve as sub-advisers
for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 17
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks high current income, consistent with Franklin Advisers, Inc.
Global Bond preservation of capital, with capital
Securities appreciation as a secondary consideration.
Fund - Class 2 The fund normally invests at least 80% of
its net assets in bonds, which include debt
securities of any maturity, such as bonds,
notes, bills and debentures.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide above average current Morgan Stanley
UIF U.S. Real income and long-term capital appreciation Investment Management
Estate Portfolio, by investing primarily in equity securities Inc.
Class II Shares of companies in the U.S. real estate
industry, including real estate investment
trusts.
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Small Seeks capital appreciation. Putnam Investment
Cap Value Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 2) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 4) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
2) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
4) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Gold- Investment Advisers,
man Sachs Mid Cap LLC, adviser; Goldman
Value Fund (Class Sachs Asset Management,
3) L.P., subadviser.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 2) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 4) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
2) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 19
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
4) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
2) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
4) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Value adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. The
required minimum investment in each GPA is $1,000. These accounts are not
available in all states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or withdraw the contract value (subject to
applicable withdrawal provisions). If we do not receive any instructions at the
end of your guarantee period, our current practice is to automatically transfer
the contract value into the shortest GPA term offered in your state.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 21
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30 day rule). At all other
times, and unless one of the exceptions to the 30 day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under the Guarantor Withdrawal Benefit rider, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early withdrawals." The application of an
MVA may result in either a gain or loss of principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; or
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. Contract Option L has a four-
year withdrawal charge schedule. Contract Option C eliminates the withdrawal
charge schedule in exchange for a higher mortality and expense risk fee. Both
contracts have the same underlying funds. As the owner, you have all rights and
may receive all benefits under the contract.
You can own a qualified or nonqualified annuity. You can own a nonqualified
annuity in joint tenancy with rights of survivorship only in spousal situations.
You cannot own a qualified annuity in joint tenancy. You can become an owner if
you are 85 or younger. (The age limit may be younger for qualified annuities in
some states.)
When you applied, you could have selected (if available in your state):
contract Option L or Option C;
GPAs and/or subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit
- MAV Death Benefit
- 5% Accumulation Death Benefit(2)
- Enhanced Death Benefit(2)
--------------------------------------------------------------------------------
22 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
In addition, you could also have selected (if available in your state):
ANY ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PN
PROGRAM):
Accumulation Protector Benefit rider
Guarantor Withdrawal Benefit rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit riders.
The contract provides for allocation of purchase payments to the GPAs and/or to
the subaccounts of the variable account in even 1% increments subject to the
$1,000 required minimum investment for the GPAs.
If we receive your additional purchase payment at our corporate office before
the close of business, we will credit any portion of that payment allocated to
the subaccounts using the accumulation unit value we calculate on the valuation
date we received the payment. If we receive an additional purchase payment at
our corporate office at or after the close of business, we will credit any
portion of that payment allocated to the subaccounts using the accumulation unit
value we calculate on the next valuation date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the retirement date, provided you send us written instructions at least
30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, THE RETIREMENT DATE MUST BE:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 85th birthday or the tenth contract anniversary,
if purchased after age 75, or such date as agreed upon by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, TO COMPLY WITH IRS REGULATIONS, THE
RETIREMENT DATE GENERALLY MUST BE:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 23
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply. Additional purchase payments are restricted during
the waiting period after the first 180 days immediately following the
effective date of the Accumulation Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider and Enhanced Guarantor
Withdrawal Benefit rider, subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans.
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT: If mandated by applicable law, including, but
not limited to, federal anti-money laundering laws, we may be required to reject
a purchase payment. We may also be required to block an owner's access to
contract values or to satisfy other statutory obligations. Under these
circumstances, we may refuse to implement requests for transfers, withdrawals or
death benefits until instructions are received from the appropriate governmental
authority or a court of competent jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary. We prorate this charge
among the GPAs and the subaccounts in the same proportion your interest in each
account bears to your total contract value.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
--------------------------------------------------------------------------------
24 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs. We cannot increase these
fees.
The contract (either Option L or Option C) and the death benefit guarantee you
select determines the mortality and expense risk fee you pay:
CONTRACT CONTRACT
OPTION L OPTION C
ROP Death Benefit 1.55% 1.65%
MAV Death Benefit 1.75 1.85
5% Accumulation Death Benefit 1.90 2.00
Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Contract Option C has no withdrawal charge schedule but carries a higher
mortality and expense risk fee than contract Option L.
If you select contract Option L and you withdraw all or part of your contract
value before annuity payouts begin, we may deduct a withdrawal charge. As
described below, a withdrawal charge applies to each purchase payment you make.
The withdrawal schedule charge lasts for four years from the receipt of each
purchase payment. (See "Expense Summary").
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract Option L includes the Guarantor Withdrawal Benefit rider:
CONTRACT OPTION L WITHOUT THE GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 25
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment to be the prior contract
anniversary's contract value during the first contract year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal
charge schedule attaches to that purchase payment. The withdrawal charge
percentage for each purchase payment declines according to the withdrawal charge
schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 4-
YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY"
ABOVE.) For example, if you select contract Option L, during the first two years
after a purchase payment is made, the withdrawal charge percentage attached to
that payment is 8%. The withdrawal charge percentage for that payment during the
fourth year after it is made is 6%. At the beginning of the fifth year after
that purchase payment is made, and thereafter, there is no longer a withdrawal
charge as to that payment.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (See "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (See "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix C.
WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge. This
exception also applies to contract Option C.)
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
--------------------------------------------------------------------------------
26 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct a charge of 0.55% of the greater of your contract value or the minimum
contract accumulation value on your contract anniversary for this optional
benefit only if you select it. We deduct the charge from the contract value on
the contract anniversary. We prorate this charge among the GPAs and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each investment
option.
If you choose the elective step up or change your PN program investment option
after we have exercised our rights to increase the rider fee as described above,
you will pay the fee that is in effect on the valuation date we receive your
written request to step up or change your PN program investment option. On the
next contract anniversary, we will calculate an average rider charge, for the
preceding contract year only, that reflects the various different fees that were
in effect that year, adjusted for the number of calendar days each fee was in
effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE "OPTIONAL
BENEFITS").
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 27
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs and the subaccounts
in the same proportion as your interest in each bears to your total contract
value. We will modify this prorated approach to comply with state regulations
where necessary.
Once you elect the Guarantor Withdrawal Benefit, you may not cancel it and the
charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payments begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the annual or spousal continuation elective step up, the elective
spousal continuation step up or change your PN program investment option after
we have exercised our rights to increase the rider fee as described above, you
will pay the charge that is in effect on the valuation date we receive your
written request to step up or change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
The charge does not apply after annuity payouts begin.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you select it. We determine
the charge by multiplying the guaranteed income benefit base by the charge of
the Income Assurer Benefit rider you select. There are three Income Assurer
Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation 2.00 0.65(1)
Benefit Base
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary at the
end of each contract year. We prorate this charge among the GPAs and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or
when annuity payouts begin, we will deduct the charge from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the fee for each PN program investment option but not to exceed the
maximum fees shown above. We cannot change the Income Assurer Benefit fee after
the rider effective date, unless you change your PN program investment option
after we have exercised our rights to increase the rider fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit fee is calculated, see
Appendix B.
--------------------------------------------------------------------------------
28 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value. We will modify this prorated approach to comply with state regulations
where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among the GPAs, the one-year fixed account and the subaccounts in the
same proportion your interest in each account bears to your total contract
value.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual fee after the rider effective date and it does not
apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocated to the GPAs directly in dollars. The value of
a GPA equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 29
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L); and
the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year GPA to one or
more subaccounts. Only the one-year GPA is available for automated transfers.
You can also obtain the benefits of dollar-cost averaging by setting up regular
automatic SIP payments or by establishing an interest sweep strategy. Interest
sweeps are a monthly transfer of the interest earned from the one-year GPA into
the subaccounts of your choice. If you participate in an Interest Sweep strategy
the interest you earn on the one-year GPA will be less than the annual interest
rate we apply because there will be no compounding. There is no charge for
dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
30 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number of AMOUNT ACCUMULATION OF UNITS
dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Automated dollar-cost averaging is not available when the PN program is in
effect (see "Portfolio Navigator Program" below).
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Asset
Allocation Program" and "Portfolio Navigator Program" below).
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program called Portfolio Navigator. You could elect to participate in
the asset allocation program, and there is no additional charge. If you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you are required to participate
in the PN program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Currently, there are five model portfolios ranging from conservative to
aggressive. You may not use more than one model portfolio at a time. You are
allowed to request a change to another model portfolio twice per contract year.
Each model
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 31
portfolio specifies allocation percentages to each of the subaccounts and any
GPAs that make up that model portfolio. By participating in the asset allocation
program, you authorize us to invest your contract value in the subaccounts and
any GPAs (if included) according to the allocation percentages stated for the
specific model portfolio you have selected. You also authorize us to
automatically rebalance your contract value quarterly beginning three months
after the effective date of your contract in order to maintain alignment with
the allocation percentages specified in the model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts and any GPAs (if included)
that make up the model portfolio you selected and the allocation percentages to
those subaccounts, any GPAs (if included) will not change unless we adjust the
composition of the model portfolio to reflect the liquidation, substitution or
merger of an underlying fund, a change of investment objective by an underlying
fund or when an underlying fund stops selling its shares to the variable
account. We reserve the right to change the terms and conditions of the asset
allocation program upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT
RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER
If you are required to participate in the asset allocation program because you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you may not discontinue your
participation in the asset allocation program unless permitted by the terms of
the rider as summarized below:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the model
portfolios. The Accumulation Protector Benefit rider automatically ends at the
end of the waiting period as does the requirement that you participate in the
asset allocation program. At all other times, if you do not want to
participate in any of the model portfolios, you must terminate your contract
by requesting a full withdrawal. Withdrawal charges and tax penalties may
apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL
PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit
rider requires that your contract value be invested in one of the model
portfolios for the life of the contract, and you cannot terminate the
Guarantor Withdrawal Benefit rider once you have selected it, you must
terminate your contract by requesting a full withdrawal if you do not want to
participate in any of the model portfolios. Withdrawal charges and tax
penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE
MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit
rider during a 30-day period after the first rider anniversary and at any time
after the expiration of the waiting period. At all other times, if you do not
want to participate in any of the model portfolios, you must terminate your
contract by requesting a full withdrawal. Withdrawal charges and tax penalties
may apply. As long as the Income Assurer Benefit rider is in effect, your
contract value must be invested in one of the model portfolios. THEREFORE, YOU
SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF
TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which
--------------------------------------------------------------------------------
32 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
invests in underlying funds in proportions that vary among the funds of funds in
light of each fund of funds' investment objective ("Portfolio Navigator funds").
The PN program is available for both nonqualified and qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 33
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
34 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount or GPA to another
subaccount before annuity payouts begin. Certain restrictions apply to transfers
involving the GPAs.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs at any time.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the Guarantee Period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If you select a variable annuity payout, once annuity payouts begin, you may
make transfers once per contract year among the subaccounts and we reserve the
right to limit the number of subaccounts in which you may invest.
Once annuity payouts begin, you may not make any transfers to or from the GPAs
but you may make transfers once per contract year among the subaccounts.
During the annuity payout period, we reserve the right to limit the number of
subaccounts in which you may invest. When annuity payments begin, you must
transfer all contract value out of your GPAs.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 35
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
--------------------------------------------------------------------------------
36 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers or partial
withdrawals among your subaccounts or GPAs.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 37
If the PN program is in effect, you are not allowed to set up automated
transfers (see "Making the Most of Your Contract -- Portfolio Navigator
Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have a Guarantor Withdrawal Benefit rider, you may set up automated
partial withdrawals up to the benefit available for withdrawal under the
rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request at our corporate office before the close of business, we will
process your withdrawal using the accumulation unit value we calculate on the
valuation date we received your withdrawal request. If we receive your
withdrawal request at our corporate office at or after the close of business, we
will process your withdrawal using the accumulation unit value we calculate on
the next valuation date after we received your withdrawal request. We may ask
you to return the contract. You may have to pay a contract administrative
charge, withdrawal charges, or any applicable optional rider charges (see
"Charges") and federal income taxes and penalties. State and local income taxes
may also apply (see "Taxes"). You cannot make withdrawals after annuity payouts
begin except under Annuity Payout Plan E. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the Guarantor Withdrawal
Benefit rider and your partial withdrawals in any contract year exceed the
permitted withdrawal amount under the terms of the Guarantor Withdrawal Benefit
rider, your benefits under the rider may be reduced (see "Optional Benefits").
Any partial withdrawal request that exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the withdrawal on the rider benefits or a verbal acknowledgement that
you understand and accept the impacts that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts and GPAs in
the same proportion as your value in each account correlates to your total
contract value, unless requested otherwise. After executing a partial
withdrawal, the value in each subaccount and GPA must be either zero or at least
$50.
--------------------------------------------------------------------------------
38 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding on us when we receive and record it. We will honor any
change of ownership request received in good order that we believe is authentic
and we will use reasonable procedures to confirm authenticity. If we follow
these procedures, we will not take any responsibility for the validity of the
change.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 39
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit and/or Benefit Protector Plus rider, the
rider will terminate upon transfer of ownership of the annuity contract. The
Accumulation Protector Benefit, and the Guarantor Withdrawal Benefit riders will
continue upon transfer of ownership of your annuity contract. Continuance of the
Benefit Protector is optional. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit;
Enhanced Death Benefit
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death. We will base the benefit paid on
the death benefit coverage you chose when you purchased the contract. If a
contract has more than one person as the owner, we will pay benefits upon the
first to die of any owner or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal
CV = contract value on the date of (but prior to) the partial withdrawal
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments applied to the contract minus adjusted partial
withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by adjusted partial withdrawals. Every contract anniversary after that
prior to the earlier of your or the annuitant's 81st birthday, we compare the
MAV to the current contract value and we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs and the
variable account floor. There is no variable account floor prior to the first
contract anniversary. On the first contract anniversary, we establish the
variable account floor as:
the amounts allocated to the subaccounts at issue increased by 5%;
plus any subsequent amounts allocated to the subaccounts;
minus adjusted transfers and partial withdrawals from the subaccounts.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts and subtract adjusted transfers and partial withdrawals from the
subaccounts. On each contract anniversary after the first, through age 80, we
add an amount to
--------------------------------------------------------------------------------
40 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
the variable account floor equal to 5% of the prior anniversary's variable
account floor. We stop adding this amount after you or the annuitant reach age
81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts is reduced as a
result of the partial withdrawal or transfer from the subaccounts.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts on the date of (but prior to) the transfer of partial
withdrawal.
The amount of purchase payments withdrawn or transferred from any subaccount or
fixed account (if applicable) or GPA account is calculated as (a) times (b)
where:
(a) is the amount of purchase payments in the account or subaccount on the date
of but prior to the current withdrawal or transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments allocated to the subaccounts that have
not been withdrawn or transferred out of the subaccounts.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin and while
this contract is in force, the death benefit will be the greater of these two
values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 41
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix D.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract Option L from that point forward unless
additional purchase payments are made. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or restrictions of those features or riders just
as if they were purchasing a new contract. The Income Assurer Benefit and
Benefit Protector Plus riders, if selected, will terminate. The Accumulation
Protector Benefit and Guarantor Withdrawal Benefit riders, if selected, will
continue. Continuance of the Benefit Protector rider is optional. (See "Optional
Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and the Benefit Protector Plus riders, if
selected, will terminate. The Accumulation Protector Benefit rider and
Guarantor Withdrawal Benefit riders, if selected, will continue. Continuance
of the Benefit Protector is optional. (See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
--------------------------------------------------------------------------------
42 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
---------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
---------------------------------------------------------------------------------------
The Minimum Contract Accumulation The contract value is increased on the benefit
Value (defined below) as date to equal the Minimum Contract Accumulation
determined under the Accumulation Value as determined under the Accumulation
Protector Benefit rider is greater Protector Benefit rider on the benefit date.
than your contract value,
---------------------------------------------------------------------------------------
The contract value is equal to or Zero; in this case, the Accumulation Protector
greater than the Minimum Contract Benefit rider ends without value and no benefit
Accumulation Value as determined is payable.
under the Accumulation Protector
Benefit rider,
---------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it, except as
described in the "Terminating the Rider" section below. An additional charge for
the Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
Guarantor Withdrawal Benefit rider or any Income Assurer Benefit rider.
The Accumulation Protector Benefit may not be available in all states.
You should consider whether a Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
available investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts and GPAs that are available under the contract to contract
owners who do not elect this rider. (See "Making the Most of Your
Contract -- Asset Allocation Program" and "Portfolio Navigator Program");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those you take to satisfy RMDs, will reduce any potential benefit
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 43
that the Accumulation Protector Benefit rider provides. You should consult
your tax advisor if you have any questions about the use of this rider in your
tax situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the Elective Step Up Option (described below) or your
surviving spouse exercises the spousal continuation Elective Step Up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program investment option to one
that causes the Accumulation Protector Benefit rider charge to increase (see
"Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment. It is increased by
the amount of any subsequent purchase payments received within the first 180
days that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee
--------------------------------------------------------------------------------
44 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
is higher than your annual rider fee before the elective step up. Elective step
ups will also result in a restart of the waiting period as of the most recent
contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix E.
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that you may
select for an additional annual charge if:
your contract application was signed on or after April 29, 2005(1),(2);
you and the annuitant are 79 or younger on the date the contract is issued.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) In previous disclosures, we have referred to this rider as Rider A. We also
offered an earlier version of this rider, previously referred to as Rider B.
See Appendix F for information regarding Rider B which is no longer offered.
See the rider attached to your contract for the actual terms of the benefit
you purchased.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a withdrawal charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 45
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: If you selected this Guarantor
Withdrawal Benefit rider before May 1, 2006, you must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"). The Portfolio Navigator program and the asset allocation program
limit your choice of investments. This means you will not be able to allocate
contract value to all of the subaccounts or GPAs that are available under the
contract to contract owners who do not elect this rider.
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change. See Appendix H for additional information. RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current limitations, see "Buying Your
Contract -- Purchase Payments."
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
The GBA is determined at the following times:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment. The total GBA when an additional purchase payment is added
is
--------------------------------------------------------------------------------
46 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
the sum of the individual GBAs immediately prior to the receipt of the
additional purchase payment, plus the GBA associated with the additional
purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups.
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
The RBA is determined at the following times:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups.
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 47
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year until the RBA is depleted, subject to certain
restrictions prior to the third anniversary (see "Elective Step Up" above). The
GBP is equal to 7% of the GBA.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted. The GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
If you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
If you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
If you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
--------------------------------------------------------------------------------
48 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 49
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix G.
INCOME ASSURER BENEFIT RIDERS
There are three optional Income Assurer Benefit riders available under your
contract:
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider. This section is followed by a description of each specific Income Assurer
Benefit rider and how it is calculated.
You should consider whether an Income Assurer Benefit rider is appropriate for
you because:
you must participate in the PN program. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts or GPAs that are available under the contract to other
contract owners who do not elect this rider. (See "Making the Most of Your
Contract -- Asset Allocation Program" and "Portfolio Navigator Program");
if you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the Code must begin, you should consider whether an
Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals you take
from the contract, including those used to satisfy RMDs, will reduce the
guaranteed income benefit base (defined below), which in turn may reduce or
eliminate the amount of any annuity payouts available under the rider. Consult
a tax advisor before you purchase any Income Assurer Benefit rider with a
qualified annuity;
you must hold the Income Assurer Benefit for 10 years unless you elect to
terminate the rider within 30 days following the first anniversary after the
effective date of the rider;
you can only exercise the Income Assurer Benefit within 30 days after a
contract anniversary following the expiration of the 10-year waiting period;
--------------------------------------------------------------------------------
50 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
the 10-year waiting period may be restarted if you elect to change the PN
investment option to one that causes the rider charge to increase (see
"Charges -- Income Assurer Benefit"); and
the Income Assurer Benefit rider terminates* on the contract anniversary after
the annuitant's 86th birthday.
* The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday, however, if you exercise the Income Assurer
Benefit rider before this time, your benefits will continue according to the
annuity payout plan you have selected.
If the Income Assurer Benefit rider is available in your state and the annuitant
is 75 or younger at contract issue, you may choose this optional benefit at the
time you purchase your contract for an additional charge. The amount of the
charge is determined by the Income Assurer Benefit rider you select (see
"Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider
will be the contract issue date. The Accumulation Protector Benefit and the
Guarantor Withdrawal Benefit riders are not available with any Income Assurer
Benefit rider. If the annuitant is between age 73 and age 75 at contract issue,
you should consider whether a Income Assurer Benefit rider is appropriate for
your situation because of the 10-year waiting period requirement. Be sure to
discuss with your investment professional whether an Income Assurer Benefit
rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio -- Cash Management Fund and, if available under your contract, the
GPAs. Excluded investment options are not used in the calculation of this
riders' variable account floor for the Income Assurer Benefit - 5% Accumulation
Benefit Base and the Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments paid in the last five years
before exercise of the benefit which we reserve the right to exclude from the
calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as excluded investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your model portfolio to one that causes the rider charge to
increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the Waiting Period;
the annuitant on the retirement date must be between 50 to 86 years old; and
you can only take an annuity payment in one of the following annuity payout
plans:
PLAN A - LIFE ANNUITY -- NO REFUND;
PLAN B - LIFE ANNUITY WITH TEN OR TWENTY YEARS CERTAIN;
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND;
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH TWENTY YEARS CERTAIN; or
PLAN E - TWENTY YEARS CERTAIN.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payments with a guaranteed
minimum initial payment or a combination of the two options.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 51
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. Exception: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "1983 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate. These are the same rates used
in Table B of the contract (see "The Annuity Payout Period -- Annuity Tables").
Your annuity payouts remain fixed for the lifetime of the annuity payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments made to the contract minus proportionate adjustments for
partial withdrawals.
--------------------------------------------------------------------------------
52 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by proportionate adjustments for partial withdrawals. Every contract
anniversary after that prior to the earlier of your or the annuitant's 81st
birthday, we compare the MAV to the current contract value and we reset the MAV
to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such purchase
payment. The estimated contract value at such anniversary is calculated by
assuming that payments, and partial withdrawals occurring in a contract year
take place at the beginning of the year for that anniversary and every year
after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR -- is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments made to the protected investment options minus
adjusted partial withdrawals and transfers from the protected investment
options; plus
an amount equal to 5% of your initial purchase payment allocated to the
protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments to or withdraw or
transfer amounts from the protected investment options, we adjust the variable
account floor by adding the additional purchase payment and subtracting adjusted
withdrawals and adjusted transfers. On each subsequent contract anniversary
after the first anniversary of the effective date of this rider, prior to the
earlier of your or the annuitant's 81st birthday, we increase the variable
account floor by adding the amount ("roll-up amount") equal to 5% of the prior
contract anniversary's variable account floor.
The amount of purchase payments withdrawn from or transferred between the
excluded investment options and the protected investment options is calculated
as (a) times (b) where:
(a) is the amount of purchase payments in the investment options being withdrawn
or transferred on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in the
investment options being withdrawn or transferred on the date of (but prior
to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options in
the current policy year but prior to the current withdrawal or transfer.
However, (a) cannot be less than zero; and
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 53
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment options
less the value from (a)] to [the total in the protected investment options
on the date of (but prior to) the current withdrawal or transfer from the
protected investment options less the value from (a)].
This method is greater than a dollar-for-dollar reduction, and could potentially
deplete the maximum benefit faster than the dollar-for-dollar reduction.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
accumulated at 5% for the number of full contract years they have been in the
contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% variable account floor, less 5% Adjusted Excluded Payments (described
above).
For an example of how each Income Assurer Benefit rider is calculated, see
Appendix I.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective. The
Benefit Protector does not provide any additional benefit before the first rider
anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
--------------------------------------------------------------------------------
54 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
For an example, see Appendix J.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are age 70 or older at the rider
effective date. It does not provide any additional benefit before the first
rider anniversary and it does not provide any benefit beyond what is offered
under the Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector
Plus to you contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 55
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix K.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate.
--------------------------------------------------------------------------------
56 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
Using a 5% assumed interest rate results in a higher initial payout, but later
payouts will increase more slowly when annuity unit values rise and decrease
more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
retirement date. If the annuitant outlives the elected guaranteed payout
period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT RIDER): This annuity payout
option is an alternative to the above annuity payout plans. This option may
not be available if the contract is a qualified annuity. For such contracts,
this option will be available only if the guaranteed payment period is less
than the life expectancy of the owner at the time the option becomes
effective. Such life expectancy will be computed using a life expectancy table
published by the IRS. Under this option, the amount payable each year will be
equal to the remaining schedule of GBPs, but the total amount paid over the
life of the annuity will not exceed the total RBA at the time you begin this
fixed payout option (see "Guarantor Withdrawal Benefit Rider"). The amount
paid in the current contract year will be reduced for any prior withdrawals in
that year. These annualized amounts will be paid in the frequency that you
elect. The frequencies will be among those offered by us at the time but will
be no less frequent than annually. If, at the death of the owner, total
payouts have been made for less than the RBA, the remaining payouts will be
paid to the beneficiary.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 57
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
--------------------------------------------------------------------------------
58 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 59
the exchange and subsequent withdrawal. As a result, there may be unexpected tax
consequences. You should consult your tax advisor before taking any withdrawal
from either contract during the 180-day period following a partial exchange.
Different IRS limitations on withdrawals apply to partial exchanges completed
prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
--------------------------------------------------------------------------------
60 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 61
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 5.50% each time a purchase
payment is made for contract Option L and 1.00% for contract Option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay a temporary
additional sales commission of up to 1.00% (for both contracts) of purchase
payments for a period of time we select. These commissions do not change
depending on which subaccounts you choose to allocate your purchase payments.
--------------------------------------------------------------------------------
62 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits. Ask your sales representative for further information about what
your sales representative and the selling firm for which he or she works may
receive in connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 63
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
64 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 66 p. 21
Appendix B: Example -- Income Assurer Charges -- Income Assurer Benefit Rider
Benefit Rider Fee p. 68 Fee p. 28
Appendix C: Example -- Withdrawal Charges -- Withdrawal Charges
Charges p. 69 p. 25
Appendix D: Example -- Death Benefits p. 74 Benefits in Case of Death p. 40
Appendix E: Example -- Accumulation Optional Benefits -- Accumulation
Protector Benefit Rider p. 77 Protector Benefit Rider p. 43
Appendix F: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
Rider -- Benefit Rider
Rider B Disclosure p. 79 p. 45
Appendix G: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit Rider p. 84 Benefit Rider p. 45
Appendix H: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
Rider -- Benefit Rider
Additional RMD Disclosure p. 86 p. 45
Appendix I: Example -- Income Assurer Optional Benefits -- Income Assurer
Benefit Riders p. 87 Benefit Riders p. 50
Appendix J: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 92 Death Benefit Rider p. 54
Appendix K: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 94 Plus Death Benefit Rider p. 55
Appendix L: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 96 (Unaudited) p. 13
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts and GPAs, and the fees and charges that
apply to your contract.
The examples of death benefits and optional riders in appendices D, E, G and I
through K include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 65
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 6% due to the withdrawal
--------------------------------------------------------------------------------
66 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge").
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge under contract Option L),
unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 67
APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
ASSUMPTIONS:
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the Protected Investment Options and make no transfers, add-ons or
withdrawals; and
on the first contract anniversary your total contract value is $55,545; and
on the second contract anniversary your total contract value is $53,270.
WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER
BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS:
THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
--------------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS
THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
--------------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME
BENEFIT BASE
IS THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
--------------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE:
INCOME ASSURER BENEFIT - MAV FEE = 0.30% X $55,545 = $166.64
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = 0.60% X $55,125 = $330.75
INCOME ASSURER BENEFIT - MAV OR 5% ACCUMULATION BENEFIT BASE 0.65% X $55,545 = $361.04
FEE =
--------------------------------------------------------------------------------
68 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for a contract with a four-year withdrawal charge
schedule. Each example illustrates the amount of the withdrawal charge for both
a contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling up to 10% of your
prior anniversary's contract value or your contract's remaining benefit
payment if you elected the Guarantor Withdrawal Benefit rider and your
remaining benefit payment is greater than 10% of your prior anniversary's
contract value. We do not assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount or GPA. If the
contract value is less than purchase payments received and not previously
withdrawn (PPNPW) then contract earnings are zero.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 69
FULL WITHDRAWAL CHARGE CALCULATION -- FOUR YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You withdraw the contract for its total value in the fourth contract year
after you made the single purchase payment. The withdrawal charge percentage
in the fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
withdrawn (PPNPW): 50,000.00 50,000.00
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
70 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
--------- ---------
withdrawal charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
--------- ---------
NET FULL WITHDRAWAL PROCEEDS: 56,960.00 37,212.00
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 71
PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You request a net partial withdrawal in the fourth contract year after you
made the single purchase payment. The withdrawal charge percentage in the
fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS
FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
withdrawn (PPNPW): 50,000.00 50,000.00
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,319.15 15,897.93
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 5,319.15 15,897.93
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
72 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 5,319.15 19,165.51
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 5,319.15 19,165.51
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
--------- ---------
withdrawal charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,319.15 15,897.93
WITHDRAWAL CHARGE: (319.15) (897.93)
--------- ---------
NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 73
APPENDIX D: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000. You select contract
Option L; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
during the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal, including withdrawal charge; and
during the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. You select contract
Option L; and
on the first contract anniversary the contract value grows to $26,000; and
during the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
74 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
on the first contract anniversary the GPA value is $5,200 and the subaccount
value is $17,000. Total contract value is $23,200; and
during the second contract year the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor calculated as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs and the variable account
floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 75
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
on the first contract anniversary, the GPAs value is $5,200 and the subaccount
value is $17,000. Total contract value is $23, 200; and
during the second contract year, the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a ROP Death Benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs and the variable account
floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE
ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
76 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
AUTOMATIC STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
in the second, third and seventh contract anniversaries. These increases occur
because of the automatic step up feature of the rider. The automatic step up
does not create contract value, guarantee the performance of any underlying fund
in which a subaccount invests, or provide a benefit that can be withdrawn or
paid upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV which determines whether a benefit will be paid under
the rider on the Benefit Date.
ASSUMPTIONS:
You purchase a contract with a four-year withdrawal schedule with a payment of
$125,000; and
you make no additional purchase payments to the contract; and
you take partial withdrawals from the contract on the fifth and eighth
contract anniversaries in the amounts of $2,000 and $5,000, respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and
you do not exercise the elective step up option available under the rider; and
you do not change PN program investment options.
Based on these assumptions, the waiting period expires at the end of the 10th
contract year. The rider then ends. On the benefit date, the hypothetical
assumed contract value is $108,118 and the MCAV is $136,513, so the contract
value would be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT ADJUSTED ASSUMED ASSUMED
DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 0 0 0 12.0% 140,000 125,000
2 0 0 0 15.0% 161,000 128,800(2)
3 0 0 0 3.0% 165,830 132,664(2)
4 0 0 0 -8.0% 152,564 132,664
5 0 2,000 2,046 -15.0% 127,679 130,618
6 0 0 0 20.0% 153,215 130,618
7 0 0 0 15.0% 176,197 140,958(2)
8 0 5,000 4,444 -10.0% 153,577 136,513
9 0 0 0 -20.0% 122,862 136,513
10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date.
(2) These values indicate where the automatic step up feature increased the
MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the waiting period causes the contract
value to equal or exceed the MCAV on the benefit date, no benefit is paid
under this rider.
Even if a benefit is paid under the rider on the benefit date, contract value
allocated to the variable account after the benefit date continues to vary
with the market and may go up or go down.
ELECTIVE STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
on the first, second, third and seventh contract anniversaries. These increases
occur only if you exercise the elective step up Option within 30 days following
the contract anniversary. The contract value on the date we receive your written
request to step up must be greater than the MCAV on that date. The elective step
up does not create contract value, guarantee the performance of any underlying
fund in which a subaccount invests, or provide a benefit that can be withdrawn
or paid upon death. Rather, the elective step up is an interim calculation used
to arrive at the final MCAV which determines whether a benefit will be paid
under the rider on the benefit date.
ASSUMPTIONS:
You purchase a contract with a four-year withdrawal schedule with a payment of
$125,000; and
you make no additional purchase payments to the contract; and
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 77
you take partial withdrawals from the contract on the fifth, eighth and
thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500,
respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and,
the elective step up is exercised on the first, second, third and seventh
contract anniversaries; and
you do not change PN program investment options.
Based on these assumptions, the 10 year waiting period restarts each time you
exercise the elective step up option (on the first, second, third and seventh
contract anniversaries in this example). The waiting period expires at the end
of the 10th contract year following the last exercise of the elective step up
option. When the waiting period expires, the rider ends. On the benefit date the
hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the
contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED
DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 10(2) 0 0 0 12.0% 140,000 140,000(3)
2 10(2) 0 0 0 15.0% 161,000 161,000(3)
3 10(2) 0 0 0 3.0% 165,830 165,830(3)
4 9 0 0 0 -8.0% 152,564 165,830
5 8 0 2,000 2,558 -15.0% 127,679 163,272
6 7 0 0 0 20.0% 153,215 163,272
7 10(2) 0 0 0 15.0% 176,197 176,197(3)
8 9 0 5,000 5,556 -10.0% 153,577 170,642
9 8 0 0 0 -20.0% 122,862 170,642
10 7 0 0 0 -12.0% 108,118 170,642
11 6 0 0 0 3.0% 111,362 170,642
12 5 0 0 0 4.0% 115,817 170,642
13 4 0 7,500 10,524 5.0% 114,107 160,117
14 3 0 0 0 6.0% 120,954 160,117
15 2 0 0 0 -5.0% 114,906 160,117
16 1 0 0 0 -11.0% 102,266 160,117
17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date.
(2) The waiting period restarts when the elective step up is exercised.
(3) These values indicate when the elective step up feature increased the MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the waiting period causes the contract
value to equal or exceed the MCAV on the benefit date, no benefit is paid
under this rider.
Exercising the elective step up provision may result in an increase in the
charge that you pay for this rider.
Even if a benefit is paid under the rider on the benefit date, contract value
allocated to the variable account after the benefit date continues to vary
with the market and may go up or go down.
--------------------------------------------------------------------------------
78 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: GUARANTOR WITHDRAWAL BENEFIT RIDER --
RIDER B DISCLOSURE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that was offered
for an additional annual charge if:
your contract application was signed prior to April 29, 2005(1),(2);
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
(2) In previous disclosure, we have referred to this rider as Rider B. This
rider is no longer available for purchase. See the Guarantor Withdrawal
Benefit section in this prospectus for information about currently offered
version of this benefit. See the rider attached to your contract for the
actual terms of the benefit you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a withdrawal charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"), however, you may have elected to participate in the Portfolio
Navigator program after May 1, 2006 (see "Making the Most of Your
Contract -- Portfolio Navigator Program"). The Portfolio Navigator program and
the asset allocation program limit your choice of investments. This means you
will not be able to allocate contract value to all of the subaccounts or GPAs
that are available under the contract to contract owners who do not elect this
rider;
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 79
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change. See Appendix G for additional information. RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current limitations, see "Buying Your
Contract -- Purchase Payments;"
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
The GBA is determined at the following times:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment. The total GBA
when an additional purchase payment is added is the sum of the individual GBAs
immediately prior to the receipt of the additional purchase payment, plus the
GBA associated with the additional purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below);
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups.
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
--------------------------------------------------------------------------------
80 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
The RBA is determined at the following times:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below);
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups.
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of
the GBA; or (b) the RBA.
If you withdraw less than the GBP in a contract year, there is no carry over to
the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 81
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
if you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract anniversary value is greater than the RBA.
The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or
(b) the contract value on the step up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
--------------------------------------------------------------------------------
82 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A spousal continuation step up occurs automatically when the spouse elects to
continue the contract. The rider charge will not change upon this automatic step
up.
Under this step up, the RBA will be reset to the greater of the RBA on the
valuation date we receive the spouse's written request to continue the contract
and the death benefit that would otherwise have been paid; the GBA will be reset
to the greater of the GBA on the valuation date we receive the spouse's written
request to continue the contract and the death benefit that would otherwise have
been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix G.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 83
APPENDIX G: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH
RIDER A AND RIDER B (SEE "OPTIONAL BENEFITS").
ASSUMPTIONS:
You purchase the contract with a payment of $100,000; and
you select contract Option L.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to $110,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $7,700
During the fourth contract year you decide to take a partial withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA
less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $7,700
On the fourth contract anniversary you make an additional purchase payment of
$50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of the additional
purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of the additional
purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of the additional
purchase payment:
$7,700 + $3,500 = $11,200
On the fifth contract anniversary your contract value grows to $200,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $14,000
During the seventh contract year your contract value grows to $230,000. You decide
to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
--------------------------------------------------------------------------------
84 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $14,000
During the eight contract year your contract value falls to $175,000. You decide to
take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $10,500
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 85
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT RIDER --
ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit rider (including Riders A and B) to satisfy the RMD
rules under 401(a)(9) of the Code without application of the excess withdrawal
procedures described in the rider. We reserve the right to modify this
administrative practice at any time upon 30 days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current contract
year, an Additional Benefit Amount (ABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and reduce
the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any additional
amounts withdrawn will count against and reduce any ABA. These withdrawals
will not be considered excess withdrawals as long as they do not exceed the
remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit rider is attached as of the date we make the determination; and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable, on the effective date of this
prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit rider may not be sufficient to satisfy the requirements under
the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your RBP amount
and may result in the reduction of your GBA and RBA as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g. ownership
by a trust or a charity), we will calculate the life expectancy RMD amount
calculated by us as zero in all years. The life expectancy required minimum
distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
86 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX I: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "Protected Investment Options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (Protected Investment Options). Some PN program investment options
include Protected Investment Options and Excluded Investment Options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
the GPAs). Excluded Investment Options are not included in calculating the 5%
variable account floor under the Income Assurer Benefit - 5% Accumulation
Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5%
Accumulation Benefit Base rider. Because the examples which follow are based on
hypothetical contract values, they do not factor in differences in PN program
investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (Protected Investment
Options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment options; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2)
--------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 87
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT - MAV
CONTRACT -----------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
--------------------------------------------------------------------------------------------------
10 $174,000 $ 774.30 $174,000 $ 774.30
11 141,000 642.96 174,000 793.44
12 148,000 692.64 174,000 814.32
13 208,000 998.40 208,000 998.40
14 198,000 976.14 208,000 1,025.44
15 203,000 1,027.18 208,000 1,052.48
--------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS INCOME ASSURER BENEFIT - MAV
CONTRACT ------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND*
---------------------------------------------------------------------------------------------------
10 $174,000 $622.92 $174,000 $622.92
11 141,000 516.06 174,000 636.84
12 148,000 553.52 174,000 650.76
13 208,000 796.64 208,000 796.64
14 198,000 778.14 208,000 817.44
15 203,000 818.09 208,000 838.24
---------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
88 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT -
STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE
CONTRACT ----------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
-------------------------------------------------------------------------------------------------
10 $174,000 $ 774.30 $174,000 $ 774.30
11 141,000 642.96 171,034 779.91
12 148,000 692.64 179,586 840.46
13 208,000 998.40 208,000 998.40
14 198,000 976.14 198,000 976.14
15 203,000 1,027.18 207,893 1,051.94
-------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 89
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT -
STANDARD PROVISIONS 5% ACCUMULATION BENEFIT BASE
CONTRACT ------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND*
---------------------------------------------------------------------------------------------------
10 $174,000 $622.92 $174,000 $622.92
11 141,000 516.06 171,034 625.98
12 148,000 553.52 179,586 671.65
13 208,000 796.64 208,000 796.64
14 198,000 778.14 198,000 778.14
15 203,000 818.09 207,893 837.81
---------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
90 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
INCOME ASSURER BENEFIT - GREATER OF MAV
STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE
CONTRACT -------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN B - LIFE WITH GUARANTEED INCOME PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN* BENEFIT BASE 10 YEARS CERTAIN*
----------------------------------------------------------------------------------------------------
10 $174,000 $ 774.30 $174,000 $ 774.30
11 141,000 642.96 174,000 793.44
12 148,000 692.64 179,586 840.46
13 208,000 998.40 208,000 998.40
14 198,000 976.14 208,000 1,025.44
15 203,000 1,027.18 208,000 1,052.48
----------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
INCOME ASSURER BENEFIT - GREATER OF MAV
STANDARD PROVISIONS OR 5% ACCUMULATION BENEFIT BASE
CONTRACT ------------------------------------------------------------------------------------
ANNIVERSARY ASSUMED PLAN D - LAST GUARANTEED INCOME PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND* BENEFIT BASE SURVIVOR NO REFUND*
---------------------------------------------------------------------------------------------------
10 $174,000 $622.92 $174,000 $622.92
11 141,000 516.06 174,000 636.84
12 148,000 553.52 179,586 671.65
13 208,000 796.64 208,000 796.64
14 198,000 778.14 208,000 817.44
15 203,000 818.09 208,000 838.24
---------------------------------------------------------------------------------------------------
* The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 91
APPENDIX J: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit on equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $ 58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the eight contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
92 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 93
APPENDIX K: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector Plus
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the record contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit on equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $ 64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit
calculated. The reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
94 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX L : CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 56 61 84 154 167 189 109 52 8
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $0.93 $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,923 8,703 28,798 37,213 21,915 15,378 8,725 1,580 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 $1.00 -- --
Accumulation unit
value at end of
period $1.34 $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,705 12,467 14,455 14,852 23,568 25,472 20,290 3,919 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.03 $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,210 5,777 7,197 7,837 8,361 23,813 6,935 1,154 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.14 $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57 76 102 77 74 88 26 18 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,164 3,587 19,621 8,230 5,476 2,192 1,151 399 76 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,083 4,009 84,971 77,286 67,959 33,990 1,077 842 152 40
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit
value at end of
period $1.52 $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,456 10,953 63,435 55,414 35,371 27,624 9,764 608 392 325
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.67 $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,129 9,784 12,306 14,085 14,409 15,807 17,584 7,616 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.96 $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,530 2,741 12,170 16,976 10,106 9,010 5,172 1,070 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.15 $1.12 $1.07 $1.09 $1.02 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.25 $1.15 $1.12 $1.07 $1.09 $1.02 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,043 2,737 67,428 34,578 35,149 26,599 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.55 $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,002 1,436 41,498 25,442 20,776 8,355 8 -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
96 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 $1.00 -- --
Accumulation unit
value at end of
period $1.02 $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 231 331 809 5,059 3,798 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit
value at beginning
of period $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 $1.00
Accumulation unit
value at end of
period $1.41 $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 314 406 643 597 708 735 335 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 $1.00 -- --
Accumulation unit
value at end of
period $1.12 $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 255 408 405 374 367 227 227 174 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $0.96 $0.77 $1.29 $1.32 $1.13 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.09 $1.13 $0.96 $0.77 $1.29 $1.32 $1.13 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 3 2 3 3 -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10
Accumulation unit
value at end of
period $1.20 $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,096 2,681 13,727 7,345 6,207 5,084 3,085 1,544 1,019 864
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.24 $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,280 1,660 2,334 3,051 3,154 7,113 2,763 500 -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $0.99 $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 14 63 66 115 87 57 9 -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit
value at beginning
of period $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 $1.00
Accumulation unit
value at end of
period $1.65 $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 10,705 13,957 27,907 47,719 43,300 45,089 16,531 3,067 152 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.30 $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,787 6,648 45,428 40,566 40,253 12,953 8,188 1,336 -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06
Accumulation unit
value at end of
period $2.05 $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,684 2,096 12,835 18,330 11,091 7,570 3,100 1,208 722 290
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.05 $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,997 2,249 4,907 4,814 4,416 4,843 4,036 1,573 -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit
value at end of
period $1.69 $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,164 1,832 2,044 2,501 3,051 2,743 2,554 2,119 1,118 777
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.79 $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,899 4,938 34,264 32,433 35,814 23,082 7,734 1,493 -- --
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit
value at end of
period $2.68 $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,277 2,833 10,008 11,967 11,638 9,377 4,128 1,284 550 386
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 97
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit
value at beginning
of period $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 $1.00
Accumulation unit
value at end of
period $1.45 $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 86 97 110 133 147 153 163 29 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit
value at beginning
of period $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 $1.00
Accumulation unit
value at end of
period $1.42 $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98
Number of
accumulation units
outstanding at end
of period (000
omitted) 12,380 16,064 35,637 43,373 36,774 36,888 18,912 3,700 73 --
-------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 $1.00 -- --
Accumulation unit
value at end of
period $1.77 $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 199 289 498 554 553 510 443 177 -- --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit
value at beginning
of period $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 $1.00
Accumulation unit
value at end of
period $1.25 $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,237 5,659 6,442 7,744 7,383 8,562 6,720 1,419 14 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 $1.00
Accumulation unit
value at end of
period $1.40 $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 320 469 582 612 831 683 680 562 136 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit
value at beginning
of period $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit
value at end of
period $1.77 $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 160 185 206 207 221 168 168 143 64 18
-------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 $1.00
Accumulation unit
value at end of
period $1.11 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 23 97 123 136 162 175 177 188 73
-------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 $1.00 -- --
Accumulation unit
value at end of
period $1.10 $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 285 299 325 340 355 5,948 89 5 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,578 3,678 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57,497 68,262 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,700 2,476 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53,602 58,932 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.19 $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 7 7 7 7 8 8 2 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 36,336 32,170 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
98 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 458,939 516,525 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28,278 25,057 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 213,018 254,807 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.06 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 9,842 6,739 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 69,228 81,004 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.50 $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,522 5,828 9,670 11,364 11,900 10,097 9,125 1,935 72 20
-------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 $1.00 -- --
Accumulation unit
value at end of
period $1.32 $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,139 4,208 17,593 17,008 13,828 7,563 5,332 946 -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit
value at beginning
of period $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93 $1.00
Accumulation unit
value at end of
period $1.39 $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,129 1,408 1,909 1,823 1,770 2,013 1,419 443 326 53
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit
value at beginning
of period $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96 $1.00
Accumulation unit
value at end of
period $1.77 $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,097 4,103 2,160 2,719 3,312 3,653 2,474 717 169 45
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 395 -- -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25 $0.41
Accumulation unit
value at end of
period $0.56 $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,928 2,412 611 755 924 1,086 1,314 1,371 1,396 976
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit
value at beginning
of period $1.22 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.11 $1.22 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 233 253 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18 $1.12
Accumulation unit
value at end of
period $1.72 $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,996 5,466 11,055 11,176 16,465 11,634 3,551 990 627 579
-------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07 $1.00
Accumulation unit
value at end of
period $1.01 $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 99
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19 $1.00
Accumulation unit
value at end of
period $0.90 $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 14 15 24 40 59 67 39 6
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05 $1.00
Accumulation unit
value at end of
period $1.29 $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 8 8 19 141 224 126 22
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06 $1.00
Accumulation unit
value at end of
period $0.99 $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 19 19 42 91 149 50 --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.09 $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 61 73 353 -- 7 4 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.23 $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 11 59 105 66 40 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.22 $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 28 51 82 160 181 83 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05 $1.00
Accumulation unit
value at end of
period $1.00 $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 2 14 21 19
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16 $1.00
Accumulation unit
value at end of
period $1.88 $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 7 8 18 32 46 24 3
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $1.10 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.12 $1.10 $1.06 $1.08 $1.02 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 6 29 44 38 29 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09 $1.00
Accumulation unit
value at end of
period $1.49 $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 4 14 23 31 14 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07 $1.00
Accumulation unit
value at end of
period $0.98 $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 1 1 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06 $1.00
Accumulation unit
value at end of
period $1.10 $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- 1 1 1
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.08 $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.10 $0.93 $0.75 $1.27 $1.31 $1.12 $1.10 $1.00
Accumulation unit
value at end of
period $1.05 $1.10 $0.93 $0.75 $1.27 $1.31 $1.12 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
100 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $1.02 $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 14 21 -- 9 5 --
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.04 $0.68 $1.18 $1.06 $1.04 $1.03 $1.00
Accumulation unit
value at end of
period $1.19 $1.33 $1.04 $0.68 $1.18 $1.06 $1.04 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 4 9 19 30 12 --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14 $1.00
Accumulation unit
value at end of
period $0.96 $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10 $1.00
Accumulation unit
value at end of
period $1.27 $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 31 38 83 177 296 101 8
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.25 $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 13 36 65 166 215 115 19
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21 $1.00
Accumulation unit
value at end of
period $1.53 $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 6 13 23 38 39 16 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10 $1.00
Accumulation unit
value at end of
period $1.02 $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 1 2 5 6 5
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12 $1.00
Accumulation unit
value at end of
period $1.31 $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16 $1.00
Accumulation unit
value at end of
period $1.72 $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 5 18 34 64 78 39 8
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19 $1.00
Accumulation unit
value at end of
period $1.36 $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 12 17 30 58 65 28 3
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10 $1.00
Accumulation unit
value at end of
period $1.09 $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13 $1.00
Accumulation unit
value at end of
period $1.06 $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 31 34 42 78 192 235 119 13
-------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.65 $1.30 $1.03 $1.71 $2.11 $1.57 $1.37 $1.00
Accumulation unit
value at end of
period $1.70 $1.65 $1.30 $1.03 $1.71 $2.11 $1.57 $1.37
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- 3 3 3
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06 $1.00
Accumulation unit
value at end of
period $0.98 $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 12 12 11 19 57 87 48 8
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 101
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.23 $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16 $1.00
Accumulation unit
value at end of
period $1.26 $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03 $1.00
Accumulation unit
value at end of
period $1.08 $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18 $1.00
Accumulation unit
value at end of
period $1.06 $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 5 4 12 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 223 266 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09 $1.00
Accumulation unit
value at end of
period $1.14 $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 47 47 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 239 257 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 69 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 61 61 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
102 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15 $1.00
Accumulation unit
value at end of
period $1.32 $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 10 11 17 56 72 43 5
-------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15 $1.00
Accumulation unit
value at end of
period $1.27 $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 8 14 18 49 56 28 4
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.28 $1.13 $1.00 $1.74 $1.55 $1.29 $1.14 $1.00
Accumulation unit
value at end of
period $1.09 $1.28 $1.13 $1.00 $1.74 $1.55 $1.29 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 -- -- -- -- 2 1 --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.19 $0.85 $1.19 $1.09 $1.06 $1.04 $1.00
Accumulation unit
value at end of
period $1.29 $1.39 $1.19 $0.85 $1.19 $1.09 $1.06 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 1 1 6 5 2
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.04 -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.56 $1.26 $0.84 $1.47 $1.32 $1.10 $1.06 $1.00
Accumulation unit
value at end of
period $1.45 $1.56 $1.26 $0.84 $1.47 $1.32 $1.10 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP VALUE FUND - CLASS 2 (07/16/2010)
Accumulation unit
value at beginning
of period $1.21 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.10 $1.21 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.24 $1.19 $1.08 $1.08 $1.04 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.32 $1.24 $1.19 $1.08 $1.08 $1.04 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS 103
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
104 EVERGREEN PATHWAYS SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45309 M (4/12)
PROSPECTUS
APRIL 30, 2012
WELLS FARGO
ADVANTAGE CHOICE(SM) SELECT VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION
FIXED/VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION
FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing in
Wells Fargo Advantage Choice Select Variable Annuity Contract Option L and
Contract Option C. The information in this prospectus applies to both contracts
unless stated otherwise.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Series Trust II
Dreyfus Variable Investment Fund, Service Share Class
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Wells Fargo Variable Trust
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contract described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges you
will pay when buying, owning and withdrawing money from the contract we describe
in this prospectus may be more or less than the fees and charges of other
variable annuities we issue. A securities broker dealer authorized to sell the
contract described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contract and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contract described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contract and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 13
FINANCIAL STATEMENTS........................ 13
THE VARIABLE ACCOUNT AND THE FUNDS.......... 13
THE GUARANTEE PERIOD ACCOUNTS (GPAS)........ 21
THE FIXED ACCOUNT........................... 22
BUYING YOUR CONTRACT........................ 24
CHARGES..................................... 26
VALUING YOUR INVESTMENT..................... 32
MAKING THE MOST OF YOUR CONTRACT............ 34
WITHDRAWALS................................. 42
TSA -- SPECIAL PROVISIONS................... 43
CHANGING OWNERSHIP.......................... 43
BENEFITS IN CASE OF DEATH................... 44
OPTIONAL BENEFITS........................... 47
THE ANNUITY PAYOUT PERIOD................... 70
TAXES....................................... 72
VOTING RIGHTS............................... 75
SUBSTITUTION OF INVESTMENTS................. 76
ABOUT THE SERVICE PROVIDERS................. 76
ADDITIONAL INFORMATION...................... 77
APPENDICES TABLE OF CONTENT AND CROSS-
REFERENCE TABLE........................... 78
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 79
APPENDIX B: EXAMPLE --
INCOME ASSURER BENEFIT RIDER FEE.......... 82
APPENDIX C: EXAMPLE --
WITHDRAWAL CHARGES FOR CONTRACT OPTION L.. 83
APPENDIX D: EXAMPLE -- DEATH BENEFITS....... 88
APPENDIX E: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 91
APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL
BENEFIT FOR LIFE RIDER.................... 93
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT
FOR LIFE RIDER -- ADDITIONAL RMD
DISCLOSURE................................ 95
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT --
RIDER B DISCLOSURE........................ 97
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT
RIDER --
ADDITIONAL RMD DISCLOSURE................. 102
APPENDIX J: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT RIDER........ 103
APPENDIX K: EXAMPLE --
INCOME ASSURER BENEFIT RIDERS............. 105
APPENDIX L: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 110
APPENDIX M: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 112
APPENDIX N: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 114
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 122
--------------------------------------------------------------------------------
2 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the one-year fixed account and
the DCA fixed account. Amounts you allocate to the fixed account earn interest
rates we declare periodically. For Contract Option C, the one-year fixed account
may not be available or may be significantly limited in some states.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Each contract has different expenses.
Contract Option L has lower expenses than Contract Option C. Contract Option L
has a four-year withdrawal charge schedule that applies to each purchase payment
you make. Contract Option C eliminates the purchase payment withdrawal charge
schedule, but has a higher mortality and expense risk fee than Contract Option
L. Your investment professional can help you determine which contract is best
suited to your needs based on factors such as your investment goals and how long
you intend to keep your contract.
PURPOSE: These contracts allow you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the one-year fixed account (if part of your
contract), the DCA fixed account, GPAs and/or subaccounts of the variable
account under the contract; however you risk losing amounts you invest in the
subaccounts of the variable account. These accounts, in turn, may earn returns
that increase the value of a contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. You may be able to purchase an optional benefit to reduce the
investment risk you assume. Beginning at a specified time in the future called
the retirement date, these contracts provide lifetime or other forms of payouts
of your contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
the GPAs which earn interest at rates that we declare when you allocate
purchase payments or transfer contract value to these accounts. The required
minimum investment in a GPA is $1,000. These accounts may not be available in
all states. (See "The Guarantee Period Accounts (GPAs)" and "The One-Year
Fixed Account").
the one-year fixed account (if part of your contract), which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract" and "Transfer policies").
DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract value
can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. Transfers into the DCA
fixed account are not permitted. We reserve the right to further limit transfers
to the one-year fixed account if the interest rate we are then
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
currently crediting is equal to the minimum interest rate stated in the
contract. (See "Making the Most of Your Contract -- Transferring Among
Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: This contract offers features that are available for
additional charges if you meet certain criteria. Optional benefits may require
the use of a Portfolio Navigator program (PN program) investment option which
may limit transfers and allocations; may limit the timing, amount and allocation
of purchase payments; and may limit the amount of partial withdrawals that can
be taken under the optional benefit during a contract year. (See "Optional
Benefits").
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
and the DCA fixed account are not available during the payout period. (See "The
Annuity Payout Period").
--------------------------------------------------------------------------------
6 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(contingent deferred sales charge as a percentage of purchase payment withdrawn)
You select either contract Option L or Option C at the time of application.
Option C has no withdrawal charge schedule but carries a higher mortality and
expense risk fee than Option L.
CONTRACT OPTION L
YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE
1-2 8%
3 7
4 6
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE DEATH
BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND
EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO
THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
Return of Purchase Payment (ROP) Death 0.15% 1.70%
Benefit 1.55%
Maximum Anniversary Value (MAV) Death 0.15 1.90
Benefit 1.75
5% Accumulation Death Benefit 1.90 0.15 2.05
Enhanced Death Benefit 1.95 0.15 2.10
IF YOU SELECT CONTRACT OPTION C AND:
ROP Death Benefit 1.65% 0.15% 1.80%
MAV Death Benefit 1.85 0.15 2.00
5% Accumulation Death Benefit 2.00 0.15 2.15
Enhanced Death Benefit 2.05 0.15 2.20
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. Each optional living benefit requires participation
in the PN program. The fees apply only if you have selected one of these
benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
8 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.50% 1.45%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55% 0.25% 0.05% --% 0.85%
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(3)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(4)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(5)
Shares
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58% 0.25% 0.13% 0.07% 1.03%(6)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(7)
Service Shares
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(8)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(8)
3)
Wanger USA 0.86 -- 0.08 -- 0.94(9)
Wells Fargo Advantage VT Index Asset Allocation 0.55 0.25 0.26 -- 1.06(10)
Fund - Class 2
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(11)
2
Wells Fargo Advantage VT Intrinsic Value Fund - Class 2 0.55 0.25 0.37 0.01 1.18(11)
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(11)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(12)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(11)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.845% for
Columbia Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for
Columbia Variable Portfolio - Large Cap Growth Fund (Class 3) and 1.005%
for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund (Class
3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(4) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(5) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
--------------------------------------------------------------------------------
10 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(6) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(7) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(8) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
(9) Other expenses have been restated to reflect contractual changes to certain
other fees.
(10) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(11) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(12) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV Death Benefit, the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,354 $2,551 $3,228 $6,612 $634 $1,919 $3,228 $6,612
Contract Option C 644 1,948 3,274 6,690 644 1,948 3,274 6,690
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,004 $1,490 $1,382 $2,911 $266 $813 $1,382 $2,911
Contract Option C 276 843 1,433 3,013 276 843 1,433 3,013
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
12 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix N.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
are generally more profitable for us and our affiliates. For example, we may
receive compensation from our affiliates in connection with purchase payments
and contract value you allocate to the affiliated funds that exceeds the range
disclosed in the previous paragraph for funds our affiliates do not manage.
These
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
relationships may influence recommendations your investment professional makes
regarding whether you should invest in the contract, and whether you should
allocate purchase payments or contract values to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under the asset allocation program we
offer (see "Making the Most of Your Contract -- Portfolio Navigator Program")
or under asset allocation programs used in conjunction with the contracts and
plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
14 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS International
Value Portfolio
(Class B)
----------------------------------------------------------------------------------------
American Century Seeks long-term total return using a American Century
VP Inflation strategy that seeks to protect against U.S. Investment Management,
Protection, Class inflation. Inc.
II
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Value, Class secondary objective. Investment Management,
II Inc.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Non-diversified fund that seeks total Columbia Management
Portfolio - Glob- return that exceeds the rate of inflation Investment Advisers, LLC
al Inflation over the long term.
Protected
Securities Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
16 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Dreyfus Seeks capital appreciation. The Dreyfus Corporation
Investment
Portfolios
Technology Growth
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth consistent The Dreyfus Corporation,
Investment Fund with the preservation of capital. adviser; Fayez Sarofim &
Appreciation Co., sub-adviser.
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks high current income, consistent with Franklin Advisers, Inc.
Global Bond preservation of capital, with capital
Securities appreciation as a secondary consideration.
Fund - Class 2 The fund normally invests at least 80% of
its net assets in bonds, which include debt
securities of any maturity, such as bonds,
notes, bills and debentures.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Small Seeks capital appreciation. Putnam Investment
Cap Value Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 2) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 4) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
2) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
4) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Gold- Investment Advisers,
man Sachs Mid Cap LLC, adviser; Goldman
Value Fund (Class Sachs Asset Management,
3) L.P., subadviser.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 2) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 4) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
2) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
4) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
2) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
4) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term total return, consisting of Wells Fargo Funds
Advantage VT capital appreciation and current income. Management, LLC,
Index Asset adviser; Wells Capital
Allocation Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. The
required minimum investment in each GPA is $1,000. These accounts are not
available in all states and are not offered after annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or the one-year fixed account, if available or
withdraw the contract value (subject to applicable withdrawal provisions). If we
do not receive any instructions at the end of your guarantee period, our current
practice is to automatically transfer the contract value into the shortest GPA
term offered in your state.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30 day rule). At all other
times, and unless one of the exceptions to the 30 day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under a SecureSource rider or the Guarantor Withdrawal
Benefit for Life rider or you elect an annuity payout plan while you have
contract value invested in a GPA. We will refer to these transactions as "early
withdrawals." The application of an MVA may result in either a gain or loss of
principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA will apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; or
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. The
fixed account includes the one-year fixed account and the DCA fixed account. We
credit interest on amounts you allocate to the fixed account at rates we
determine from time to time in our discretion. These rates will be based on
various factors including, but not limited to, the interest rate environment,
returns we earn on our general account investments, the rates currently in
effect for new and existing RiverSource Life annuities, product design,
competition, and RiverSource Life's revenues and expenses. The guaranteed
minimum interest rate on amounts invested in the fixed account may vary by state
but will not be lower than state law allows. We back the principal and interest
guarantees relating to the fixed account. These guarantees are based on the
continued claims-paying ability of RiverSource Life. You should be aware that
our general account is exposed to the risks normally associated with a portfolio
of fixed-income securities, including interest rate, option, liquidity and
credit risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account.(1) The value of the
one-year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
--------------------------------------------------------------------------------
22 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Buying Your
Contract" and "Making the Most of Your Contract -- Transfer policies").
(1) For Contract Option C, the one-year fixed account may not be available, or
may be significantly limited in some states. See your contract for the
actual terms of the one-year fixed account you purchased.
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The value of the DCA fixed account increases when we credit interest to
the DCA fixed account, and decreases when we make monthly transfers from the DCA
fixed account to your investment allocations. We credit interest only on the
declining balance of the DCA fixed account; we do not credit interest on amounts
that have been transferred from the DCA fixed account. We credit and compound
interest daily based on a 365-day year (366 in a leap year) so as to produce the
annual effective rate which we declare. Generally, we will credit the DCA fixed
account with interest at the same annual effective rate we apply to the one-year
fixed account on the date we receive your purchase payment, regardless of the
length of the term you select. From time to time, we may credit interest to the
DCA fixed account at promotional rates that are higher than those we credit to
the one-year fixed account. We reserve the right to declare different annual
effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account you instruct us to transfer to the one-
year fixed account if available under your contract;
for amounts in the DCA fixed account you instruct us to transfer to the GPAs;
for amounts in the DCA fixed account you instruct us to transfer to the
subaccounts.
The interest rates in effect for the DCA fixed account when we receive your
purchase payment are guaranteed for the length of the term. When you allocate an
additional purchase payment to an existing DCA fixed account term, the interest
rates applicable to that purchase payment will be the rates in effect for the
DCA fixed account of the same term on the date we receive your purchase payment.
For DCA fixed accounts with an initial term (or, in the case of an additional
purchase payment, a remaining term) of less than twelve months, the net
effective interest rates we credit to the DCA fixed account balance will be less
than the declared annual effective rates.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program model portfolio or investment option in effect;
if no PN program investment option is in effect, to the one-year fixed account
if available under your contract, the GPAs and/or the subaccounts, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account if available under your contract, the GPAs and/or the subaccounts,
subject to investment minimums and other restrictions we may impose on
investments in the one-year fixed account and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
If you participate in a PN program and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
investment instructions to us to the one-year fixed account if available under
your contract, the GPAs and the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs, including but not limited to, any limitations described in this
prospectus on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account if available under
your contract, the GPAs and/or the subaccounts, subject to investment minimums
and other restrictions we may impose on investments in the one-year fixed
account and the GPAs, including but not limited to, any limitations described in
this prospectus on transfers (see "Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of Your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. You may buy Contract Option L
or Contract Option C. Contract Option L has a four-year withdrawal charge
schedule. Contract Option C eliminates the withdrawal charge schedule in
exchange for a higher mortality and expense risk fee. Both contracts have the
same underlying funds. As the owner, you have all rights and may receive all
benefits under the contract.
You may select a qualified or nonqualified annuity. You can own a nonqualified
annuity in joint tenancy with rights of survivorship only in spousal situations.
You cannot own a qualified annuity in joint tenancy. You can become an owner if
you are 85 or younger. (The age limit may be younger for qualified annuities in
some states.)
When you applied you could have selected (if available in your state):
contract Option L or Option C;
GPAs, the one-year fixed account (if part of your contract), the DCA fixed
account (if part of your contract), and/or subaccounts in which you want to
invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit
- MAV Death Benefit
- 5% Accumulation Death Benefit(2)
- Enhanced Death Benefit(2)
In addition, you could have also selected (if available in your state):
EITHER ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE
PN PROGRAM):
Accumulation Protector Benefit rider
Guarantor Withdrawal Benefit for Life rider
Guarantor Withdrawal Benefit rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
--------------------------------------------------------------------------------
24 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Available if you and the annuitant are age 75 or younger at contract issue.
Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit riders.
This contract provides for allocations of purchase payments to the GPAs, the
one-year fixed account (if part of your contract), the DCA fixed account (if
part of your contract), and/or to the subaccounts in even 1% increments subject
to the required $1,000 required minimum investment for the GPAs. For Contract
Option L, the amount of any purchase payment allocated to the one-year fixed
account in total cannot exceed 30% of the purchase payment. More than 30% of a
purchase payment may be so allocated if you establish an automated dollar-cost
averaging arrangement with respect to the purchase payment according to
procedures currently in effect. We reserve the right to further limit purchase
payment allocations to the one-year fixed account if the interest rate we are
then crediting on new purchase payments allocated to the one-year fixed account
is equal to the minimum interest rate stated in the contract. For Contract
Option C, the one-year fixed account may not be available or may be
significantly limited in some states. See your contract for the actual terms of
the one-year fixed account you purchased.
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different date, depending
on your needs and goals and on certain restrictions. You also can change the
retirement date, provided you send us written instructions at least 30 days
before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 90th(1) birthday or the tenth contract
anniversary, if purchased after age 80(1), or such other date as agreed upon
by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from your contract, annuity payouts can start as late as the
annuitant's 85th birthday or the tenth contract anniversary, if later, or a date
that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the retirement date must be no later
than the annuitant's 85th birthday or the tenth contract anniversary, if
purchased after age 75. Ask your investment professional which retirement
date applies to you.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
share when we receive their completed claim. A beneficiary will bear the
investment risk of the variable account until we receive the beneficiary's
completed claim. If there is no named beneficiary, the default provisions of
your contract will apply. (See "Benefits in Case of Death" for more about
beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract. See your contract and/or ask your
investment professional for the actual terms of the contract you purchased.
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*:
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the tax-deferred retirement plan's or the Code's limits on annual
contributions also apply. Additional purchase payments are restricted during
the waiting period after the first 180 days immediately following the
effective date of the Accumulation Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider, Enhanced Guarantor
Withdrawal Benefit rider, or Guarantor Withdrawal Benefit for Life rider,
subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary. We prorate this charge
among the GPAs, the fixed account and the subaccounts in the same proportion
your
--------------------------------------------------------------------------------
26 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
interest in each account bears to your total contract value. Some states also
limit any contract charge allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The contract (either Option L or Option C) and the death benefit guarantee you
select determines the mortality and expense risk fee you pay:
CONTRACT CONTRACT
OPTION L OPTION C
ROP Death Benefit 1.55% 1.65%
MAV Death Benefit 1.75 1.85
5% Accumulation Death Benefit 1.90 2.00
Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge for contract Option L will cover sales and distribution
expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Contract Option C has no purchase payment withdrawal charge schedule but carries
a higher mortality and expense risk fee than contract Option L.
If you select contract Option L and you withdraw all or part of your contract
value before annuity payouts begin, we may deduct a withdrawal charge. As
described below, a withdrawal charge schedule applies to each purchase payment
you make. The withdrawal charge lasts for four years from the receipt of each
purchase payment (see "Expense Summary").
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract Option L includes the Guarantor Withdrawal Benefit for
Life rider or the Guarantor Withdrawal Benefit rider:
CONTRACT OPTION L WITHOUT GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR THE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
CONTRACT OPTION L WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment to be the prior contract
anniversary's contract value during the first contract year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract Option L, a
withdrawal charge schedule attaches to that purchase payment. The withdrawal
charge percentage for each purchase payment declines according to the withdrawal
charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR
THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select contract Option L, during the first
two years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the fourth year after it is made is 6%. At the beginning of the
fifth year after that purchase payment is made, and thereafter, there is no
longer a withdrawal charge as to that payment.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix C.
WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
--------------------------------------------------------------------------------
28 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the Guarantor Withdrawal Benefit for Life rider, the greater of
your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment
to the extent it exceeds the greater of contract earnings or 10% of the
contract value on the prior contract anniversary;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge. This
exception also applies to contract Option C.)
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct a charge of 0.55% of the greater of your contract value or the minimum
contract accumulation value on your contract anniversary for this optional
benefit only if you select it. We deduct the charge from the contract value on
the contract anniversary. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
the charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the charge.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each investment
option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider charge, for the preceding contract year only,
that reflects the various different fees that were in effect that year, adjusted
for the number of calendar days each charge was in effect. We reserve the right
to restart the waiting period whenever you elect to change your PN program
investment option to one that causes the rider fee to increase.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this fee among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, the contract value reduces to zero or annuity payouts begin. If the
contract is terminated for any reason or when annuity payouts begin, we will
deduct the charge from the proceeds payable adjusted for the number of calendar
days coverage was in place since we last deducted the fee. If the RBA goes to
zero but the contract value has not been depleted, you will continue to be
charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit for Life rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE
THIS FEE INFORMATION APPLIES TO BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER
B (SEE APPENDIX H) UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account,
--------------------------------------------------------------------------------
30 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
and the subaccounts in the same proportion as your interest in each bears to
your total contract value. We will modify this prorated approach to comply with
state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the charge that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you select it. We determine
the charge by multiplying the guaranteed income benefit base by the charge of
the Income Assurer Benefit rider you select. There are three Income Assurer
Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary at the
end of each contract year. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion your interest in each
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
rider fee after the rider effective date, unless you change your PN program
investment option after we have exercised our rights to increase the rider
charge and/or charge a separate fee for PN program each investment option. If
you choose to change your investment option after we have exercised our rights
to increase the rider fee for new contract owners, you will pay the fee that is
in effect on the valuation date we receive your written request to change your
PN program investment option. On the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
For an example of how each Income Assurer Benefit fee is calculated, see
Appendix B.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this charge among all accounts and subaccounts in the same proportion your
interest in each account bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the charge from the proceeds payable adjusted for
the number of calendar days coverage was in place since we last deducted the
charge. We cannot increase this annual charge after the rider effective date and
it does not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocated to the GPAs directly in dollars. The value of
a GPA equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR
CONTRACT, AND THE DCA FIXED ACCOUNT.
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
the sum of your purchase payments allocated to the one-year fixed account (if
included) and the DCA fixed account (if included), and transfer amounts to the
one-year fixed account (if included) (including any positive or negative MVA
on amounts transferred from the GPAs to the one-year fixed account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for Contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
--------------------------------------------------------------------------------
32 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or one-year GPA to one or more subaccounts. Automated transfers are not
available for GPA terms of two or more years. You can also obtain the benefits
of dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the DCA fixed account. See the "DCA Fixed
Account" and "Portfolio Navigator Program" sections in this prospectus for
details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below).
As long as you are not participating in a PN program, asset rebalancing is
available for use with the DCA fixed account (see "DCA Fixed Account") only if
your subaccount allocation for asset rebalancing is exactly the same as your
subaccount allocation for transfers from the DCA fixed account. If you change
your subaccount allocations under the asset rebalancing
--------------------------------------------------------------------------------
34 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
program or the DCA fixed account, we will automatically change the subaccount
allocations so they match. If you do not wish to have the subaccount allocation
be the same for the asset rebalancing program and the DCA fixed account, you
must terminate the asset rebalancing program or the DCA fixed account, as you
may choose.
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program called Portfolio Navigator. You could elect to participate in
the asset allocation program, and there is no additional charge. If you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you are required to participate
in the PN program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent various asset classes. By spreading your contract value among
these various asset classes, you may be able to reduce the volatility in your
contract value, but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Currently, there are five model portfolios ranging from conservative to
aggressive. You may not use more than one model portfolio at a time. You are
allowed to request a change to another model portfolio twice per contract year.
Each model portfolio specifies allocation percentages to each of the subaccounts
and any GPAs and/or the one-year fixed account that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs and/or one-year fixed
account (if included) according to the allocation percentages stated for the
specific model portfolio you have selected. You also authorize us to
automatically rebalance your contract value quarterly beginning three months
after the effective date of your contract in order to maintain alignment with
the allocation percentages specified in the model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account (if included) that make up the model portfolio you selected
and the allocation percentages to those subaccounts, any GPAs and/or the one-
year fixed account (if included) will not change unless we adjust the
composition of the model portfolio to reflect the liquidation, substitution or
merger of an underlying fund, a change of investment objective by an underlying
fund or when an underlying fund stops selling its shares to the variable
account. We reserve the right to change the terms and conditions of the asset
allocation program upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT
RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER
If you are required to participate in the asset allocation program because you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you may not discontinue your
participation in the asset allocation program unless permitted by the terms of
the rider as summarized below:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the model
portfolios. The Accumulation Protector Benefit rider automatically ends at the
end of the waiting period as does the requirement that you participate in the
asset allocation program. At all other times, if you do not want to
participate in any of the model portfolios, you must terminate your contract
by requesting a full withdrawal. Withdrawal charges and tax penalties may
apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL
PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit
rider requires that your contract value be invested in one of the model
portfolios for the life of the contract, and you cannot terminate the
Guarantor Withdrawal Benefit rider once you have selected it, you must
terminate your contract by requesting a full withdrawal if you do not want to
participate in any of the model portfolios. Withdrawal charges and tax
penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE
MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit
rider during a 30-day period after the first rider anniversary and at any time
after the expiration of the waiting period. At all other times, if you do not
want to participate in any of the model portfolios, you must terminate your
contract by requesting a full withdrawal. Withdrawal charges and tax penalties
may apply. As long as the Income Assurer Benefit rider is in effect, your
contract value must be invested in one of the model portfolios. THEREFORE, YOU
SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF
TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
--------------------------------------------------------------------------------
36 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The Guarantor Withdrawal Benefit
for Life rider requires that your contract value be invested in one of the PN
program investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the Guarantor Withdrawal Benefit for Life
rider once you have selected it, you must terminate your contract by
requesting a full withdrawal if you do not want to invest in any of the PN
program investment options. Withdrawal charges and tax penalties may apply.
THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT
NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or the DCA fixed account, to another subaccount before annuity
payouts begin. Certain restrictions apply to transfers involving the GPAs and
the one-year fixed account. You may not transfer contract value to the DCA fixed
account.
--------------------------------------------------------------------------------
38 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account (if included) at any time. However, if you made a transfer from the
one-year fixed account to the subaccounts or the GPAs, you may not make a
transfer from any subaccount or GPA back to the one-year fixed account for six
months following that transfer. We reserve the right to further limit
transfers to the one-year fixed account if the interest rate we are then
currently crediting to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
You may transfer contract values from the one-year fixed account (if included)
to the subaccounts or the GPAs once a year on or within 30 days before or
after the contract anniversary (except for automated transfers, which can be
set up at any time for certain transfer periods subject to certain minimums).
Transfers from the one-year fixed account are not subject to an MVA. For
Contract Option L, the amount of contract value transferred to the one-year
fixed account cannot result in the value of the one-year fixed account being
greater than 30% of the contract value; transfers out of the one-year fixed
account are limited to 30% of one-year fixed account values at the beginning
of the contract year or $10,000, whichever is greater. For Contract Option C,
transfers to the one-year fixed account and transfers out of the one-year
fixed account may not be available or may be significantly limited. See your
contract for the actual terms of the one-year fixed account you purchased. For
both Contract Option L and Contract Option C, we reserve the right to further
limit transfers to or from the one-year fixed account if the interest rate we
are then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Because of these limitations, it may
take several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest. Transfers made more than 30
days before the end of the guarantee period will receive an MVA, which may
result in a gain or loss of contract value, unless an exception applies (see
"The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values from the DCA fixed account to any of the investment options
available under your contract, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and
the GPA, as described above. (See "DCA Fixed Account.")
Once annuity payouts begin, you may not make transfers to or from the GPAs or
the fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest. When annuity payments
begin, you must transfer all contract value out of your GPAs and the DCA fixed
account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
--------------------------------------------------------------------------------
40 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
subaccounts, the one-year fixed account or GPAs or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA fixed account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have a Guarantor Withdrawal Benefit for Life rider or Guarantor
Withdrawal Benefit rider, you may set up automated partial withdrawals up to
the benefit available for withdrawal under the rider.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges, or any applicable optional rider
charges (see "Charges") and federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity
Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your
partial withdrawals in any contract year exceed the permitted withdrawal amount
under the terms of the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced
(see "Optional Benefits"). Any partial withdrawal request that exceeds the
amount allowed under the riders and impacts the guarantees provided, will not be
considered in good order until we receive a signed Benefit Impact
Acknowledgement form showing the projected effect of the withdrawal on the rider
benefits or a verbal acknowledgement that you understand and accept the impacts
that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs may reduce the
value of certain death benefits and optional benefits (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts and GPAs,
the DCA fixed account, and/or the one-year fixed account in the same proportion
as your value in each account correlates to your total contract value, unless
requested otherwise. After executing a partial withdrawal, the value in each
subaccount, one-year fixed account or GPA must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
--------------------------------------------------------------------------------
42 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding on us when we receive and record it. We will honor any
change of ownership request received in good order that we believe is authentic
and we will use reasonable procedures to confirm authenticity. If we follow
these procedures, we will not take any responsibility for the validity of the
change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (see "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit rider and/or Benefit Protector Plus rider,
the rider will terminate upon transfer of ownership of the annuity contract. The
Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and
the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership
of your annuity contract. For the Guarantor Withdrawal Benefit for Life riders,
any ownership change that impacts the guarantees provided will not be considered
in good order until we receive a signed Benefit Impact Acknowledgement form
showing the projected effect of the ownership change on the rider benefits or a
verbal acknowledgement that you understand and accept the impacts that have been
explained to you. Continuance of the Benefit Protector is optional. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit;
Enhanced Death Benefit
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death. We will base the benefit paid on
the death benefit coverage you chose when you purchased the contract. If a
contract has more than one person as the owner, we will pay benefits upon the
first to die of any owner or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal
CV = contract value on the date of (but prior to) the partial withdrawal
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments applied to the contract minus adjusted partial
withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by adjusted partial withdrawals. Every contract anniversary after that
prior to the earlier of your or the annuitant's 81st birthday, we compare the
MAV to the current contract value and we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, the one-
year fixed account and the variable account floor. There is no variable account
floor prior to the first contract anniversary. On the first contract
anniversary, we establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts or the DCA fixed account and subtract adjusted transfers and partial
withdrawals from the subaccounts or the DCA fixed account. On each contract
anniversary after the first, through age 80, we add an amount to the variable
account floor equal to 5% of the prior anniversary's variable account floor. We
stop adding this amount after you or the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED PARTIAL WITHDRAWALS = ---------
SV
--------------------------------------------------------------------------------
44 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
PWT = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial withdrawal or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer of partial withdrawal.
The amount of purchase payments withdrawn or transferred from any subaccount or
fixed account (if applicable) or GPA account is calculated as (a) times (b)
where:
(a) is the amount of purchase payments in the account or subaccount on the date
of but prior to the current withdrawal or transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments allocated to the subaccounts and the
DCA fixed account that have not been withdrawn or transferred out of the
subaccounts or the DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin and while
this contract is in force, the death benefit will be the greater of these two
values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix D.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on contract Option L from that point forward unless
additional payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus
riders, if selected, will terminate. The Accumulation Protector Benefit, the
Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit
riders, if selected, will continue. Continuance of the Benefit Protector is
optional. (see "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward unless additional payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and Benefit Protector Plus riders, if
selected, will terminate. The Accumulation Protector Benefit, the Guarantor
Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if
selected, will continue. Continuance of the Benefit Protector is optional.
(see "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
--------------------------------------------------------------------------------
46 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit at the time you purchase your contract and the rider effective
date will be the contract issue date. The Accumulation Protector Benefit rider
may not be terminated once you have elected it, except as described in the
"Terminating the Rider" section below. An additional charge for the Accumulation
Protector Benefit rider will be assessed annually during the waiting period. The
rider ends when the waiting period expires and no further benefit will be
payable and no further fees for the rider will be deducted. After the waiting
period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract to create a guaranteed income stream.
The Accumulation Protector Benefit rider may not be purchased with the optional
Guarantor Withdrawal Benefit for Life rider, or the Guarantor Withdrawal Benefit
rider or any Income Assurer Benefit rider.
The Accumulation Protector Benefit rider may not be available in all states.
You should consider whether a Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
available investment options. This requirement limit your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, one-year fixed account (if included) and GPAs that are
available under the contract to contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those you take to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step up option (described below) or your
surviving spouse exercises the spousal continuation elective step up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program investment option to one
that causes the Accumulation Protector Benefit rider charge to increase (see
"Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment. It is increased by
the amount of any subsequent purchase payments received within the first 180
days that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
--------------------------------------------------------------------------------
48 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix E.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if:
your contract application is signed on or after May 1, 2006(1);
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the retirement date, you
have the right to withdraw some or all of your contract value, less applicable
administrative, withdrawal and rider charges imposed under the contract at the
time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals").
Because your contract value will fluctuate depending on the performance of the
underlying funds in which the subaccounts invest, the contract itself does not
guarantee that you will be able to take a certain withdrawal amount each year
before the annuity payouts begin, nor does it guarantee the length of time over
which such withdrawals can be made before the annuity payouts begin.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and do not
intend to elect an annuity payout and wish to ensure that market performance
will not adversely affect your ability to withdraw your principal over time.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
[under the basic withdrawal benefit] is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year;
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below). Please note
that each of the two benefits has its own definition of the allowed annual
withdrawal amount. Therefore a partial withdrawal may be considered an excess
withdrawal for purposes of the lifetime withdrawal benefit only, the basic
withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your PN investment option, the rider charge may change
(see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
--------------------------------------------------------------------------------
50 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect this rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate qualifying purchase payments to the DCA
fixed account, when available, and we will make monthly transfers into the
investment option you have chosen. Subject to state restrictions, we reserve
the right to limit the number of investment options from which you can select
based on the dollar amount of purchase payments you make.
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of this
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix G for
additional information. RMD rules follow the calendar year which most likely
does not coincide with your contract year and therefore may limit when you can
take your RMD and not be subject to excess withdrawal processing. You should
consult your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
limitations, see "Buying Your Contract -- Purchase Payments."
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or annuity payouts begin.
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw in a contract year under the contract's TFA provision that exceeds
the RBP or RALP is subject to the excess withdrawal procedures described below
for the GBA, RBA and ALP.
For an example, see Appendix F.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any withdrawal charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
The GBA is determined at the following times, calculated as described:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal that payment's GBA.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
--------------------------------------------------------------------------------
52 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. Please note that if the partial withdrawal is made
during the waiting period, the excess withdrawal processing is applied
AFTER any previously applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The Covered Person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date following the date the covered person reaches age 65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65 -- the ALP is established
as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. Please note that if the partial withdrawal is made
during the waiting period, the excess withdrawal processing are applied
AFTER any previously applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
--------------------------------------------------------------------------------
54 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from this contract
and the RMD calculated separately for this contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of the RMD that
exceeds the RBP or RALP will not be subject to excess withdrawal processing
provided that the following conditions are met:
The RMD is the life expectancy RMD for this contract alone, and
The RMD amount is based on the requirements of section 401(a)(9), related Code
provisions and regulations thereunder that were in effect on the effective
date of this rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above.
See Appendix G for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up and it is also possible for the RBA and GBA to step up even
if the ALP and the RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to equal to the ALP less all prior
withdrawals made in the current contract year, but never less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
--------------------------------------------------------------------------------
56 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of
(i) the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be
paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered
person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero, then the Guarantor
Withdrawal Benefit for Life rider will terminate when the death benefit becomes
payable (see "Benefits in Case of Death"). The beneficiary may elect to take the
death benefit as a lump sum under the terms of the contract (see "Benefits in
Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit
Annuity Payout Option" heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the anniversary contract anniversary following the date the
covered person reaches age 65. The ALP will be set equal to the lesser of the
RBA or the contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set equal to
the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to equal the ALP
less all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. In addition to these annuity payout
plans, a fixed annuity payout option is available under the Guarantor Withdrawal
Benefit for Life rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the future schedule of GBPs if necessary to comply with the
Code.
--------------------------------------------------------------------------------
58 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that you may
select for an additional annual charge if:
your contract application was signed on or after May 1, 2006(1),(2) in those
states where the Guarantor Withdrawal Benefit for Life rider is not
available(3);
you and the annuitant are 79 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) The disclosures in this section also apply to contract owners who purchased
this rider on or after April 29, 2005. In previous disclosures, we have
referred to this rider as Rider A. We also offered an earlier version of
this rider, previously referred to as Rider B. See Appendix H for
information regarding Rider B which is no longer offered. See the rider
attached to your contract for the actual terms of the benefit you purchased.
(3) Ask your investment professional if this rider is available in your state.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a withdrawal charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefit (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program investment option, the rider charge may change (see "Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
program (see "Making the Most of Your Contract -- Asset Allocation Program"),
however, you may have elected to participate in the Portfolio Navigator
program after May 1, 2006. The Portfolio Navigator program and the asset
allocation program limit your choice of investments. This means you will not
be able to allocate contract value to all of the subaccounts, GPAs or the one-
year fixed account that are available under the contract to contract owners
who do not elect this rider. (See "Making the Most of Your Contract -- Asset
Allocation Program and Portfolio Navigator Program."). You may make qualifying
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the PN program investment option you have chosen.
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals before age 59 1/2 may also incur a 10%
IRS early withdrawal penalty;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change. See Appendix I for additional information. RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments.
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
The GBA is determined at the following times:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase
payment has its own GBA equal to the amount of the purchase payment plus any
purchase payment credit. The total GBA when an additional purchase payment is
added is the sum of the individual GBAs immediately prior to the receipt of
the additional purchase payment, plus the GBA associated with the additional
purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups;
--------------------------------------------------------------------------------
60 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
The RBA is determined at the following times:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups.
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary (see "Elective Step Up" above). The GBP is equal to 7% of the
GBA.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment, multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
If you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
If you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
If you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
procedures discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
--------------------------------------------------------------------------------
62 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all prior
withdrawals made during the current contract year, but never less than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor(SM) Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
INCOME ASSURER BENEFIT RIDERS
There are three optional Income Assurer Benefit riders available under your
contract:
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider. This section is followed by a description of each specific Income Assurer
Benefit rider and how it is calculated.
You should consider whether an Income Assurer Benefit rider is appropriate for
you because:
you must participate in the Portfolio Navigator program if you purchase a
contract on or after May 1, 2006 with this rider (see "Making the Most of Your
Contract -- Portfolio Navigator Program"). If you selected this rider before
May 1, 2006, you must participate in the asset allocation program (see "Making
the Most of Your Contract -- Asset Allocation Program"), however, you may
elect to participate in the Portfolio Navigator program after May 1, 2006. The
Portfolio Navigator program and the asset allocation program limit your choice
of investments. This means you will not be able to allocate contract value to
all of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to other contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Asset Allocation Program" and "Portfolio
Navigator Program.");
if you are purchasing the contract as a qualified annuity, such as an IRA, you
are planning to begin annuity payouts after the date on which minimum
distributions required by the Code must begin, you should consider whether an
Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals you take
from the contract, including those used to satisfy RMDs will reduce the
guaranteed income benefit base (defined below), which in turn may reduce or
eliminate the amount of any annuity payouts available under the rider. Consult
a tax advisor before you purchase any Income Assurer Benefit rider with a
qualified annuity;
you must hold the Income Assurer Benefit for 10 years unless you elect to
terminate the rider within 30 days following the first anniversary after the
effective date of the rider;
you can only exercise the Income Assurer Benefit within 30 days after a
contract anniversary following the expiration of the 10-year waiting period;
the 10-year waiting period may be restarted if you elect to change the PN
program investment option to one that causes the rider charge to increase (see
"Charges -- Income Assurer Benefit"); and
the Income Assurer Benefit rider terminates* on the contract anniversary after
the annuitant's 86th birthday.
* The rider and annual fee terminate on the contract anniversary after the
annuitant's 86th birthday, however, if you exercise the Income Assurer
Benefit rider before this time, your benefits will continue according to the
annuity payout plan you have selected.
If the Income Assurer Benefit rider is available in your state and the annuitant
is 75 or younger at contract issue, you may choose this optional benefit at the
time you purchase your contract for an additional charge. The amount of the
charge is determined by the Income Assurer Benefit rider you select (see
"Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider
will be the contract issue date. The Accumulation Protector Benefit, the
Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit
riders are not available with any Income Assurer Benefit rider. If the annuitant
is between age 73 and age 75 at contract issue, you should consider whether a
Income Assurer Benefit rider is
--------------------------------------------------------------------------------
64 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
appropriate for your situation because of the 10-year waiting period
requirement. Be sure to discuss with your investment professional whether an
Income Assurer Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under Contract Data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, GPAs and
one-year fixed account. Excluded investment options are not used in the
calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments paid in the last five years
before exercise of the benefit which we reserve the right to exclude from the
calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the retirement date must be between 50 to 86 years old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
-- Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payment or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. Exception: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate, for contracts purchased on or
after May 1, 2006 and if available in your state(1). These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
and a 2.0% interest rate.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) - is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments made to the contract minus proportionate adjustments for
partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by proportionate adjustments for partial withdrawals. Every contract
anniversary after that prior to the earlier of your or the annuitant's 81st
birthday, we compare the MAV to the current contract value and we reset the MAV
to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
--------------------------------------------------------------------------------
66 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such purchase
payment. The estimated contract value at such anniversary is calculated by
assuming that payments, and partial withdrawals occurring in a contract year
take place at the beginning of the year for that anniversary and every year
after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments made to the protected investment options minus
adjusted partial withdrawals and transfers from the protected investment
options; plus
an amount equal to 5% of your initial purchase payment allocated to the
protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments to or withdraw or
transfer amounts from the protected investment options, we adjust the variable
account floor by adding the additional purchase payment and subtracting adjusted
withdrawals and adjusted transfers. On each subsequent contract anniversary
after the first anniversary of the effective date of this rider, prior to the
earlier of your or the annuitant's 81st birthday, we increase the variable
account floor by adding the amount ("roll-up amount") equal to 5% of the prior
contract anniversary's variable account floor.
The amount of purchase payments withdrawn from or transferred between the
excluded investment options and the protected investment options is calculated
as (a) times (b) where:
(a) is the amount of purchase payments in the investment options being withdrawn
or transferred on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in the
investment options being withdrawn or transferred on the date of (but prior
to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options in
the current policy year but prior to the current withdrawal or transfer.
However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment options
less the value from (a)] to [the total in the protected investment options
on the date of (but prior to) the current withdrawal or transfer from the
protected investment options less the value from (a)].
This method is greater than a dollar-for-dollar reduction, and could potentially
deplete the maximum benefit faster than the dollar-for-dollar reduction.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
accumulated at 5% for the number of full contract years they have been in the
contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit -- Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% variable account floor, less 5% adjusted excluded payments (described
above).
For an example of how benefits under each Income Assurer Benefit rider are
calculated, see Appendix K.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective. The
Benefit Protector does not provide any additional benefit before the first rider
anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
--------------------------------------------------------------------------------
68 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
For an example, see Appendix L.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are age 70 or older at the rider
effective date. It does not provide any additional benefit before the first
rider anniversary and it does not provide any benefit beyond what is offered
under the Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector
Plus to you contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix M.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). You may reallocate this contract value to the
subaccounts to provide variable annuity payouts. Additionally, we currently
allow you to use part of the amount available to purchase payouts, leaving any
remaining contract value to accumulate on a tax-deferred basis. If you select a
variable annuity payout, we reserve the right to limit the number of subaccounts
in which you may invest. The GPAs and the DCA fixed account are not available
during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years
--------------------------------------------------------------------------------
70 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
that you elect. This election will determine the length of the payout period
to the beneficiary if the annuitant should die before the elected period
expires. We calculate the guaranteed payout period from the retirement date.
If the annuitant outlives the elected guaranteed payout period, we will
continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR
WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid over the life of the
annuity will not exceed the total RBA at the time you begin this fixed payout
option (see "Optional Benefits -- Guarantor Withdrawal Benefit for Life Rider"
or "Optional Benefits -- Guarantor Withdrawal Benefit Rider"). The amount paid
in the current contract year will be reduced for any prior withdrawals in that
year. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at the time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For
--------------------------------------------------------------------------------
72 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
individuals, the 3.8% tax will apply to the lesser of (1) the amount by which
the taxpayer's modified adjusted gross income exceeds $200,000 ($250,000 for
married filing jointly and surviving spouses; $125,000 for married filing
separately) or (2) the taxpayer's "net investment income." Net investment income
includes taxable income from nonqualified annuities. Annuity holders are advised
to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
--------------------------------------------------------------------------------
74 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 5.50% each time a purchase
payment is made for contract Option L and 1.00% for contract Option C as well as
service/trail commissions of up to 1.00% based on annual total contract value
for as long as the contract remains in effect. We also may pay a temporary
additional sales commission of up to 1.00% (for both contracts) of purchase
payments for a period of time we select. These commissions do not change
depending on which subaccounts you choose to allocate your purchase payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits. Ask your sales representative for further information about what
your sales representative and the selling firm for which he or she works may
receive in connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
--------------------------------------------------------------------------------
76 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
78 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 80 p. 21
Appendix B: Example -- Income Assurer Charges -- Income Assurer Benefit Rider
Benefit Rider Fee p. 82 Fee p. 31
Appendix C: Example -- Withdrawal Charges -- Withdrawal Charge
Charges for Contract Option L p. 83 p. 27
Appendix D: Example -- Death Benefits p. 88 Benefits in Case of Death p. 44
Appendix E: Example -- Accumulation Optional Benefits -- Accumulation
Protector Benefit Rider p. 91 Protector Benefit Rider p. 47
Appendix F: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit for Life Rider p. 93 Benefit for Life Rider p. 49
Appendix G: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
for Life Rider -- Additional RMD Benefit for Life Rider
Disclosure p. 95 p. 49
Appendix H: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit -- Rider B Disclosure p. 97 Benefit Rider p. 59
Appendix I: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
Rider -- Additional RMD Disclosure p. 102 Benefit Rider p. 59
Appendix J: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit Rider p. 103 Benefit Rider p. 59
Appendix K: Example -- Income Assurer Optional Benefits -- Income Assurer
Benefit Riders p. 105 Benefit Riders p. 64
Appendix L: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 110 Death Benefit Rider p. 68
Appendix M: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 112 Plus Death Benefit Rider p. 69
Appendix N: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 114 (Unaudited) p. 13
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, DCA fixed account, and one-year
fixed account and the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices D through F and
J through M include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 6% due to the withdrawal
--------------------------------------------------------------------------------
80 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge").
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge under contract Option L),
unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
ASSUMPTIONS:
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the protected investment options and make no transfers, add-ons or
withdrawals; and
on the first contract anniversary your total contract value is $55,545; and
on the second contract anniversary your total contract value is $53,270.
WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER
BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS:
THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS
THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME
BENEFIT BASE IS THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT
VALUE WOULD BE:
INCOME ASSURER BENEFIT - MAV FEE = 0.30% X $55,545 = $166.64
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = 0.60% X $55,125 = $330.75
INCOME ASSURER BENEFIT - MAV OR 5% ACCUMULATION BENEFIT BASE
FEE = 0.65% X $55,545 = $361.04
--------------------------------------------------------------------------------
82 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling:
- up to 10% of your prior anniversary's contract value or your contract's
remaining benefit payment if you elected the Guarantor Withdrawal Benefit
rider and your remaining benefit payment is greater than 10% of your prior
anniversary's contract value. We do not assess a withdrawal charge on this
amount.
- up to 10% of your prior anniversary's contract value or the greater of your
contract's remaining benefit payment or remaining annual lifetime payment if
you elected the Guarantor Withdrawal Benefit for Life rider, and the greater
of your remaining annual lifetime payment and your remaining benefit payment
is greater than 10% of your prior anniversary's contract value. We do not
assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA, the one-year
fixed account or the DCA fixed account. If the contract value is less than
purchase payments received and not previously withdrawn (PPNPW) then contract
earnings are zero.
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for Contract Option L with a four-year withdrawal
charge schedule. Each example illustrates the amount of the withdrawal charge
for both a contract that experiences gains and a contract that experiences
losses, given the same set of assumptions.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
FULL WITHDRAWAL CHARGE CALCULATION -- FOUR YEAR WITHDRAWAL CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You withdraw the contract for its total value in the fourth contract year
after you made the single purchase payment. The withdrawal charge percentage
in the fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 1. First, we determine the amount of earnings available in
the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
withdrawn (PPNPW): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the contract
value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of the
prior anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
84 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a percentage
of PPW. Note that for a contract with a loss, PPW may
be greater than the amount you request to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
---------- ----------
withdrawal charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of your
full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
---------- ----------
NET FULL WITHDRAWAL PROCEEDS: $56,960.00 $37,212.00
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You request a net partial withdrawal of $15,000.00 in the fourth contract year
after you made the single purchase payment. The withdrawal charge percentage
in the fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS:
--------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings available
in the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,319.15 15,897.93
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,319.15 15,897.93
STEP 4. Next we determine XSF, the amount by which 10% of the
prior anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
86 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 5,319.15 19,165.51
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you request
to withdraw:
PPW: 5,319.15 19,165.51
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
---------- ----------
withdrawal charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,319.15 15,897.93
WITHDRAWAL CHARGE: (319.15) (897.93)
---------- ----------
NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
APPENDIX D: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000. You select contract
Option L; and
during the first contract year you make an additional purchase payment of
$5,000; and
during the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal, including withdrawal charge; and
during the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. You select contract
Option L; and
on the first contract anniversary the contract value grows to $26,000; and
during the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
88 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
on the first contract anniversary, the GPA value is $5,200 and the subaccount
value is $17,000. Total contract value is $23,200; and
during the second contract year the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
-----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
-----------
for a death benefit of: $23,456.79
-----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
-----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs, one-year fixed account and
the variable account floor): $24,642.11
-----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
on the first contract anniversary, the GPAs value is $5,200 and the subaccount
value is $17,000. Total contract value is $23,200; and
during the second contract year the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a ROP Death Benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary,
calculated as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs and the variable account
floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE
ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
90 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
AUTOMATIC STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
in the second, third and seventh contract anniversaries. These increases occur
because of the automatic step up feature of the rider. The automatic step up
does not create contract value, guarantee the performance of any underlying fund
in which a subaccount invests, or provide a benefit that can be withdrawn or
paid upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV which determines whether a benefit will be paid under
the rider on the benefit date.
ASSUMPTIONS:
You purchase a contract with a four-year withdrawal schedule with a payment of
$125,000; and
you make no additional purchase payments to the contract; and
you take partial withdrawals from the contract on the fifth and eighth
contract anniversaries in the amounts of $2,000 and $5,000, respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and
you do not exercise the elective step up option available under the rider; and
you do not change PN program investment options.
Based on these assumptions, the waiting period expires at the end of the 10th
contract year. The rider then ends. On the benefit date the hypothetical assumed
contract value is $108,118 and the MCAV is $136,513, so the contract value would
be reset to equal the MCAV, or $136,513.
MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT ADJUSTED ASSUMED ASSUMED
DURATION PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 0 0 0 12.0% 140,000 125,000
2 0 0 0 15.0% 161,000 128,800(2)
3 0 0 0 3.0% 165,830 132,664(2)
4 0 0 0 -8.0% 152,564 132,664
5 0 2,000 2,046 -15.0% 127,679 130,618
6 0 0 0 20.0% 153,215 130,618
7 0 0 0 15.0% 176,197 140,958(2)
8 0 5,000 4,444 -10.0% 153,577 136,513
9 0 0 0 -20.0% 122,862 136,513
10(1) 0 0 0 -12.0% 108,118 136,513
(1) The APB benefit date.
(2) These values indicate where the automatic step up feature increased the
MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the waiting period causes the contract
value to equal or exceed the MCAV on the benefit date, no benefit is paid
under this rider.
Even if a benefit is paid under the rider on the benefit date, contract value
allocated to the variable account after the benefit date continues to vary
with the market and may go up or go down.
ELECTIVE STEP UP
This example shows increases in the Minimum Contract Accumulation Value (MCAV)
on the first, second, third and seventh contract anniversaries. These increases
occur only if you exercise the elective step up Option within 30 days following
the contract anniversary. The contract value on the date we receive your written
request to step up must be greater than the MCAV on that date. The elective step
up does not create contract value, guarantee the performance of any underlying
fund in which a subaccount invests, or provide a benefit that can be withdrawn
or paid upon death. Rather, the elective step up is an interim calculation used
to arrive at the final MCAV which determines whether a benefit will be paid
under the rider on the benefit date.
ASSUMPTIONS:
You purchase a contract with a four-year withdrawal schedule with a payment of
$125,000; and
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
you make no additional purchase payments to the contract; and
you take partial withdrawals from the contract on the fifth, eighth and
thirteenth contract anniversaries in the amounts of $2,000, $5,000 and $7,500,
respectively; and
contract values increase or decrease according to the hypothetical assumed net
rate of return; and
the elective step up is exercised on the first, second, third and seventh
contract anniversaries; and
you do not change PN program investment options.
Based on these assumptions, the 10 year waiting period restarts each time you
exercise the elective step up option (on the first, second, third and seventh
contract anniversaries in this example). The waiting period expires at the end
of the 10th contract year following the last exercise of the elective step up
option. When the waiting period expires, the rider ends. On the benefit date the
hypothetical assumed contract values is $99,198 and the MCAV is $160,117, so the
contract value would be reset to equal the MCAV, or $160,117.
YEARS MCAV HYPOTHETICAL HYPOTHETICAL
CONTRACT REMAINING IN ADJUSTED ASSUMED ASSUMED
DURATION THE WAITING PURCHASE PARTIAL PARTIAL NET RATE CONTRACT
IN YEARS PERIOD PAYMENTS WITHDRAWALS WITHDRAWAL OF RETURN VALUE MCAV
At Issue 10 $125,000 $ N/A $ N/A N/A $125,000 $125,000
1 10(2) 0 0 0 12.0% 140,000 140,000(3)
2 10(2) 0 0 0 15.0% 161,000 161,000(3)
3 10(2) 0 0 0 3.0% 165,830 165,830(3)
4 9 0 0 0 -8.0% 152,564 165,830
5 8 0 2,000 2,558 -15.0% 127,679 163,272
6 7 0 0 0 20.0% 153,215 163,272
7 10(2) 0 0 0 15.0% 176,197 176,197(3)
8 9 0 5,000 5,556 -10.0% 153,577 170,642
9 8 0 0 0 -20.0% 122,862 170,642
10 7 0 0 0 -12.0% 108,118 170,642
11 6 0 0 0 3.0% 111,362 170,642
12 5 0 0 0 4.0% 115,817 170,642
13 4 0 7,500 10,524 5.0% 114,107 160,117
14 3 0 0 0 6.0% 120,954 160,117
15 2 0 0 0 -5.0% 114,906 160,117
16 1 0 0 0 -11.0% 102,266 160,117
17(1) 0 0 0 0 -3.0% 99,198 160,117
(1) The APB benefit date.
(2) The waiting period restarts when the elective step up is exercised.
(3) These values indicate when the elective step up feature increased the MCAV.
IMPORTANT INFORMATION ABOUT THIS EXAMPLE:
If the actual rate of return during the waiting period causes the contract
value to equal or exceed the MCAV on the benefit date, no benefit is paid
under this rider.
Exercising the elective step up provision may result in an increase in the
charge that you pay for this rider.
Even if a benefit is paid under the rider on the benefit date, contract value
allocated to the variable account after the benefit date continues to vary
with the market and may go up or go down.
--------------------------------------------------------------------------------
92 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
94 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER -- ADDITIONAL RMD
DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit for Life rider to satisfy the RMD rules under
401(a)(9) of the Code without application of the excess withdrawal procedures
described in the rider. We reserve the right to modify this administrative
practice at any time upon 30 days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the Guarantor
Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit for Life rider is attached as of the date we make the determination;
and
(3) is otherwise based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the effective
date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit for Life rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of your
GBA, RBA, and/or ALP as described under the excess withdrawal provision of the
rider.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
96 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that was offered
for an additional annual charge if:
your contract application is signed prior to April 29, 2005(1),(2);
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) In previous disclosure, we have referred to this rider as Rider B. This
rider is no longer available for purchase. See the Guarantor Withdrawal
Benefit for Life and Guarantor Withdrawal Benefit sections in this
prospectus for information about currently offered versions of this benefit.
See the rider attached to your contract for the actual terms of the benefit
you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a withdrawal charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"), however, you may elect to participate in the Portfolio Navigator
program after May 1, 2006 (see "Making the Most of Your Contract -- Portfolio
Navigator Program"). The Portfolio Navigator program and the asset allocation
program limit your choice of investments. This means you will not be able to
allocate contract value to all of the subaccounts, GPAs or the one-year fixed
account that are available under the contract to contract owners who do not
elect this rider;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may also
incur a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change. See Appendix I for additional information. RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
limitations, see "Buying Your Contract -- Purchase Payments."
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment. The total GBA
when an additional purchase payment is added is the sum of the individual GBAs
immediately prior to the receipt of the additional purchase payment, plus the
GBA associated with the additional purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken
during the first three years, the GBA and the GBP are calculated after the
reversal of any prior step ups:
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
--------------------------------------------------------------------------------
98 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
The RBA is determined at the following times:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of
the GBA; or (b) the RBA.
If you withdraw less than the GBP in a contract year, there is no carry over to
the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment, multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
step up the remaining benefit amount and guaranteed benefit amount to the
contract value on the valuation date we receive your written request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
procedures discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract anniversary value is greater than the RBA.
The elective step up will be determined as follows: The effective date of the
elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
--------------------------------------------------------------------------------
100 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A spousal continuation step up occurs automatically when the spouse elects to
continue the contract. The rider charge will not change upon this automatic step
up.
Under this step up, the RBA will be reset to the greater of the RBA on the
valuation date we receive the spouse's written request to continue the contract
and the death benefit that would otherwise have been paid; the GBA will be reset
to the greater of the GBA on the valuation date we receive the spouse's written
request to continue the contract and the death benefit that would otherwise have
been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT RIDER --
ADDITIONAL RMD DISCLOSURE
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the GBP on the date we calculated the ALERMDA, an
Additional Benefit Amount (ABA) will be set equal to that portion of your
ALERMDA that exceeds the GBP.
(2) Any withdrawals taken in a contract year will count first against and reduce
the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any additional
amounts withdrawn will count against and reduce any ABA. These withdrawals
will not be considered excess withdrawals as long as they do not exceed the
remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
procedure described by the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year,
(2) based on the value of this contract alone on the date it is determined, and
(3) based on the company's understanding and interpretation of the requirements
for the following types of plans under the Code as of the date of this
prospectus:
Life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable, to:
1. an individual retirement annuity (Code Section 408(b)),
2. a Roth individual retirement account (Code Section 408A),
3. a Simplified Employee Pension plan (Code Section 408(k)),
4. a 401K plan (Code Section 401(k)) (with our approval),
5. custodial and investment only plans (Code Section 401(a)) (with our
approval),
6. a tax-sheltered annuity rollover (Code Section 403(b)).
In the future, the requirements under tax law for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit rider may not be sufficient to satisfy the requirements under
the tax law for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your GBP amount
and may result in the reduction of your GBA and RBA as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g. some
ownerships by trusts and charities), the life expectancy required minimum
distribution amount calculated by us will equal zero in all years. The life
expectancy required minimum distribution amount calculated by us will also equal
zero in all years for contracts not covered by the sections of the Code listed
above as of the date of this prospectus.
Please consult your tax advisor about the impact of these rules prior to
purchasing the Guarantor Withdrawal Benefit rider.
--------------------------------------------------------------------------------
102 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX J: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH
RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER B (SEE APPENDIX H).
ASSUMPTIONS:
You purchase the contract with a payment of $100,000; and
you select contract Option L.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to $110,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA
less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase payment of
$50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of the additional
purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of the additional
purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of the additional
purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to $200,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to $230,000. You decide
to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to $175,000. You decide
to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
104 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you participate in the PN program. The riders
are intended to offer protection against market volatility in the subaccounts
(protected investment options). Some PN program investment options include
protected investment options and excluded investment options (Columbia Variable
Portfolio - Cash Management Fund, and if available under the contract, GPAs and
the one-year fixed account). Excluded investment options are not included in
calculating the 5% variable account floor under the Income Assurer Benefit - 5%
Accumulation Benefit Base rider and the Income Assurer Benefit - Greater of MAV
or 5% Accumulation Benefit Base rider. Because the examples which follow are
based on hypothetical contract values, they do not factor in differences in PN
program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year, with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment options; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2)
--------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
106 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
108 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan B
Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
---------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) PLAN NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
APPENDIX L: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit and the seven-year
withdrawal charge schedule.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit on May 1, 2008 equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the eighth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
110 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
APPENDIX M: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit and the seven-year
withdrawal charge schedule.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector Plus
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
112 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
APPENDIX N: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 56 61 84 154 167 189 109 52 8
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $0.93 $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,923 8,703 28,798 37,213 21,915 15,378 8,725 1,580 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 $1.00 -- --
Accumulation unit
value at end of
period $1.34 $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,705 12,467 14,455 14,852 23,568 25,472 20,290 3,919 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.14 $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57 76 102 77 74 88 26 18 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,164 3,587 19,621 8,230 5,476 2,192 1,151 399 76 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,083 4,009 84,971 77,286 67,959 33,990 1,077 842 152 40
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit
value at end of
period $1.52 $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,456 10,953 63,435 55,414 35,371 27,624 9,764 608 392 325
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.67 $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,129 9,784 12,306 14,085 14,409 15,807 17,584 7,616 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.96 $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,530 2,741 12,170 16,976 10,106 9,010 5,172 1,070 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.15 $1.12 $1.07 $1.09 $1.02 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.25 $1.15 $1.12 $1.07 $1.09 $1.02 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,043 2,737 67,428 34,578 35,149 26,599 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90
Accumulation unit
value at end of
period $1.61 $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,679 2,244 4,591 5,601 6,703 8,935 4,144 855 325 80
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 $1.00 -- --
Accumulation unit
value at end of
period $1.02 $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 231 331 809 5,059 3,798 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
114 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit
value at beginning
of period $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 $1.00
Accumulation unit
value at end of
period $1.41 $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 314 406 643 597 708 735 335 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 $1.00 -- --
Accumulation unit
value at end of
period $1.12 $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 255 408 405 374 367 227 227 174 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10
Accumulation unit
value at end of
period $1.20 $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,096 2,681 13,727 7,345 6,207 5,084 3,085 1,544 1,019 864
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.24 $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,280 1,660 2,334 3,051 3,154 7,113 2,763 500 -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.27 $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 9 14 1 1 1 1 -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit
value at beginning
of period $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 $1.00
Accumulation unit
value at end of
period $1.65 $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 10,705 13,957 27,907 47,719 43,300 45,089 16,531 3,067 152 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06
Accumulation unit
value at end of
period $2.05 $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,684 2,096 12,835 18,330 11,091 7,570 3,100 1,208 722 290
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.05 $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,997 2,249 4,907 4,814 4,416 4,843 4,036 1,573 -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.76 $1.48 $1.27 $2.23 $2.87 $2.42 $2.17 $1.68 $1.26 $1.25
Accumulation unit
value at end of
period $1.63 $1.76 $1.48 $1.27 $2.23 $2.87 $2.42 $2.17 $1.68 $1.26
Number of
accumulation units
outstanding at end
of period (000
omitted) 212 258 622 854 1,179 527 512 421 292 334
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit
value at end of
period $1.69 $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,164 1,832 2,044 2,501 3,051 2,743 2,554 2,119 1,118 777
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.79 $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,899 4,938 34,264 32,433 35,814 23,082 7,734 1,493 -- --
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit
value at end of
period $2.68 $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,277 2,833 10,008 11,967 11,638 9,377 4,128 1,284 550 386
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit
value at beginning
of period $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 $1.00
Accumulation unit
value at end of
period $0.88 $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 349 380 4,126 3,856 4,110 3,472 324 329 238 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II
Shares.
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit
value at beginning
of period $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 $1.00
Accumulation unit
value at end of
period $1.45 $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 86 97 110 133 147 153 163 29 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit
value at beginning
of period $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 $1.00
Accumulation unit
value at end of
period $1.42 $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98
Number of
accumulation units
outstanding at end
of period (000
omitted) 12,380 16,064 35,637 43,373 36,774 36,888 18,912 3,700 73 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 $1.00
Accumulation unit
value at end of
period $1.40 $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 320 469 582 612 831 683 680 562 136 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 $1.00
Accumulation unit
value at end of
period $1.58 $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 5,377 6,880 57,951 47,806 44,474 21,466 9,445 2,076 137 5
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit
value at beginning
of period $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit
value at end of
period $1.77 $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 160 185 206 207 221 168 168 143 64 18
-------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 $1.00
Accumulation unit
value at end of
period $1.11 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 23 97 123 136 162 175 177 188 73
-------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 $1.00 -- --
Accumulation unit
value at end of
period $1.10 $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 285 299 325 340 355 5,948 89 5 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,578 3,678 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57,497 68,262 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,700 2,476 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53,602 58,932 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.19 $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 7 7 7 7 8 8 2 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 36,336 32,170 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 458,939 516,525 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28,278 25,057 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 213,018 254,807 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
116 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.06 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 9,842 6,739 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 69,228 81,004 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.50 $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,522 5,828 9,670 11,364 11,900 10,097 9,125 1,935 72 20
-------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 $1.00 -- --
Accumulation unit
value at end of
period $1.32 $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,139 4,208 17,593 17,008 13,828 7,563 5,332 946 -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.05 $0.95 $0.83 $1.20 $1.13 $1.03 $0.99 $0.92 $0.77 $0.90
Accumulation unit
value at end of
period $1.10 $1.05 $0.95 $0.83 $1.20 $1.13 $1.03 $0.99 $0.92 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 566 822 941 1,078 1,784 2,517 2,665 2,740 2,853 2,230
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit
value at beginning
of period $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93 $1.00
Accumulation unit
value at end of
period $1.39 $1.62 $1.41 $1.24 $2.17 $1.92 $1.59 $1.40 $1.20 $0.93
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,129 1,408 1,909 1,823 1,770 2,013 1,419 443 326 53
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.10 $0.98 $0.86 $1.37 $1.36 $1.17 $1.12 $1.03 $0.83 $1.05
Accumulation unit
value at end of
period $1.06 $1.10 $0.98 $0.86 $1.37 $1.36 $1.17 $1.12 $1.03 $0.83
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,066 1,342 4,297 1,427 1,795 1,983 2,255 1,615 1,429 993
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit
value at beginning
of period $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96 $1.00
Accumulation unit
value at end of
period $1.77 $1.91 $1.63 $1.15 $1.61 $1.47 $1.41 $1.39 $1.32 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,097 4,103 2,160 2,719 3,312 3,653 2,474 717 169 45
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 -- -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 395 -- -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25 $0.41
Accumulation unit
value at end of
period $0.56 $0.60 $0.48 $0.32 $0.55 $0.49 $0.41 $0.39 $0.35 $0.25
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,928 2,412 611 755 924 1,086 1,314 1,371 1,396 976
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18 $1.12
Accumulation unit
value at end of
period $1.72 $1.61 $1.53 $1.39 $1.38 $1.33 $1.30 $1.30 $1.26 $1.18
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,996 5,466 11,055 11,176 16,465 11,634 3,551 990 627 579
-------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07 $1.00
Accumulation unit
value at end of
period $1.01 $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19 $1.00
Accumulation unit
value at end of
period $0.90 $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 14 15 24 40 59 67 39 6
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05 $1.00
Accumulation unit
value at end of
period $1.29 $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 8 8 19 141 224 126 22
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.09 $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 61 73 353 -- 7 4 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.23 $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 11 59 105 66 40 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.22 $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 28 51 82 160 181 83 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05 $1.00
Accumulation unit
value at end of
period $1.00 $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 2 14 21 19
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16 $1.00
Accumulation unit
value at end of
period $1.88 $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 7 8 18 32 46 24 3
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $1.10 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.12 $1.10 $1.06 $1.08 $1.02 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 6 29 44 38 29 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.51 $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 1 6 38 55 30 4
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07 $1.00
Accumulation unit
value at end of
period $0.98 $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 1 1 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06 $1.00
Accumulation unit
value at end of
period $1.10 $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- 1 1 1
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.08 $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $1.02 $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 14 21 -- 9 5 --
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.04 $0.68 $1.18 $1.06 $1.04 $1.03 $1.00
Accumulation unit
value at end of
period $1.19 $1.33 $1.04 $0.68 $1.18 $1.06 $1.04 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 4 9 19 30 12 --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.15 $1.02 $0.85 $1.24 $1.18 $1.04 $1.02 $1.00
Accumulation unit
value at end of
period $1.22 $1.15 $1.02 $0.85 $1.24 $1.18 $1.04 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10 $1.00
Accumulation unit
value at end of
period $1.27 $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 31 38 83 177 296 101 8
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
118 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21 $1.00
Accumulation unit
value at end of
period $1.53 $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 6 13 23 38 39 16 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10 $1.00
Accumulation unit
value at end of
period $1.02 $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 1 2 5 6 5
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.06 $0.89 $0.77 $1.36 $1.76 $1.49 $1.34 $1.00
Accumulation unit
value at end of
period $0.97 $1.06 $0.89 $0.77 $1.36 $1.76 $1.49 $1.34
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12 $1.00
Accumulation unit
value at end of
period $1.31 $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16 $1.00
Accumulation unit
value at end of
period $1.72 $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 5 18 34 64 78 39 8
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19 $1.00
Accumulation unit
value at end of
period $1.36 $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 12 17 30 58 65 28 3
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06 $1.00
Accumulation unit
value at end of
period $0.86 $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II
Shares.
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10 $1.00
Accumulation unit
value at end of
period $1.09 $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13 $1.00
Accumulation unit
value at end of
period $1.06 $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 31 34 42 78 192 235 119 13
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.23 $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07 $1.00
Accumulation unit
value at end of
period $1.29 $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 10 34 60 120 136 68 12
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16 $1.00
Accumulation unit
value at end of
period $1.26 $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03 $1.00
Accumulation unit
value at end of
period $1.08 $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18 $1.00
Accumulation unit
value at end of
period $1.06 $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 5 4 12 -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 223 266 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09 $1.00
Accumulation unit
value at end of
period $1.14 $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 47 47 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 239 257 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 69 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 61 61 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15 $1.00
Accumulation unit
value at end of
period $1.32 $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 10 11 17 56 72 43 5
-------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15 $1.00
Accumulation unit
value at end of
period $1.27 $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 8 14 18 49 56 28 4
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.89 $1.28 $1.21 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.15 $1.11 $1.00 $0.89 $1.28 $1.21 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.28 $1.13 $1.00 $1.74 $1.55 $1.29 $1.14 $1.00
Accumulation unit
value at end of
period $1.09 $1.28 $1.13 $1.00 $1.74 $1.55 $1.29 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 -- -- -- -- 2 1 --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
120 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $0.92 $0.80 $1.29 $1.29 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $0.98 $1.02 $0.92 $0.80 $1.29 $1.29 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.19 $0.85 $1.19 $1.09 $1.06 $1.04 $1.00
Accumulation unit
value at end of
period $1.29 $1.39 $1.19 $0.85 $1.19 $1.09 $1.06 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 1 1 6 5 2
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit
value at beginning
of period $1.00 -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.04 -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.56 $1.26 $0.84 $1.47 $1.32 $1.10 $1.06 $1.00
Accumulation unit
value at end of
period $1.45 $1.56 $1.26 $0.84 $1.47 $1.32 $1.10 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.24 $1.19 $1.08 $1.08 $1.04 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.32 $1.24 $1.19 $1.08 $1.08 $1.04 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
122 WELLS FARGO ADVANTAGE CHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45305 M (4/12)
PROSPECTUS
APRIL 30, 2012
WELLS FARGO
ADVANTAGE(R) SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Series Trust II
Dreyfus Variable Investment Fund, Service Share Class
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Oppenheimer Variable Account Funds, Service Shares
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Wells Fargo Variable Trust
Please read the prospectuses carefully and keep them for future reference.
Contracts with applications signed prior to May 1, 2006 with a seven-year
withdrawal charge schedule receive a purchase payment credit for each payment
made to the contract. Purchase payment credits are not available on contracts
with applications signed on or after May 1, 2006 in most states. Ask your
investment professional whether purchase payment credits are available under
your contract. Expense charges for contracts with purchase payment credits may
be higher than expenses for contracts without such credits. The amount of the
credit may be more than offset by any additional fees and charges associated
with the credit. The credits may be reversed. Purchase payment credits are not
available for contracts with a five-year withdrawal charge schedule. (See
"Buying Your Contract -- Purchase Payment Credits").
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers other variable annuity contracts in addition to the
contract described in this prospectus. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and withdrawing money from the contract we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contract described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contract and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contract described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contract and/or optional riders described in this prospectus..
--------------------------------------------------------------------------------
2 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS
KEY TERMS................................... 4
THE CONTRACT IN BRIEF....................... 6
EXPENSE SUMMARY............................. 8
CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 15
FINANCIAL STATEMENTS........................ 15
THE VARIABLE ACCOUNT AND THE FUNDS.......... 15
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 22
THE FIXED ACCOUNT........................... 24
BUYING YOUR CONTRACT........................ 26
CHARGES..................................... 29
VALUING YOUR INVESTMENT..................... 34
MAKING THE MOST OF YOUR CONTRACT............ 36
WITHDRAWALS................................. 45
TSA -- SPECIAL PROVISIONS................... 46
CHANGING OWNERSHIP.......................... 46
BENEFITS IN CASE OF DEATH................... 47
OPTIONAL BENEFITS........................... 49
THE ANNUITY PAYOUT PERIOD................... 73
TAXES....................................... 75
VOTING RIGHTS............................... 78
SUBSTITUTION OF INVESTMENTS................. 79
ABOUT THE SERVICE PROVIDERS................. 79
ADDITIONAL INFORMATION...................... 80
APPENDICES TABLE OF CONTENT AND
CROSS-REFERENCE TABLE..................... 82
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 83
APPENDIX B: EXAMPLE --
INCOME ASSURER BENEFIT RIDER FEE.......... 85
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES... 86
APPENDIX D: EXAMPLE -- DEATH BENEFITS....... 91
APPENDIX E: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 94
APPENDIX F: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER..................................... 95
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER -- ADDITIONAL RMD DISCLOSURE... 97
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT --
RIDER B DISCLOSURE........................ 99
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT
RIDER -- ADDITIONAL RMD DISCLOSURE........ 104
APPENDIX J: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT RIDER........ 105
APPENDIX K: EXAMPLE --
INCOME ASSURER BENEFIT RIDERS............. 107
APPENDIX L: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 112
APPENDIX M: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 114
APPENDIX N: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 116
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 124
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the one-year fixed account and
the DCA fixed account. Amounts you allocate to the fixed account earn interest
rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: For contracts with applications signed prior to May 1,
2006 with a seven-year withdrawal charge schedule only, an addition we make to
your contract value. We base the amount of the credit on total net payments
(total
--------------------------------------------------------------------------------
4 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
payments less total withdrawals). We apply the credit to your contract based on
your current payment. Purchase payment credits are not be available on contracts
with applications signed on or after May 1, 2006 in most states.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement or similar long-term goal. You do this by making one or more purchase
payments. You may allocate your purchase payments to the GPAs, one-year fixed
account, the DCA fixed account (if part of your contract) and/or subaccounts of
the variable account under the contract; however, you risk losing amounts you
invest in the subaccounts of the variable account. These accounts, in turn, may
earn returns that increase the value of the contract. If the contract value goes
to zero due to underlying fund's performance or deduction of fees, the contract
will no longer be in force and the contract (including any death benefit riders)
will terminate. Beginning at a specified time in the future called the
retirement date, the contract provides lifetime or other forms of payout of your
contract value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract value
can remain in this account. (See "The Fixed Account -- DCA Fixed Account").
BUYING YOUR CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. Transfers into the DCA
fixed account are not permitted. We reserve the right to further limit transfers
to the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
--------------------------------------------------------------------------------
6 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL BENEFITS: This contract offers features that are available for
additional charges if you meet certain criteria. Optional benefits may require
the use of a Portfolio Navigator program (PN program) investment option which
may limit transfers and allocations; may limit the timing, amount and allocation
of purchase payments; and may limit the amount of partial withdrawals that can
be taken under the optional benefit during a contract year. (See "Optional
Benefits").
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
and the DCA fixed account are not available during the payout period. (See "The
Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE*
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
* The five-year withdrawal charge schedule may not be available in all states.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR CONTRACTS WITH APPLICATIONS SIGNED ON
OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
Return of Purchase Payment (ROP) Death
Benefit 0.90% 0.15% 1.05%
Maximum Anniversary Value (MAV) Death
Benefit 1.10 0.15 1.25
5% Accumulation Death Benefit 1.25 0.15 1.40
Enhanced Death Benefit 1.30 0.15 1.45
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.05 0.15 1.20
MAV Death Benefit 1.25 0.15 1.40
5% Accumulation Death Benefit 1.40 0.15 1.55
Enhanced Death Benefit 1.45 0.15 1.60
--------------------------------------------------------------------------------
8 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL OTHER CONTRACTS
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP Death Benefit 1.00% 0.15% 1.15%
MAV Death Benefit 1.20 0.15 1.35
5% Accumulation Death Benefit 1.35 0.15 1.50
Enhanced Death Benefit 1.40 0.15 1.55
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.15 0.15 1.30
MAV Death Benefit 1.35 0.15 1.50
5% Accumulation Death Benefit 1.50 0.15 1.65
Enhanced Death Benefit 1.55 0.15 1.70
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP Death Benefit 1.20% 0.15% 1.35%
MAV Death Benefit 1.40 0.15 1.55
5% Accumulation Death Benefit 1.55 0.15 1.70
Enhanced Death Benefit 1.60 0.15 1.75
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.35 0.15 1.50
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full withdrawal.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. Each optional living benefit requires participation
in the PN program. The fees apply only if you have selected one of these
benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
10 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.50% 1.45%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55% 0.25% 0.05% --% 0.85%
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Global Real Estate Securities Fund - Class 0.80 0.25 0.32 -- 1.37
2
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(2)
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(3)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(4)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(5)
Shares
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58% 0.25% 0.13% 0.07% 1.03%(6)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(7)
Service Shares
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(8)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21 (8)
3)
Wanger USA 0.86 -- 0.08 -- 0.94(9)
Wells Fargo Advantage VT Index Asset Allocation 0.55 0.25 0.26 -- 1.06(10)
Fund - Class 2
Wells Fargo Advantage VT International Equity Fund - Class 0.75 0.25 0.22 0.01 1.23(11)
2
Wells Fargo Advantage VT Intrinsic Value Fund - Class 2 0.55 0.25 0.37 0.01 1.18(11)
Wells Fargo Advantage VT Omega Growth Fund - Class 2 0.55 0.25 0.25 -- 1.05(11)
Wells Fargo Advantage VT Opportunity Fund - Class 2 0.65 0.25 0.17 -- 1.07(12)
Wells Fargo Advantage VT Small Cap Growth Fund - Class 2 0.75 0.25 0.20 0.01 1.21
Wells Fargo Advantage VT Total Return Bond Fund - Class 2 0.40 0.25 0.26 0.01 0.92(11)
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.845% for
Columbia Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for
Columbia Variable Portfolio - Large Cap Growth Fund (Class 3) and 1.005%
for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund (Class
3).
(2) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(3) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(4) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(5) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
--------------------------------------------------------------------------------
12 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
(6) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(7) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(8) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
(9) Other expenses have been restated to reflect contractual changes to certain
other fees.
(10) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(11) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(12) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV Death Benefit, the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,303 $2,403 $3,537 $6,208 $583 $1,772 $2,995 $6,208
Five-year
withdrawal charge
schedule 1,334 2,402 3,316 6,453 614 1,860 3,135 6,453
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,288 $2,359 $3,466 $6,082 $568 $1,728 $2,924 $6,082
Five-year
withdrawal charge
schedule 1,318 2,357 3,246 6,331 598 1,816 3,065 6,331
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $957 $1,346 $1,723 $2,387 $214 $658 $1,123 $2,387
Five-year
withdrawal charge
schedule 985 1,335 1,479 2,705 245 751 1,279 2,705
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $943 $1,302 $1,644 $2,225 $199 $611 $1,044 $2,225
Five-year
withdrawal charge
schedule 971 1,291 1,401 2,547 230 704 1,201 2,547
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
14 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find our unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix N.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust Funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. (See "Revenue
we received from the funds may create potential conflicts of interest.") These
relationships may influence recommendations
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
your investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under the asset allocation program we
offer (see "Making the Most of Your Contract -- Portfolio Navigator Program")
or under asset allocation programs used in conjunction with the contracts and
plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
16 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS International
Value Portfolio
(Class B)
----------------------------------------------------------------------------------------
American Century Seeks long-term total return using a American Century
VP Inflation strategy that seeks to protect against U.S. Investment Management,
Protection, Class inflation. Inc.
II
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Value, Class secondary objective. Investment Management,
II Inc.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Non-diversified fund that seeks total Columbia Management
Portfolio - Glob- return that exceeds the rate of inflation Investment Advisers, LLC
al Inflation over the long term.
Protected
Securities Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
Dreyfus Seeks capital appreciation. The Dreyfus Corporation
Investment
Portfolios
Technology Growth
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth consistent The Dreyfus Corporation,
Investment Fund with the preservation of capital. adviser; Fayez Sarofim &
Appreciation Co., sub-adviser.
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks high total return. The fund normally Franklin Templeton
Global Real invests at least 80% of its net assets in Institutional, LLC
Estate Securities investments of companies located anywhere
Fund - Class 2 in the world that operate in the real
estate sector.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks high current income, consistent with Franklin Advisers, Inc.
Global Bond preservation of capital, with capital
Securities appreciation as a secondary consideration.
Fund - Class 2 The fund normally invests at least 80% of
its net assets in bonds, which include debt
securities of any maturity, such as bonds,
notes, bills and debentures.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Small Seeks capital appreciation. Putnam Investment
Cap Value Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 2) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 4) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
2) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
4) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Gold- Investment Advisers,
man Sachs Mid Cap LLC, adviser; Goldman
Value Fund (Class Sachs Asset Management,
3) L.P., subadviser.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 2) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 4) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
2) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
4) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
2) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
4) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term total return, consisting of Wells Fargo Funds
Advantage VT capital appreciation and current income. Management, LLC,
Index Asset adviser; Wells Capital
Allocation Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
International adviser; Wells Capital
Equity Management Inc., sub-
Fund - Class 2 adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Intrinsic Value adviser; Metropolitan
Fund - Class 2 West Capital Management,
LLC, sub-adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Omega Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Opportunity adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks long-term capital appreciation. Wells Fargo Funds
Advantage VT Management, LLC,
Small Cap Growth adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
Wells Fargo Seeks total return consisting of income and Wells Fargo Funds
Advantage VT capital appreciation. Management, LLC,
Total Return Bond adviser; Wells Capital
Fund - Class 2 Management Inc., sub-
adviser.
----------------------------------------------------------------------------------------
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The required
minimum investment in each GPA is $1,000. These accounts are not offered after
annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
--------------------------------------------------------------------------------
22 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns earned on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. Interest rates offered may vary by state,
but will not be lower than state law allows. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or the one-year fixed account or withdraw the
contract value (subject to applicable withdrawal provisions). If we do not
receive any instructions at the end of your guarantee period, our current
practice is to automatically transfer the contract value into the shortest GPA
term offered in your state.
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under the Guarantor Withdrawal Benefits for Life rider
or the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan
while you have contract value invested in a GPA. We will refer to these
transactions as "early withdrawals." The application of an MVA may result in
either a gain or loss of principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; and
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT
Amounts allocated to the fixed account become part of our general account. The
fixed account includes the one-year fixed account and the DCA fixed account. We
credit interest on amounts you allocate to the fixed account at rates we
determine from time to time in our discretion. These rates will be based on
various factors including, but not limited to, the interest rate environment,
returns we earn on our general account investments, the rates currently in
effect for new and existing RiverSource Life annuities, product design,
competition, and RiverSource Life's revenues and expenses. The guaranteed
minimum interest rate on amounts invested in the fixed account may vary by state
but will not be lower than state law allows. We back the principal and interest
guarantees relating to the fixed account. These guarantees are based on the
continued claims-paying ability of RiverSource Life. You should be aware that
our general account is exposed to the risks normally associated with a portfolio
of fixed-income securities, including interest rate, option, liquidity and
credit risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account. The value of the one-
year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Making the Most of
Your Contract -- Transfer policies").
DCA FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
--------------------------------------------------------------------------------
24 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The value of the DCA fixed account increases when we credit interest to
the DCA fixed account, and decreases when we make monthly transfers from the DCA
fixed account to your investment allocations. We credit interest only on the
declining balance of the DCA fixed account; we do not credit interest on amounts
that have been transferred from the DCA fixed account. We credit and compound
interest daily based on a 365-day year (366 in a leap year) so as to produce the
annual effective rate which we declare. Generally, we will credit the DCA fixed
account with interest at the same annual effective rate we apply to the one-year
fixed account on the date we receive your purchase payment, regardless of the
length of the term you select. From time to time, we may credit interest to the
DCA fixed account at promotional rates that are higher than those we credit to
the one-year fixed account. We reserve the right to declare different annual
effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account you instruct us to transfer to the one-
year fixed account;
for amounts in the DCA fixed account you instruct us to transfer to the GPAs;
for amounts in the DCA fixed account you instruct us to transfer to the
subaccounts.
The interest rates in effect for the DCA fixed account when we receive your
purchase payment are guaranteed for the length of the term. When you allocate an
additional purchase payment to an existing DCA fixed account term, the interest
rates applicable to that purchase payment will be the rates in effect for the
DCA fixed account of the same term on the date we receive your purchase payment.
For DCA fixed accounts with an initial term (or, in the case of an additional
purchase payment, a remaining term) of less than twelve months, the net
effective interest rates we credit to the DCA fixed account balance will be less
than the declared annual effective rates.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may buy a qualified
or nonqualified annuity. Generally, you can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can become an owner if you are 85 or
younger. (The age limit may be younger for qualified annuities in some states.)
When you applied, you could have selected (if available in your state):
GPAs, the one-year fixed account, the DCA fixed account (if part of your
contract) and/or subaccounts in which you want to invest;
how you want to make purchase payments;
the length of the withdrawal charge schedule (5 or 7 years);
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit;
- MAV Death Benefit;
- 5% Accumulation Death Benefit(2); or
- Enhanced Death Benefit(2).
In addition, you could have also selected (if available in your state):
EITHER ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE
PN PROGRAM):
Accumulation Protector Benefit rider
Guarantor Withdrawal Benefit for Life rider
Guarantor Withdrawal Benefit rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature.
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account, the DCA fixed account (if part of your contract) and/or the
subaccounts of the variable account in even 1% increments subject to the $1,000
required minimum investment for the GPAs. The amount of any purchase payment
allocated to the one-year fixed account in total cannot exceed 30% of the
purchase payment. More than 30% of a purchase payment may be so allocated if you
establish an automated dollar-cost averaging arrangement with respect to the
purchase payment according to procedures currently in effect. We reserve the
right to further limit purchase payment allocations to the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment
--------------------------------------------------------------------------------
26 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
allocated to the subaccounts using the accumulation unit value we calculate on
the valuation date we received the payment. If we receive an additional purchase
payment at our corporate office at or after the close of business, we will
credit any portion of that payment allocated to the subaccounts using the
accumulation unit value we calculate on the next valuation date after we
received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the retirement date, provided you send us written instructions at least
30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 90th(1) birthday or the tenth contract
anniversary, if purchased after age 80(1), or such other date as agreed upon
by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a
date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the retirement date must be no later
than the annuitant's 85th birthday or the tenth contract anniversary, if
purchased after age 75. Ask your investment professional which retirement
date applies to you.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the Code's limits on annual contributions also apply. Additional
purchase payments are restricted during the waiting period after the first
180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider, Enhanced Guarantor
Withdrawal Benefit rider, or Guarantor Withdrawal Benefit for Life rider,
subject to state restrictions.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
Purchase payment credits are not available for:
contracts with a five-year withdrawal charge schedule.
contracts with a seven-year withdrawal charge schedule with applications
signed on or after May 1, 2006, in most states. Ask your investment
professional whether purchase payment credits are available under your
contract.
All other contracts will receive a purchase payment credit on any purchase
payment made to the contract. We apply a credit to your contract of 1% of your
current purchase payment. We apply this credit immediately. We allocate the
credit to the GPAs, the one-year fixed account and the subaccounts in the same
proportions as your purchase payment.
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit payment under this contract; or (2) a
request for withdrawal charge waiver due to "Contingent events" (see
"Charges -- Contingent events"), we will assess a charge, similar to a
withdrawal charge, equal to the amount of the purchase payment credits. The
amount we pay to you under these circumstances will always equal or exceed your
withdrawal value. The amount returned to you under the free look provision also
will not include any credits applied to your contract.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available through revenue from higher withdrawal charges and
contract administrative charges than would otherwise be charged. In general, we
do not profit from the higher charges assessed to cover the cost of the purchase
payment credit. We use all the revenue from these higher charges to pay for the
cost of the credits. However, we could profit from the higher charges if market
appreciation is higher than expected or if contract owners hold their contracts
for longer than expected.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory
--------------------------------------------------------------------------------
28 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
obligations. Under these circumstances, we may refuse to implement requests for
transfers, withdrawals or death benefits until instructions are received from
the appropriate governmental authority or a court of competent jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The mortality and expense risk fee you pay is based on the death benefit
guarantee you select, whether the contract is a qualified annuity or a
nonqualified annuity and the withdrawal charge schedule that applies to your
contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR
CONTRACTS WITH APPLICATIONS SIGNED
ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR
STATE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP Death Benefit 0.90% 1.05%
MAV Death Benefit 1.10 1.25
5% Accumulation Death Benefit 1.25 1.40
Enhanced Death Benefit 1.30 1.45
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL
OTHER CONTRACTS
ROP Death Benefit 1.00% 1.15%
MAV Death Benefit 1.20 1.35
5% Accumulation Death Benefit 1.35 1.50
Enhanced Death Benefit 1.40 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP Death Benefit 1.20% 1.35%
MAV Death Benefit 1.40 1.55
5% Accumulation Death Benefit 1.55 1.70
Enhanced Death Benefit 1.60 1.75
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value before annuity payouts begin,
we may deduct a withdrawal charge. As described below, a withdrawal charge
applies to each purchase payment you make. The withdrawal charge lasts for 7
years or 5 years from our receipt of each purchase payment, depending on which
withdrawal charge schedule you select when you purchase the contract (see
"Expense Summary").
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract includes the Guarantor Withdrawal Benefit for Life rider
or the Guarantor Withdrawal Benefit rider:
CONTRACTS WITHOUT GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR GUARANTOR
WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and purchase payment credit to be
the prior contract anniversary's contract value during the first contract
year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal
charge schedule attaches to that purchase payment. The withdrawal charge
percentage for each purchase payment declines according to the withdrawal charge
schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 5-
YEAR AND 7-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select the 7-Year withdrawal charge
schedule, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
3%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a withdrawal charge as to that payment.
--------------------------------------------------------------------------------
30 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix C.
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the Guarantor Withdrawal Benefit for Life rider, the greater of
your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment
to the extent it exceeds the greater of contract earnings or 10% of the
contract value on the prior contract anniversary;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge.)
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct a charge of 0.55% of the greater of your contract value or the minimum
contract accumulation value on your contract anniversary for this optional
benefit only if you select it. We deduct the charge from the contract value on
the contract anniversary. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the charge.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each investment
option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider charge, for the preceding contract year only,
that reflects the various different fees that were in effect that year, adjusted
for the number of calendar days each charge was in effect. We reserve the right
to restart the waiting period whenever you elect to change your PN program
investment option to one that causes the rider fee to increase.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this fee among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, the contract value reduces to zero or annuity payouts begin. If the
contract is terminated for any reason or when annuity payouts begin, we will
deduct the charge from the proceeds payable adjusted for the number of calendar
days coverage was in place since we last deducted the fee. If the RBA goes to
zero but the contract value has not been depleted, you will continue to be
charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit for Life rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
--------------------------------------------------------------------------------
32 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE
THIS FEE INFORMATION APPLIES TO BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER
B (SEE APPENDIX H) UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the charge that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you select it. We determine
the charge by multiplying the guaranteed income benefit base by the charge of
the Income Assurer Benefit rider you select. There are three Income Assurer
Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary at the
end of each contract year. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion your interest in each
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
rider fee after the rider effective date, unless you change your PN program
investment option after we have exercised our rights to increase the rider
charge and/or charge a separate fee for PN program each investment option. If
you choose to change your investment option after we have exercised our rights
to increase the rider fee for new contract owners, you will pay the fee that is
in effect on the valuation date we receive your written request to change your
PN program investment option. On the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
For an example of how each Income Assurer Benefit fee is calculated, see
Appendix B.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
--------------------------------------------------------------------------------
34 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT AND THE DCA FIXED ACCOUNT.
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
the sum of your purchase payments and any purchase payment credits allocated
to the one-year fixed account and the DCA fixed account (if included), and
transfer amounts to the one-year fixed account (including any positive or
negative MVA on amounts transferred from the GPAs to the one-year fixed
account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or one-year GPA to one or more subaccounts. Automated transfers are not
available for GPA terms of two or more years. You can also obtain the benefits
of dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
36 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the DCA fixed account. See the "DCA Fixed
Account" and "Portfolio Navigator Program" sections in this prospectus for
details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below).
As long as you are not participating in a PN program, asset rebalancing is
available for use with the DCA fixed account (see "DCA Fixed Account") only if
your subaccount allocation for asset rebalancing is exactly the same as your
subaccount allocation for transfers from the DCA fixed account. If you change
your subaccount allocations under the asset rebalancing program or the DCA fixed
account, we will automatically change the subaccount allocations so they match.
If you do not wish to have the subaccount allocation be the same for the asset
rebalancing program and the DCA fixed account, you must terminate the asset
rebalancing program or the DCA fixed account, as you may choose.
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program called Portfolio Navigator. You could elect to participate in
the asset allocation program, and there is no additional charge. If you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you are required to participate
in the PN program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent various asset classes. By spreading your contract value among
these various asset classes, you may be able to reduce the volatility in your
contract value, but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
determining which model portfolio is best for you. Your investment professional
can help you make this determination. In addition, your investment professional
may provide you with an investor questionnaire, a tool that can help you
determine which model portfolio is suited to your needs based on factors such as
your investment goals, your tolerance for risk, and how long you intend to
invest.
Currently, there are five model portfolios ranging from conservative to
aggressive. You may not use more than one model portfolio at a time. You are
allowed to request a change to another model portfolio twice per contract year.
Each model portfolio specifies allocation percentages to each of the subaccounts
and any GPAs and/or the one-year fixed account that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs and/or one-year fixed
account (if included) according to the allocation percentages stated for the
specific model portfolio you have selected. You also authorize us to
automatically rebalance your contract value quarterly beginning three months
after the effective date of your contract in order to maintain alignment with
the allocation percentages specified in the model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account (if included) that make up the model portfolio you selected
and the allocation percentages to those subaccounts, any GPAs and/or the one-
year fixed account (if included) will not change unless we adjust the
composition of the model portfolio to reflect the liquidation, substitution or
merger of an underlying fund, a change of investment objective by an underlying
fund or when an underlying fund stops selling its shares to the variable
account. We reserve the right to change the terms and conditions of the asset
allocation program upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT
RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER
If you are required to participate in the asset allocation program because you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you may not discontinue your
participation in the asset allocation program unless permitted by the terms of
the rider as summarized below:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the model
portfolios. The Accumulation Protector Benefit rider automatically ends at the
end of the waiting period as does the requirement that you participate in the
asset allocation program. At all other times, if you do not want to
participate in any of the model portfolios, you must terminate your contract
by requesting a full withdrawal. Withdrawal charges and tax penalties may
apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL
PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit
rider requires that your contract value be invested in one of the model
portfolios for the life of the contract, and you cannot terminate the
Guarantor Withdrawal Benefit rider once you have selected it, you must
terminate your contract by requesting a full withdrawal if you do not want to
participate in any of the model portfolios. Withdrawal charges and tax
penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE
MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit
rider during a 30-day period after the first rider anniversary and at any time
after the expiration of the waiting period. At all other times, if you do not
want to participate in any of the model portfolios, you must terminate your
contract by requesting a full withdrawal. Withdrawal
--------------------------------------------------------------------------------
38 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
charges and tax penalties may apply. As long as the Income Assurer Benefit
rider is in effect, your contract value must be invested in one of the model
portfolios. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER
IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS
DURING THE PERIOD OF TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
40 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The Guarantor Withdrawal Benefit
for Life rider requires that your contract value be invested in one of the PN
program investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the Guarantor Withdrawal Benefit for Life
rider once you have selected it, you must terminate your contract by
requesting a full withdrawal if you do not want to invest in any of the PN
program investment options. Withdrawal charges and tax penalties may apply.
THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT
NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or the DCA fixed account, to another subaccount before annuity
payouts begin. Certain restrictions apply to transfers involving the GPAs and
the one-year fixed account. You may not transfer contract value to the DCA fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
six months following that transfer. We reserve the right to further limit
transfers to the one-year fixed account if the interest rate we are then
currently crediting to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. We reserve the right to further limit
transfers to or from the one-year fixed account if the interest rate we are
then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values from the DCA fixed account to any of the investment options
available under your contract, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and
the GPA, as described above. (See "DCA Fixed Account.")
Once annuity payouts begin, you may not make transfers to or from the GPAs or
the fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest. When annuity payments
begin, you must transfer all contract value out of your GPAs and DCA accounts.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
42 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
GPAs, one-year fixed account or the subaccounts or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months.
Transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA Fixed Account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have a Guarantor Withdrawal Benefit for Life rider or Guarantor
Withdrawal Benefit rider, you may set up automated partial withdrawals up to
the benefit available for withdrawal under the rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
44 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout
Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your
partial withdrawals in any contract year exceed the permitted withdrawal amount
under the terms of the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced
(see "Optional Benefits"). Any partial withdrawal request that exceeds the
amount allowed under the riders and impacts the guarantees provided, will not be
considered in good order until we receive a signed form Benefit Impact
Acknowledgement showing the projected effect of the withdrawal on the rider
benefits or a verbal acknowledgement that you understand and accept the impacts
that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the
DCA fixed account and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise. You may request that a partial withdrawal be taken from one
or more investment options unless an asset allocation program is in effect for
your contract. After executing a partial withdrawal, the value in the one-year
fixed account and each GPA and subaccount must be either zero or at least $50.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding on us when we receive and record it. We will honor any
change of ownership request received in good order that we believe is authentic
and we will use reasonable procedures to confirm authenticity. If we follow
these procedures, we will not take any responsibility for the validity of the
change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (see "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit rider and/or Benefit Protector Plus rider,
the rider will terminate upon transfer of ownership of the annuity contract. The
Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and
the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership
of your annuity contract. For the Guarantor Withdrawal Benefit for Life riders,
any ownership change that impacts the guarantees provided will not be considered
in good order until we receive a signed Benefit Impact Acknowledgement form
showing the projected effect of the ownership change on the rider benefits or a
verbal acknowledgement that you understand
--------------------------------------------------------------------------------
46 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
and accept the impacts that have been explained to you. Continuance of the
Benefit Protector is optional. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit, less any purchase payment
credits subject to reversal, to your beneficiary upon the earlier of your death
or the annuitant's death. We will base the benefit paid on the death benefit
coverage you chose when you purchased the contract. If a contract has more than
one person as the owner, we will pay benefits upon the first to die of any owner
or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial withdrawals.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial withdrawal or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer of partial withdrawal.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
The amount of purchase payments and any purchase payment credits withdrawn or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
withdrawn or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin and while
this contract is in force, the death benefit will be the greater of these two
values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix D.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest,
--------------------------------------------------------------------------------
48 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
if any, at a rate no less than required by law. We will mail payment to the
beneficiary within seven days after our death claim requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus
riders, if selected, will terminate. The Accumulation Protector Benefit, the
Guarantor Withdrawal Benefit for Life rider and the Guarantor Withdrawal Benefit
riders, if selected, will continue. Continuance of the Benefit Protector rider
is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and the Benefit Protector Plus riders, if
selected, will terminate. The Accumulation Protector Benefit rider, the
Guarantor Withdrawal Benefit for Life and Guarantor Withdrawal Benefit riders,
if selected, will continue. Continuance of the Benefit Protector is optional.
(See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
OPTIONAL LIVING BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
the risks normally associated with a portfolio of fixed-income securities,
including interest rate, option, liquidity and credit risk. You should also be
aware that we issue other types of insurance and financial products as well, and
we also pay our obligations under these products from assets in our general
account. Our general account is not segregated or insulated from the claims of
our creditors. The financial statements contained in the SAI include a further
discussion of the risks inherent within the investments of the general account.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit riders
or any Income Assurer Benefit rider.
The Accumulation Protector Benefit rider may not be available in all states.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
PN program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those used to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector
--------------------------------------------------------------------------------
50 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
Benefit rider. In some cases, as described below, you may need to hold the
contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step up option (described below) or your
surviving spouse exercises the spousal continuation elective step up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program investment option to one
that causes the Accumulation Protector Benefit rider charge to increase (see
"Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credit. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix E.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if:
you purchase your contract on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the retirement date, you
have the right to withdraw some or all of your contract value, less applicable
administrative, withdrawal and rider charges imposed under the contract at the
time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals").
Because your contract value will fluctuate depending on the performance of the
underlying funds in which the subaccounts invest, the contract itself does not
guarantee that you will be able to take a certain withdrawal amount each year
before the annuity payouts begin, nor does it guarantee the length of time over
which such withdrawals can be made before the annuity payouts begin.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and do not
intend to elect an annuity payout before the annuity payouts begin and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time will total
an amount equal to, at minimum, your purchase payments. Key terms associated
with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP),"
"Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and
"Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime
--------------------------------------------------------------------------------
52 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
Payment (ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered
Person," and "Annual Lifetime Payment Attained Age (ALPAA)." See these
headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life(R) rider guarantees that you may take the following partial withdrawal
amounts each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year;
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below). Please note
that each of the two benefits has its own definition of the allowed annual
withdrawal amount. Therefore a partial withdrawal may be considered an excess
withdrawal for purposes of the lifetime withdrawal benefit only, the basic
withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant (see "At Death" heading below). Therefore, if
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
there are multiple contract owners or the annuitant is not an owner, the
rider may terminate or the lifetime withdrawal benefit may be reduced.
This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the investment options of the PN program. This requirement limits your choice
of investments. This means you will not be able to allocate contract value to
all of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program."). You may
allocate qualifying purchase payments and any purchase payment credits to the
DCA fixed account, when available (see "DCA Fixed Account"), and we will make
monthly transfers into the investment option you have chosen. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make.
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty and may be considered taxable income. You
should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or annuity payouts begin.
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal procedures described below for the GBA, RBA
and ALP.
For an example, see Appendix F.
--------------------------------------------------------------------------------
54 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any withdrawal charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
The RBA is determined at the following times, calculated as described:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal that payment's GBA to (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
--------------------------------------------------------------------------------
56 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The Covered Person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from this contract
and the RMD calculated separately for this contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of the RMD that
exceeds the RBP or RALP will not be subject to excess withdrawal processing
provided that the following conditions are met:
The RMD is the life expectancy RMD for this contract alone, and
The RMD amount is based on the requirements of section 401(a)(9), related Code
provisions and regulations thereunder that were in effect on the effective
date of this rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above.
See Appendix G for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
--------------------------------------------------------------------------------
58 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to equal to the ALP less all prior
withdrawals made in the current contract year, but never less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
spousal continuation step up, the step-up date is the valuation date we receive
the spouse's written request to step-up if we receive the request by the close
of business on that day, otherwise the next valuation date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be
paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be
paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero, then the Guarantor
Withdrawal Benefit for Life rider will terminate when the death benefit becomes
payable (see "Benefits in Case of Death"). The beneficiary may elect to take the
death benefit as a lump sum under the terms of the contract (see "Benefits in
Case of Death") or the annuity payout option (see "Guaranteed Withdrawal Benefit
Annuity Payout Option" heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
--------------------------------------------------------------------------------
60 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set equal to
the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to equal the ALP
less all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life(R) rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that you may
select for an additional annual charge if(1):
you purchase your contract on or after May 1, 2006(2) in those states where
the Guarantor Withdrawal Benefit for Life rider is not available(3);
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
you and the annuitant are 79 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) The disclosures in this section also apply to contract owners with
applications signed on or after April 29, 2005. In previous disclosures, we
have referred to this rider as Rider A. We also offered an earlier version
of this rider, previously referred to as Rider B. See Appendix H for
information regarding Rider B which is no longer offered. See the rider
attached to your contract for the actual terms of the benefit you purchased.
(3) Ask your investment professional if this rider is available in your state.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefit (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the PN
program if you purchase a contract on or after May 1, 2006 with this rider
(see "Making the Most of Your Contract -- Portfolio Navigator Program"). If
you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you
must participate in the asset allocation program (see "Making the Most of Your
Contract -- Asset Allocation Program"), however, you may elect to participate
in the Portfolio Navigator program after May 1, 2006. The PN program and the
asset allocation program limit your choice of investments. This means you will
not be able to allocate contract value to all of the subaccounts, GPAs or the
one-year fixed account that are available under the contract to contract
owners who do not elect this rider. (See "Making the Most of Your
Contract -- Asset Allocation Program and Portfolio Navigator Program."). You
may make qualifying purchase payments and any purchase payment credits to the
DCA fixed account, when available, and we will make monthly transfers into the
investment option you have chosen;
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may also
incur a 10% IRS early withdrawal penalty and may be considered taxable income;
--------------------------------------------------------------------------------
62 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change. See Appendix I for additional information. RMD rules
follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current purchase payment restrictions, please
see "Buying Your Contract -- Purchase Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups;
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups.
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary (see "Elective Step Up" above). The GBP is equal to 7% of the
GBA.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to
--------------------------------------------------------------------------------
64 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
step up the remaining benefit amount and guaranteed benefit amount to the
contract value on the valuation date we receive your written request to step up.
The elective step up is subject to the following rules:
If you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
If you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
If you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
procedures discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
INCOME ASSURER BENEFIT RIDERS
There are three optional Income Assurer Benefit riders available under your
contract:
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several
--------------------------------------------------------------------------------
66 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
comparison values and set the guaranteed income benefit base (described below)
equal to the largest value. The guaranteed income benefit base, less any
applicable premium tax, is the value we apply to the guaranteed annuity purchase
rates stated in Table B of the contract to calculate the minimum annuity payouts
you will receive if you exercise the rider. If the guaranteed income benefit
base is greater than the contract value, the guaranteed income benefit base may
provide a higher annuity payout level than is otherwise available. However, the
riders use guaranteed annuity purchase rates which may result in annuity payouts
that are less than those using the annuity purchase rates that we may apply at
annuitization under the standard contract provisions. Therefore, the level of
income provided by the riders may be less than the contract otherwise provides.
If the annuity payouts through the standard contract provisions are more
favorable than the payouts available through the riders, you will receive the
higher standard payout option. The guaranteed income benefit base does not
create contract value or guarantee the performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider. This section is followed by a description of each specific Income Assurer
Benefit rider and how it is calculated.
You should consider whether an Income Assurer Benefit rider is appropriate for
you because:
you must participate in the PN program if you purchase a contract on or after
May 1, 2006 with this rider (see "Making the Most of Your
Contract -- Portfolio Navigator Program"). If you selected this rider before
May 1, 2006, you must participate in the asset allocation program (see "Making
the Most of Your Contract -- Asset Allocation Program"), however, you may
elect to participate in the Portfolio Navigator program after May 1, 2006. The
PN program and the asset allocation program limit your choice of investments.
This means you will not be able to allocate contract value to all of the
subaccounts, GPAs or the one-year fixed account that are available under the
contract to other contract owners who do not elect this rider.
if you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the Code must begin, you should consider whether an
Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals you take
from the contract, including those used to satisfy RMDs, will reduce the
guaranteed income benefit base (defined below), which in turn may reduce or
eliminate the amount of any annuity payouts available under the rider. Consult
a tax advisor before you purchase any Income Assurer Benefit rider with a
qualified annuity;
you must hold the Income Assurer Benefit for 10 years unless you elect to
terminate the rider within 30 days following the first anniversary after the
effective date of the rider;
the 10-year waiting period may be restarted if you elect to change the PN
program investment option to one that causes the rider charge to increase (see
"Charges -- Income Assurer Benefit");
the Income Assurer Benefit rider terminates* 30 days following the contract
anniversary after the annuitant's 86th birthday; and
you can only exercise the Income Assurer Benefit within 30 days after a
contract anniversary following the expiration of the 10-year waiting period.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
If the Income Assurer Benefit rider is available in your state and the annuitant
is 75 or younger at contract issue, you may choose this optional benefit at the
time you purchase your contract for an additional charge. The amount of the
charge is determined by the Income Assurer Benefit you select (see
"Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider
will be the contract issue date. The Guarantor Withdrawal Benefit for Life, the
Guarantor Withdrawal Benefit and the Accumulation Protector Benefit riders are
not available with any Income Assurer Benefit rider. If the annuitant is between
age 73 and age 75 at contract issue, you should consider whether an Income
Assurer Benefit rider is appropriate for your situation because of the 10-year
waiting period requirement. Be sure to discuss with your investment professional
whether an Income Assurer Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
Assurer Benefit - 5% Accumulation Benefit Base and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal, and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as excluded investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the retirement date must be between 50 to 86 years old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
-- Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. Exception: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables.") Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend
--------------------------------------------------------------------------------
68 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
on the performance of the subaccounts you select. Variable annuity payouts after
the first year are calculated using the following formula:
Pt-1 (1 + i)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit(R) rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial withdrawals. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, any credits, and partial
withdrawals occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial withdrawals and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and any purchase
payment credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and any purchase payment credit and subtracting adjusted withdrawals and
adjusted transfers. On each subsequent contract anniversary after the first
anniversary of the effective date of this rider, prior to the earlier of your or
the annuitant's 81st birthday, we increase the variable account floor by adding
the amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
The amount of purchase payment and any purchase payment credits withdrawn from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current withdrawal or transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the
value from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
--------------------------------------------------------------------------------
70 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% variable account floor, less 5% adjusted excluded payments (described
above).
For an example of how benefits under each Income Assurer Benefit rider are
calculated, see Appendix K.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective
date. The Benefit Protector does not provide any additional benefit before the
first rider anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus rider, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
For an example, see Appendix L.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are age 70 or older at the rider
effective date. It does not provide any additional benefit before the first
rider anniversary and it does not provide any benefit beyond what is offered
under the Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector
Plus to you contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
--------------------------------------------------------------------------------
72 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix M.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs and the DCA fixed account are not available during this payout
period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
before the elected period expires. We calculate the guaranteed payout period
from the retirement date. If the annuitant outlives the elected guaranteed
payout period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.")
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR
WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid over the life of the
annuity will not exceed the total RBA at the time you begin this fixed payout
option (see "Optional Benefits -- Guarantor Withdrawal Benefit for Life Rider"
or "Optional Benefits -- Guarantor Withdrawal Benefit Rider"). The amount paid
in the current contract year will be reduced for any prior withdrawals in that
year. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at the time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
--------------------------------------------------------------------------------
74 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
individuals, the 3.8% tax will apply to the lesser of (1) the amount by which
the taxpayer's modified adjusted gross income exceeds $200,000 ($250,000 for
married filing jointly and surviving spouses; $125,000 for married filing
separately) or (2) the taxpayer's "net investment income." Net investment income
includes taxable income from nonqualified annuities. Annuity holders are advised
to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
--------------------------------------------------------------------------------
76 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
--------------------------------------------------------------------------------
78 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 5.50% each time a purchase
payment is made as well as service/trail commissions of up to 0.25% of the
contract value based on annual total contract value for as long as the contract
remains in effect. We also may pay an additional sales commission of up to 1.00%
of purchase payments for a period of time we select. These commissions do not
change depending on which subaccounts you choose to allocate your purchase
payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this
--------------------------------------------------------------------------------
80 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
prospectus, the SAI and information about the contract, information incorporated
by reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs) p. 22
Adjustment (MVA) p. 83
Appendix B: Example -- Income Assurer Charges -- Income Assurer Benefit Rider p. 34
Benefit Rider Fee p. 85 Fee
Appendix C: Example -- Withdrawal Charges -- Withdrawal Charge p. 30
Charges p. 86
Appendix D: Example -- Death Benefits p. 91 Benefits in Case of Death p. 47
Appendix E: Example -- Accumulation Optional Benefits -- Accumulation p. 50
Protector Benefit Rider p. 94 Protector Benefit Rider
Appendix F: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal p. 52
Withdrawal Benefit for Life Rider p. 95 Benefit for Life Rider
Appendix G: Guarantor Withdrawal Optional Benefits -- Guarantor Withdrawal p. 52
Benefit for Life Rider -- Benefit for Life Rider
Additional RMD Disclosure p. 97
Appendix H: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal p. 61
Withdrawal Benefit -- Benefit Rider
Rider B Disclosure p. 99
Appendix I: Guarantor Withdrawal Optional Benefits -- Guarantor Withdrawal p. 61
Benefit Rider -- Benefit Rider
Additional RMD Disclosure p. 104
Appendix J: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal p. 61
Withdrawal Benefit Rider p. 105 Benefit Rider
Appendix K: Example -- Income Assurer Optional Benefits -- Income Assurer p. 66
Benefit Riders p. 107 Benefit Riders
Appendix L: Example -- Benefit Optional Benefits -- Benefit Protector p. 71
Protector Death Benefit Rider p. 112 Death Benefit Rider
Appendix M: Example -- Benefit Optional Benefits -- Benefit Protector p. 72
Protector Plus Death Benefit Rider p. 114 Plus Death Benefit Rider
Appendix N: Condensed Financial Condensed Financial Information p. 15
Information (Unaudited) p. 116 (Unaudited)
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, DCA fixed account, and one-year
fixed account and the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices D through F and
J through M include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
82 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 7%, if you elected the
seven-year withdrawal charge schedule and 4% if you elected a five-year
withdrawal charge schedule. (See "Charges -- Withdrawal Charge.") We do not
apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct
the withdrawal charge from your early withdrawal after we applied the MVA. Also
note that when you request an early withdrawal, we withdraw an amount from your
GPA that will give you the net amount you requested after we apply the MVA and
any applicable withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
84 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
ASSUMPTIONS:
You purchase the contract with a payment of $50,000. You allocate all of your
payment to the Protected Investment Options and make no transfers, add-ons or
withdrawals; and
On the first contract anniversary your total contract value is $55,545; and
On the second contract anniversary your total contract value is $53,270.
WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER
BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS:
THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS
THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED INCOME
BENEFIT BASE
IS THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE:
INCOME ASSURER BENEFIT - MAV FEE = .30% X $55,545 = $166.64
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = .60% X $55,125 = $330.75
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION
BENEFIT BASE FEE = .65% X $55,545 = $361.04
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling:
- up to 10% of your prior anniversary's contract value or your contract's
remaining benefit payment if you elected the Guarantor Withdrawal Benefit
rider and your remaining benefit payment is greater than 10% of your prior
anniversary's contract value. We do not assess a withdrawal charge on this
amount.
- up to 10% of your prior anniversary's contract value or the greater of your
contract's remaining benefit payment or remaining annual lifetime payment if
you elected the Guarantor Withdrawal Benefit for Life rider, and the greater
of your remaining annual lifetime payment and your remaining benefit payment
is greater than 10% of your prior anniversary's contract value. We do not
assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA, the one-year
fixed account or the DCA fixed account. If the contract value is less than
purchase payments received and not previously withdrawn (PPNPW) then contract
earnings are zero.
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for a contract with a seven-year withdrawal charge
schedule. Each example illustrates the amount of the withdrawal charge for both
a contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
86 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
FULL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you withdraw the contract for its total value.
The withdrawal charge percentage in the fourth year after a purchase payment
is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
--------- ---------
NET FULL WITHDRAWAL PROCEEDS: 56,460.00 36,754.00
--------------------------------------------------------------------------------
88 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
PARTIAL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial withdrawal of
$15,000.00. The withdrawal charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS
FOLLOWS:
STEP 1. First, we determine the amount of earnings available
in the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn
(PPNPW):
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,376.34 16,062.31
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 5,376.34 16,062.31
STEP 4. Next we determine XSF, the amount by which 10% of the
prior anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 5,376.34 19,375.80
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 5,376.34 19,375.80
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 5,376.34 15,175.80
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,376.34 16,062.31
WITHDRAWAL CHARGE: (376.34) (1,062.31)
--------- ---------
NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
90 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000; and
On the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including withdrawal charge) partial withdrawal; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
CONTRACT VALUE AT DEATH: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000 ----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE
TWO VALUES: $23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000 and
On the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000 ----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
On the first contract anniversary, the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000 ----------
variable account floor benefit: $19,342.11
plus the GPA account value: +5,300.00
----------
5% variable account floor (value of the GPA account, the one-year fixed
account and the variable
account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
92 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
On the first contract anniversary, the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300 ----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor the first contract anniversary,
calculated as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000 ----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
----------
5% variable account floor (value of the GPAs, the one-year fixed account
and the variable
account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
THE EXAMPLE ASSUMES:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000.
You make no additional purchase payments.
You do not exercise the Elective Step-up option
INITIAL PAYMENT 100,000
--------------- ------------
PARTIAL MCAV HYPOTHETICAL
END OF WITHDRAWALS ADJUSTMENT ACCUMULATION ASSUMED
CONTRACT (BEGINNING FOR PARTIAL BENEFIT CONTRACT
YEAR OF YEAR) WITHDRAWAL MCAV AMOUNT VALUE
1 0 0 100,000 0 112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
94 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
96 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER -- ADDITIONAL RMD
DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit for Life rider to satisfy the RMD rules under
401(a)(9) of the Code without application of the excess withdrawal procedures
described in the rider. We reserve the right to modify this administrative
practice at any time upon 30 days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the Guarantor
Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit for Life rider is attached as of the date we make the determination;
and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit for Life rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of your
GBA, RBA, and/or ALP as described under the excess withdrawal provision of the
rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
98 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that was offered
for an additional annual charge if:
you purchased your contract prior to April 29, 2005(1),(2);
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit rider is not available under an inherited
qualified annuity.
(2) In previous disclosure, we have referred to this rider as Rider B. This
rider is no longer available for purchase. See the Guarantor Withdrawal
Benefit for Life and Guarantor Withdrawal Benefit sections in this
prospectus for information about currently offered versions of this benefit.
See the rider attached to your contract for the actual terms of the benefit
you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF ASSET ALLOCATION PROGRAM REQUIRED: You must participate in the asset
allocation program (see "Making the Most of Your Contract -- Asset Allocation
Program"), however, you may elect to participate in the PN program after May
1, 2006 (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). The PN program and the asset allocation program limit your choice
of investments. This means you will not be able to allocate contract value to
all of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Asset Allocation Program and Portfolio
Navigator Program.");
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty and may be considered taxable income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change. See Appendix I for additional information. RMD rules
follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. You should consult your tax advisor
before you select this optional rider if you have any questions about the use
of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups:
--------------------------------------------------------------------------------
100 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
The RBA is determined at the following times:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of
the GBA; or (b) the RBA.
If you withdraw less than the GBP in a contract year, there is no carry over to
the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract anniversary value is greater than the RBA.
The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
--------------------------------------------------------------------------------
102 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A spousal continuation step up occurs automatically when the spouse elects to
continue the contract. The rider charge will not change upon this automatic step
up.
Under this step up, the RBA will be reset to the greater of the RBA on the
valuation date we receive the spouse's written request to continue the contract
and the death benefit that would otherwise have been paid; the GBA will be reset
to the greater of the GBA on the valuation date we receive the spouse' written
request to continue the contract and the death benefit that would otherwise have
been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT RIDER --
ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit rider (including Riders A and B) to satisfy the RMD
rules under 401(a)(9) of the Code without application of the excess withdrawal
procedures described in the rider. We reserve the right to modify this
administrative practice at any time upon 30 days' written notice to you.
For owners subject to RMD rules under Section 401(a)(9) amounts you withdraw to
satisfy these rules will not prompt excess withdrawal processing, subject to the
following rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current contract
year, an Additional Benefit Amount (ABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and reduce
the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any additional
amounts withdrawn will count against and reduce any ABA. These withdrawals
will not be considered excess withdrawals as long as they do not exceed the
remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit rider is attached as of the date we make the determination; and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable, on the effective date of this
prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit rider may not be sufficient to satisfy the requirements under
the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your RBP amount
and may result in the reduction of your GBA and RBA as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g. ownership
by a trust or a charity), we will calculate the life expectancy RMD amount
calculated by us as zero in all years. The life expectancy required minimum
distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
104 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX J: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT RIDER
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH
RIDER A
(SEE "OPTIONAL BENEFITS") AND RIDER B (SEE APPENDIX H).
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to $110,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $7,700
During the fourth contract year you decide to take a partial withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals the prior RBA
less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $7,700
On the fourth contract anniversary you make an additional purchase payment of
$50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of the additional
purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of the additional
purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of the additional
purchase payment:
$7,700 + $3,500 = $11,200
On the fifth contract anniversary your contract value grows to $200,000. You decide
to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $14,000
During the seventh contract year your contract value grows to $230,000. You decide
to take a partial withdrawal of $20,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $14,000
During the eighth contract year your contract value falls to $175,000. You decide
to take a partial withdrawal of $25,000. You took more than your GBP of $14,000 so
your RBA gets reset to the lesser of:
(1) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $10,500
--------------------------------------------------------------------------------
106 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity -- No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN investment options include
protected investment options and excluded investment options (Columbia Variable
Portfolio -- Cash Management Fund, and if available under the contract, GPAs
and/or the one-year fixed account). Excluded investment options are not included
in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment options; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE - MAV(2)
--------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
---------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
---------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
108 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
110 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan D
Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
APPENDIX L: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
You select the MAV Death Benefit and the 7-year withdrawal charge schedule.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV Death Benefit equals the contract value $105,000. You have
not reached the first contract anniversary so the Benefit Protector does not
provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The death
benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7% withdrawal
charges. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to a 7% withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in
withdrawal charges) from your contract value. Altogether, we will withdraw $50,000
and pay you $47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is
contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of $50,000.
The new purchase payment is less than one year old and so it has no effect on the
Benefit Protector value. The death benefit equals:
MAV Death Benefit (contract value): $249,500
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old) +55,000
--------
Total death benefit of: $304,500
--------------------------------------------------------------------------------
112 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes.
The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up to a maximum of
100% of purchase payments not previously withdrawn that are one or more years
old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
APPENDIX M: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the MAV Death Benefit and the seven-year
withdrawal charge schedule.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV Death Benefit, which is the contract value, or $105,000. You
have not reached the first contract anniversary so the Benefit Protector Plus does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You have
not reached the second contract anniversary so the Benefit Protector Plus does not
provide any additional benefit beyond what is provided by the Benefit Protector at
this time. The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial withdrawal of $50,000, including the applicable 7% withdrawal
charge. We will withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the withdrawal is
subject to a 7% withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in
withdrawal charges) from your contract value. Altogether, we will withdraw $50,000
and pay you $47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial withdrawal is
contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously withdrawn that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum of
20%. The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously withdrawn that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
114 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector Plus value. The death
benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals
40% of earnings at death, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains
constant. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
APPENDIX N: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit value at beginning of period $0.89 $0.80 $0.67 $1.15 $1.11 $1.00
Accumulation unit value at end of period $0.94 $0.89 $0.80 $0.67 $1.15 $1.11
Number of accumulation units outstanding at end of period
(000 omitted) 64 71 36 20 9 3
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit value at beginning of period $0.74 $0.72 $0.54 $1.17 $1.12 $1.00
Accumulation unit value at end of period $0.59 $0.74 $0.72 $0.54 $1.17 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) 190 193 14,182 15,838 6,819 2,227
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.22 $1.17 $1.08 $1.10 $1.02 $1.00
Accumulation unit value at end of period $1.35 $1.22 $1.17 $1.08 $1.10 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) 130 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.01 $0.90 $0.76 $1.05 $1.12 $1.00
Accumulation unit value at end of period $1.00 $1.01 $0.90 $0.76 $1.05 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) 6 6 7 -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.05 $1.07 $1.07 $1.06 $1.02 $1.00
Accumulation unit value at end of period $1.04 $1.05 $1.07 $1.07 $1.06 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) 204 344 6,729 1,399 321 67
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.22 $1.14 $1.01 $1.09 $1.04 $1.00
Accumulation unit value at end of period $1.29 $1.22 $1.14 $1.01 $1.09 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 341 374 36,842 27,863 19,798 8,562
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.98 $0.84 $0.67 $1.14 $1.06 $1.00
Accumulation unit value at end of period $0.92 $0.98 $0.84 $0.67 $1.14 $1.06
Number of accumulation units outstanding at end of period
(000 omitted) 271 304 38,327 27,148 12,478 5,812
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.90 $0.77 $0.63 $1.10 $1.08 $1.00
Accumulation unit value at end of period $0.94 $0.90 $0.77 $0.63 $1.10 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) 30 30 28 -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.45 $1.22 $0.71 $1.55 $1.13 $1.00
Accumulation unit value at end of period $1.13 $1.45 $1.22 $0.71 $1.55 $1.13
Number of accumulation units outstanding at end of period
(000 omitted) 118 124 6,961 8,276 3,593 1,590
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.19 $1.15 $1.09 $1.10 $1.03 $1.00
Accumulation unit value at end of period $1.29 $1.19 $1.15 $1.09 $1.10 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 238 269 27,402 11,339 9,543 6,089
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.36 $1.20 $0.79 $1.07 $1.06 $1.00
Accumulation unit value at end of period $1.42 $1.36 $1.20 $0.79 $1.07 $1.06
Number of accumulation units outstanding at end of period
(000 omitted) 6 7 477 490 517 761
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.93 $0.80 $0.59 $1.08 $1.05 $1.00
Accumulation unit value at end of period $0.89 $0.93 $0.80 $0.59 $1.08 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) -- 9 24 1,417 997 --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.19 $0.95 $0.59 $1.08 $0.96 $1.00
Accumulation unit value at end of period $1.00 $1.19 $0.95 $0.59 $1.08 $0.96
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
116 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.99 $0.88 $0.70 $1.13 $1.09 $1.00
Accumulation unit value at end of period $1.00 $0.99 $0.88 $0.70 $1.13 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 197 186 195 7 4 2
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.10 $1.08 $1.03 $1.07 $1.03 $1.00
Accumulation unit value at end of period $1.10 $1.10 $1.08 $1.03 $1.07 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 158 160 4,815 1,449 711 239
------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.28 $1.00 $0.64 $1.11 $0.98 $1.00
Accumulation unit value at end of period $1.17 $1.28 $1.00 $0.64 $1.11 $0.98
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- 2 950
------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.13 $0.99 $0.82 $1.18 $1.12 $1.00
Accumulation unit value at end of period $1.22 $1.13 $0.99 $0.82 $1.18 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.05 $0.91 $0.68 $1.20 $1.03 $1.00
Accumulation unit value at end of period $1.01 $1.05 $0.91 $0.68 $1.20 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 204 243 7,928 17,964 12,765 9,751
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.19 $0.94 $0.68 $1.13 $0.99 $1.00
Accumulation unit value at end of period $1.05 $1.19 $0.94 $0.68 $1.13 $0.99
Number of accumulation units outstanding at end of period
(000 omitted) 103 135 9,053 11,273 4,921 1,866
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.94 $0.85 $0.68 $1.22 $1.05 $1.00
Accumulation unit value at end of period $0.77 $0.94 $0.85 $0.68 $1.22 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 26 30 906 1,281 1,053 434
------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.72 $0.60 $0.51 $0.90 $1.15 $1.00
Accumulation unit value at end of period $0.67 $0.72 $0.60 $0.51 $0.90 $1.15
Number of accumulation units outstanding at end of period
(000 omitted) 3 3 233 364 498 1
------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.19 $1.07 $0.79 $1.14 $1.11 $1.00
Accumulation unit value at end of period $1.21 $1.19 $1.07 $0.79 $1.14 $1.11
Number of accumulation units outstanding at end of period
(000 omitted) 276 240 181 120 132 6
------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.61 $1.42 $1.21 $1.15 $1.05 $1.00
Accumulation unit value at end of period $1.58 $1.61 $1.42 $1.21 $1.15 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 231 238 14,147 11,041 9,216 3,787
------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.12 $0.90 $0.69 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.03 $1.12 $0.90 $0.69 $1.10 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) 117 110 7,647 7,744 5,921 3,150
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit value at beginning of period $0.84 $0.74 $0.62 $1.09 $0.99 $1.00
Accumulation unit value at end of period $0.77 $0.84 $0.74 $0.62 $1.09 $0.99
Number of accumulation units outstanding at end of period
(000 omitted) 40 32 1,288 1,224 1,210 493
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit value at beginning of period $0.95 $0.81 $0.58 $1.11 $1.01 $1.00
Accumulation unit value at end of period $0.87 $0.95 $0.81 $0.58 $1.11 $1.01
Number of accumulation units outstanding at end of period
(000 omitted) -- -- 3 -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Mid Cap Growth Fund, Series II Shares on April 27, 2012.
------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.98 $0.85 $0.67 $1.06 $1.09 $1.00
Accumulation unit value at end of period $0.95 $0.98 $0.85 $0.67 $1.06 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 107 126 11,689 12,787 7,163 5,339
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.04 $0.91 $0.66 $1.12 $1.07 $1.00
Accumulation unit value at end of period $0.94 $1.04 $0.91 $0.66 $1.12 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 39 33 36 22 10 1
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.27 $1.12 $0.96 $1.13 $1.04 $1.00
Accumulation unit value at end of period $1.27 $1.27 $1.12 $0.96 $1.13 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 249 266 27,967 18,542 13,059 3,108
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.99 $0.81 $0.60 $0.98 $1.00 $1.00
Accumulation unit value at end of period $0.95 $0.99 $0.81 $0.60 $0.98 $1.00
Number of accumulation units outstanding at end of period
(000 omitted) 14 24 25 24 24 20
------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.05 $1.04 $0.83 $1.01 $1.03 $1.00
Accumulation unit value at end of period $1.03 $1.05 $1.04 $0.83 $1.01 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.87 $0.70 $0.54 $0.90 $1.04 $1.00
Accumulation unit value at end of period $0.82 $0.87 $0.70 $0.54 $0.90 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- 6 1,670
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 472 509 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.12 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 31,406 35,636 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 884 947 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 28,351 22,295 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.13 $0.94 $0.69 $1.10 $1.05 $1.00
Accumulation unit value at end of period $1.04 $1.13 $0.94 $0.69 $1.10 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 2 2 2 -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 6,568 7,272 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- --
Accumulation unit value at end of period $1.09 $1.09 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 229,158 241,303 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 4,069 3,301 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- --
Accumulation unit value at end of period $1.09 $1.11 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 113,447 126,812 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 2,521 2,064 -- -- -- --
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
118 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 33,464 37,757 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.12 $0.91 $0.67 $0.99 $1.05 $1.00
Accumulation unit value at end of period $1.06 $1.12 $0.91 $0.67 $0.99 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 4 5 733 845 639 --
------------------------------------------------------------------------------------------------------------------
WANGER USA (05/01/2006)
Accumulation unit value at beginning of period $1.07 $0.88 $0.62 $1.05 $1.00 $1.00
Accumulation unit value at end of period $1.02 $1.07 $0.88 $0.62 $1.05 $1.00
Number of accumulation units outstanding at end of period
(000 omitted) 67 70 7,396 5,499 3,212 306
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.03 $0.92 $0.81 $1.15 $1.08 $1.00
Accumulation unit value at end of period $1.09 $1.03 $0.92 $0.81 $1.15 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.21 $1.00 -- -- -- --
Accumulation unit value at end of period $1.04 $1.21 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.93 $0.83 $0.71 $1.13 $1.12 $1.00
Accumulation unit value at end of period $0.90 $0.93 $0.83 $0.71 $1.13 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) 6 7 1,003 -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/16/2010)
Accumulation unit value at beginning of period $1.26 $1.00 -- -- -- --
Accumulation unit value at end of period $1.18 $1.26 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 5 6 -- -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.26 $1.00 $0.66 $1.14 $1.02 $1.00
Accumulation unit value at end of period $1.19 $1.26 $1.00 $0.66 $1.14 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.30 $1.23 $1.11 $1.09 $1.04 $1.00
Accumulation unit value at end of period $1.39 $1.30 $1.23 $1.11 $1.09 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 5 5 2,595 2,554 3,584 1,094
------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.03 $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 130 124 89 113 168 170 126 90
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.92 $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19
Number of accumulation units outstanding at end of
period (000 omitted) 6,871 7,882 19,909 27,146 17,556 13,071 8,418 3,162
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05 $1.00
Accumulation unit value at end of period $1.32 $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05
Number of accumulation units outstanding at end of
period (000 omitted) 7,945 11,844 13,423 13,696 23,067 24,580 21,086 7,249
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09 $1.00
Accumulation unit value at end of period $1.12 $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 87 16 16 19 24 29 15 26
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99 $1.00
Accumulation unit value at end of period $1.00 $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 2,045 2,910 11,536 5,320 3,584 1,771 839 136
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.25 $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 2,517 3,451 52,732 52,913 49,906 27,709 237 220
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.25 $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 7,706 10,251 47,600 45,615 31,206 25,297 8,506 34
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.03 $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of accumulation units outstanding at end of
period (000 omitted) 5,131 7,801 9,323 10,215 10,759 11,734 14,054 9,019
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17 $1.00
Accumulation unit value at end of period $1.93 $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17
Number of accumulation units outstanding at end of
period (000 omitted) 2,042 2,330 8,001 12,125 7,826 7,742 4,979 2,159
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.14 $1.12 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.23 $1.14 $1.12 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,527 2,123 39,552 22,934 24,803 19,914 -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.54 $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 1,037 1,429 3,043 3,808 4,514 5,751 3,150 830
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.01 $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 258 361 910 3,801 2,883 38 38 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07 $1.00
Accumulation unit value at end of period $1.13 $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 430 548 702 933 906 1,023 1,088 697
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.11 $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 198 211 155 94 147 142 132 48
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00 $1.00
Accumulation unit value at end of period $1.04 $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00
Number of accumulation units outstanding at end of
period (000 omitted) 1,924 2,722 10,350 5,772 5,294 3,802 1,781 218
----------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03 $1.00
Accumulation unit value at end of period $1.22 $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 1,184 1,653 2,265 2,987 3,110 6,310 2,901 1,117
----------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.25 $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02
Number of accumulation units outstanding at end of
period (000 omitted) 48 48 48 100 112 67 71 72
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11 $1.00
Accumulation unit value at end of period $1.30 $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11
Number of accumulation units outstanding at end of
period (000 omitted) 10,938 14,844 26,124 44,134 42,111 45,962 19,309 6,485
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.57 $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21
Number of accumulation units outstanding at end of
period (000 omitted) 1,681 2,112 10,749 15,569 9,998 6,670 2,154 194
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
120 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10 $1.00
Accumulation unit value at end of period $1.04 $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 2,343 2,808 4,655 4,812 4,606 5,282 5,025 3,210
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.08 $0.91 $0.78 $1.37 $1.77 $1.50 $1.34 $1.00
Accumulation unit value at end of period $1.00 $1.08 $0.91 $0.78 $1.37 $1.77 $1.50 $1.34
Number of accumulation units outstanding at end of
period (000 omitted) 150 172 590 821 1,056 270 252 119
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12 $1.00
Accumulation unit value at end of period $1.35 $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12
Number of accumulation units outstanding at end of
period (000 omitted) 1,057 1,140 1,013 1,631 1,849 1,382 1,066 516
----------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.76 $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16
Number of accumulation units outstanding at end of
period (000 omitted) 3,114 4,186 21,774 22,313 26,747 18,800 7,744 2,656
----------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.39 $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19
Number of accumulation units outstanding at end of
period (000 omitted) 3,562 4,764 13,524 16,698 17,019 14,517 6,833 2,746
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06 $1.00
Accumulation unit value at end of period $0.88 $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06
Number of accumulation units outstanding at end of
period (000 omitted) 96 107 2,537 2,458 2,494 2,008 3 3
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares
changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.12 $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 9 9 17 70 73 19 19 12
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap
Growth Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.09 $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13
Number of accumulation units outstanding at end of
period (000 omitted) 13,815 18,929 34,501 43,308 39,815 41,096 23,606 8,260
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.26 $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 113 127 149 169 231 209 177 72
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07 $1.00
Accumulation unit value at end of period $1.32 $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 4,711 6,319 41,343 38,121 38,909 20,731 11,203 4,674
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.29 $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of accumulation units outstanding at end of
period (000 omitted) 89 24 25 61 71 75 59 31
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03 $1.00
Accumulation unit value at end of period $1.10 $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 23 44 56 84 144 142 109 57
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18 $1.00
Accumulation unit value at end of period $1.09 $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18
Number of accumulation units outstanding at end of
period (000 omitted) 69 84 147 179 192 4,666 76 17
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 242 2,128 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 37,081 45,459 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 3,605 2,840 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 37,774 34,075 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10 $1.00
Accumulation unit value at end of period $1.17 $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 8 8 -- 28 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 4,056 2,407 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 206,439 248,214 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,555 774 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 118,725 154,365 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 2,095 1,480 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 34,697 43,744 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.35 $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 4,585 6,248 9,697 11,631 12,674 11,121 10,647 4,456
----------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of period $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15 $1.00
Accumulation unit value at end of period $1.30 $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 2,605 3,655 12,068 12,713 11,339 6,970 5,234 2,030
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.13 $1.02 $0.90 $1.29 $1.22 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.18 $1.13 $1.02 $0.90 $1.29 $1.22 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.31 $1.14 $1.01 $1.76 $1.57 $1.30 $1.14 $1.00
Accumulation unit value at end of period $1.12 $1.31 $1.14 $1.01 $1.76 $1.57 $1.30 $1.14
Number of accumulation units outstanding at end of
period (000 omitted) 1,513 1,967 2,695 2,459 2,309 2,433 1,444 79
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.04 $0.93 $0.82 $1.31 $1.30 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.00 $1.04 $0.93 $0.82 $1.31 $1.30 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 663 931 3,042 1,054 1,198 1,229 1,587 971
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
122 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.42 $1.21 $0.86 $1.21 $1.10 $1.06 $1.04 $1.00
Accumulation unit value at end of period $1.32 $1.42 $1.21 $0.86 $1.21 $1.10 $1.06 $1.04
Number of accumulation units outstanding at end of
period (000 omitted) 3,649 5,238 3,799 4,435 5,394 5,524 3,401 1,048
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of period $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 281 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.59 $1.28 $0.85 $1.48 $1.33 $1.10 $1.06 $1.00
Accumulation unit value at end of period $1.49 $1.59 $1.28 $0.85 $1.48 $1.33 $1.10 $1.06
Number of accumulation units outstanding at end of
period (000 omitted) 593 844 2 2 1 1 1 1
----------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.21 $1.10 $1.09 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.35 $1.27 $1.21 $1.10 $1.09 $1.05 $1.03 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 4,101 5,623 8,408 8,640 12,231 8,454 2,629 789
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS 123
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
124 WELLS FARGO ADVANTAGE SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45302 M (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products Trust
(FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Invesco Van Kampen Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Investment Trust
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley UIF
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contract described in this prospectus. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and withdrawing money from the contract we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contract described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contract and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contract described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contract and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION............. 15
FINANCIAL STATEMENTS........................ 15
THE VARIABLE ACCOUNT AND THE FUNDS.......... 15
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 25
THE FIXED ACCOUNT........................... 27
BUYING YOUR CONTRACT........................ 28
CHARGES..................................... 31
VALUING YOUR INVESTMENT..................... 37
MAKING THE MOST OF YOUR CONTRACT............ 39
WITHDRAWALS................................. 47
TSA -- SPECIAL PROVISIONS................... 48
CHANGING OWNERSHIP.......................... 48
BENEFITS IN CASE OF DEATH................... 49
OPTIONAL BENEFITS........................... 52
THE ANNUITY PAYOUT PERIOD................... 75
TAXES....................................... 77
VOTING RIGHTS............................... 81
SUBSTITUTION OF INVESTMENTS................. 81
ABOUT THE SERVICE PROVIDERS................. 82
ADDITIONAL INFORMATION...................... 83
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 85
APPENDIX B: EXAMPLE --
INCOME ASSURER BENEFIT RIDER FEE.......... 87
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES... 88
APPENDIX D: EXAMPLE -- DEATH BENEFITS....... 93
APPENDIX E: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 96
APPENDIX F: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER..................................... 97
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER -- ADDITIONAL RMD DISCLOSURE... 99
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT --
RIDER B DISCLOSURE........................ 101
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT
RIDER -- ADDITIONAL RMD DISCLOSURE........ 106
APPENDIX J: EXAMPLE --
GUARANTOR WITHDRAWAL BENEFIT RIDER........ 107
APPENDIX K: EXAMPLE --
INCOME ASSURER BENEFIT RIDERS............. 109
APPENDIX L: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 114
APPENDIX M: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 115
APPENDIX N: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 117
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION....... 130
--------------------------------------------------------------------------------
2 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the one-year fixed account and
the DCA fixed account. Amounts you allocate to the fixed account earn interest
rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We base
the amount of the credit on net payments (total payments less total
withdrawals). We apply the credit to your contract based on your current
payment.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account, the DCA
fixed account (if part of your contract) and/or subaccounts of the variable
account under the contract. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. Beginning at a specified time in the future called the retirement
date, the contract provides lifetime or other forms of payout of your contract
value (less any applicable premium tax).
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
the DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain in
this account. (See "The Fixed Account -- DCA Fixed Account")
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. Transfers into the DCA
fixed account are not permitted. We reserve the right to further limit transfers
to the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 5
OPTIONAL BENEFITS: This contract offers features that are available for
additional charges if you meet certain criteria. Optional benefits may require
the use of a Portfolio Navigator program (PN program) investment option which
may limit transfers and allocations; may limit the timing, amount and allocation
of purchase payments; and may limit the amount of partial withdrawals that can
be taken under the optional benefit during a contract year. (See "Optional
Benefits").
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
and the DCA fixed account are not available during the payout period. (See "The
Annuity Payout Period").
TAXES: Generally, income earned on your contract value grows tax-deferred until
you make withdrawals or begin to receive payouts. (Under certain circumstances,
IRS penalty taxes may apply.) The tax treatment of qualified and non-qualified
annuities differs. Even if you direct payouts to someone else, you will be taxed
on the income if you are the owner. (See "Taxes").
--------------------------------------------------------------------------------
6 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE*
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
* The five-year withdrawal charge schedule may not be available in all states.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR CONTRACTS WITH APPLICATIONS SIGNED ON
OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
Return of Purchase Payment (ROP) Death
Benefit 0.90% 0.15% 1.05%
Maximum Anniversary Value (MAV) Death
Benefit 1.10 0.15 1.25
5% Accumulation Death Benefit 1.25 0.15 1.40
Enhanced Death Benefit 1.30 0.15 1.45
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.05 0.15 1.20
MAV Death Benefit 1.25 0.15 1.40
5% Accumulation Death Benefit 1.40 0.15 1.55
Enhanced Death Benefit 1.45 0.15 1.60
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 7
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL OTHER CONTRACTS
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP Death Benefit 1.00% 0.15% 1.15%
MAV Death Benefit 1.20 0.15 1.35
5% Accumulation Death Benefit 1.35 0.15 1.50
Enhanced Death Benefit 1.40 0.15 1.55
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.15 0.15 1.30
MAV Death Benefit 1.35 0.15 1.50
5% Accumulation Death Benefit 1.50 0.15 1.65
Enhanced Death Benefit 1.55 0.15 1.70
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP Death Benefit 1.20% 0.15% 1.35%
MAV Death Benefit 1.40 0.15 1.55
5% Accumulation Death Benefit 1.55 0.15 1.70
Enhanced Death Benefit 1.60 0.15 1.75
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.35 0.15 1.50
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full withdrawal.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. Each optional living benefit requires participation
in the PN program. The fees apply only if you have selected one of these
benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
--------------------------------------------------------------------------------
8 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT MAXIMUM: 1.75% CURRENT: 0.60%(1)
BASE RIDER FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% MAXIMUM: 2.00% CURRENT: 0.65%(1)
ACCUMULATION BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit -- Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 9
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP International, Class II 1.31 0.25 0.02 -- 1.58
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50 0.25 0.31 -- 1.06(4)
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75 0.25 0.11 -- 1.11
Service Shares
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
--------------------------------------------------------------------------------
10 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75% 0.25% 0.05% --% 1.05%
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 11
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Variable Portfolio - Moderate Portfolio (Class 2) --% 0.25% 0.02% 0.71% 0.98%
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3), 0.925% for Columbia Variable Portfolio - Select Large-Cap Value
Fund (Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value
Fund (Class 2).
(2)Other expenses have been restated to reflect contractual changes to certain
other fees.
(3)Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4)Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5)The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6)Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7)Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(9)The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(11)MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12)The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio,
--------------------------------------------------------------------------------
12 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
Class II Shares, 1.15% for Morgan Stanley UIF Mid Cap Growth Portfolio,
Class II Shares and 1.35% for Morgan Stanley UIF U.S. Real Estate
Portfolio, Class II Shares. The fee waivers and/or expense reimbursements
will continue for at least one year or until such time as the Fund's Board
of Directors acts to discontinue all or a portion of such waivers and/or
reimbursements when it deems that such action is appropriate.
(13)The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15)PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 13
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds. They assume that you select the MAV Death Benefit, the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on these assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,325 $2,468 $3,641 $6,388 $605 $1,837 $3,098 $6,388
Five-year
withdrawal charge
schedule 1,356 2,466 3,418 6,628 636 1,924 3,237 6,628
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,310 $2,424 $3,570 $6,266 $590 $1,793 $3,027 $6,266
Five-year
withdrawal charge
schedule 1,341 2,422 3,349 6,509 621 1,881 3,168 6,509
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $957 $1,346 $1,723 $2,387 $214 $658 $1,123 $2,387
Five-year
withdrawal charge
schedule 985 1,335 1,479 2,705 245 751 1,279 2,705
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $943 $1,302 $1,644 $2,225 $199 $611 $1,044 $2,225
Five-year
withdrawal charge
schedule 971 1,291 1,401 2,547 230 704 1,201 2,547
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
14 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix N.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 15
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making withdrawal from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
16 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 17
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
AllianceBernstein Seeks to maximize total return consistent AllianceBernstein L.P.
VPS Balanced with AllianceBernstein's determination of
Wealth Strategy reasonable risk.
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Global
Thematic Growth
Portfolio (Class
B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS Growth and
Income Portfolio
(Class B)
----------------------------------------------------------------------------------------
AllianceBernstein Seeks long-term growth of capital. AllianceBernstein L.P.
VPS International
Value Portfolio
(Class B)
----------------------------------------------------------------------------------------
American Century Seeks long-term total return using a American Century
VP Inflation strategy that seeks to protect against U.S. Investment Management,
Protection, Class inflation. Inc.
II
----------------------------------------------------------------------------------------
American Century Seeks capital growth. American Century
VP International, Investment Management,
Class II Inc.
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Mid Cap Value, secondary objective. Investment Management,
Class II Inc.
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. American Century
VP Ultra(R), Investment Management,
Class II Inc.
----------------------------------------------------------------------------------------
American Century Seeks long-term capital growth. Income is a American Century
VP Value, Class secondary objective. Investment Management,
II Inc.
----------------------------------------------------------------------------------------
Columbia Variable Seeks maximum current income consistent Columbia Management
Portfolio - Cash with liquidity and stability of principal. Investment Advisers, LLC
Management Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income while Columbia Management
Portfolio - Dive- attempting to conserve the value of the Investment Advisers, LLC
rsified Bond Fund investment for the longest period of time.
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and, as Columbia Management
Portfolio - Dive- a secondary goal, steady growth of capital. Investment Advisers, LLC
rsified Equity
Income Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - Dyna- Investment Advisers, LLC
mic Equity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Emer- Investment Advisers,
ging Markets LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Non-diversified fund that seeks total Columbia Management
Portfolio - Glob- return that exceeds the rate of inflation Investment Advisers, LLC
al Inflation over the long term.
Protected
Securities Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks total return, consisting of a high Columbia Management
Portfolio - High level of income and capital appreciation. Investment Advisers, LLC
Income Fund
(Class 2)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high current income, with capital Columbia Management
Portfolio - High growth as a secondary objective. Investment Advisers, LLC
Yield Bond Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high total return through current Columbia Management
Portfolio - Inco- income and capital appreciation. Investment Advisers, LLC
me Opportunities
Fund (Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers,
ternational LLC, adviser;
Opportunity Fund Threadneedle
(Class 3) International Limited,
an indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital growth. Columbia Management
Portfolio - Large Investment Advisers, LLC
Cap Growth Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Mars- Investment Advisers,
ico Growth Fund LLC, adviser; Marsico
(Class 1) Capital Management, LLC,
subadviser.
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Mars- Investment Advisers,
ico International LLC, adviser; Marsico
Opportunities Capital Management, LLC,
Fund (Class 2) subadviser.
----------------------------------------------------------------------------------------
Columbia Variable Seeks growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Growth
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Mid Investment Advisers, LLC
Cap Value
Opportunity Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - S&P Investment Advisers, LLC
500 Index Fund
(Class 3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Sele- Investment Advisers, LLC
ct Large-Cap
Value Fund (Class
3)
----------------------------------------------------------------------------------------
Columbia Variable Seeks high level of current income and Columbia Management
Portfolio - Short safety of principal consistent with Investment Advisers, LLC
Duration U.S. investment in U.S. government and
Government Fund government agency securities.
(Class 3)
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 19
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Columbia Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Small Investment Advisers, LLC
Cap Value Fund
(Class 2)
----------------------------------------------------------------------------------------
Credit Suisse Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
----------------------------------------------------------------------------------------
Dreyfus Seeks investment results that are greater The Dreyfus Corporation
Investment than the total return performance of
Portfolios MidCap publicly traded common stocks of medium-
Stock Portfolio, size domestic companies in the aggregate,
Service Shares as represented by the Standard & Poor's
MidCap 400 Index.
----------------------------------------------------------------------------------------
Dreyfus Seeks capital appreciation. The Dreyfus Corporation
Investment
Portfolios
Technology Growth
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth consistent The Dreyfus Corporation,
Investment Fund with the preservation of capital. adviser; Fayez Sarofim &
Appreciation Co., sub-adviser.
Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Management Limited, sub-
Equity Portfolio, adviser
Service Shares
----------------------------------------------------------------------------------------
Dreyfus Variable Seeks long-term capital growth. The Dreyfus Corporation
Investment Fund
International
Value Portfolio,
Service Shares
----------------------------------------------------------------------------------------
Eaton Vance VT Seeks high level of current income. Eaton Vance Management
Floating-Rate
Income Fund
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term capital appreciation. Fidelity Management &
Contrafund(R) Normally invests primarily in common Research Company (FMR)
Portfolio Service stocks. Invests in securities of companies is the fund's manager.
Class 2 whose value it believes is not fully FMR Co., Inc. (FMRC) and
recognized by the public. Invests in either other investment
"growth" stocks or "value" stocks or both. advisers serve as sub-
The fund invests in domestic and foreign advisers for the fund.
issuers.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks to achieve capital appreciation. Fidelity Management &
Growth Portfolio Normally invests primarily in common Research Company (FMR)
Service Class 2 stocks. Invests in companies that it is the fund's manager.
believes have above-average growth FMR Co., Inc. (FMRC) and
potential (stocks of these companies are other investment
often called "growth" stocks). The Fund advisers serve as sub-
invests in domestic and foreign issuers. advisers for the fund.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks as high level of current income as is Fidelity Management &
Investment Grade consistent with the preservation of Research Company (FMR)
Bond Portfolio capital. Normally invests at least 80% of is the fund's manager.
Service Class 2 assets in investment-grade debt securities Fidelity Investments
(those of medium and high quality) of all Money Management, Inc.
types and repurchase agreements for those (FIMM) and other
securities. investment advisers
serve as sub-advisers
for the fund.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Mid Cap Portfolio invests primarily in common stocks. Research Company (FMR)
Service Class 2 Normally invests at least 80% of assets in is the fund's manager.
securities of companies with medium market FMR Co., Inc. (FMRC) and
capitalizations. May invest in companies other investment
with smaller or larger market advisers serve as sub-
capitalizations. Invests in domestic and advisers for the fund.
foreign issuers. The Fund invests in either
"growth" or "value" common stocks or both.
----------------------------------------------------------------------------------------
Fidelity(R) VIP Seeks long-term growth of capital. Normally Fidelity Management &
Overseas invests primarily in common stocks Research Company (FMR)
Portfolio Service allocating investments across different is the fund's manager.
Class 2 countries and regions. Normally invests at FMR Co., Inc. (FMRC) and
least 80% of assets in non-U.S. securities. other investment
advisers serve as sub-
advisers for the fund.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks to maximize income while maintaining Franklin Advisers, Inc.
Income Securities prospects for capital appreciation. The
Fund - Class 2 fund normally invests in both equity and
debt securities.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital appreciation, with Franklin Advisory
Rising Dividends preservation of capital as an important Services, LLC
Securities consideration. The fund normally invests at
Fund - Class 2 least 80% of its net assets in investments
of companies that have paid rising
dividends.
----------------------------------------------------------------------------------------
FTVIPT Franklin Seeks long-term capital growth. The fund Franklin Advisers, Inc.
Small-Mid Cap normally invests at least 80% of its net
Growth Securities assets in investments of small
Fund - Class 2 capitalization and mid capitalization
companies.
----------------------------------------------------------------------------------------
FTVIPT Mutual Seeks capital appreciation, with income as Franklin Mutual
Shares Securities a secondary goal. The fund normally invests Advisers, LLC
Fund - Class 2 primarily in U.S. and foreign equity
securities that the manager believes are
undervalued.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks high current income, consistent with Franklin Advisers, Inc.
Global Bond preservation of capital, with capital
Securities appreciation as a secondary consideration.
Fund - Class 2 The fund normally invests at least 80% of
its net assets in bonds, which include debt
securities of any maturity, such as bonds,
notes, bills and debentures.
----------------------------------------------------------------------------------------
FTVIPT Templeton Seeks long-term capital growth. The fund Templeton Global
Growth Securities normally invests primarily in equity Advisors Limited
Fund - Class 2 securities of companies located anywhere in
the world, including those in the U.S. and
emerging markets.
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term capital appreciation. Goldman Sachs Asset
Mid Cap Value Management, L.P.
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Structured U.S. Management, L.P.
Equity
Fund - Instituti-
onal Shares
----------------------------------------------------------------------------------------
Invesco V.I. Seeks long-term growth of capital. Invesco Advisers, Inc.
Global Health
Care Fund, Series
II Shares
----------------------------------------------------------------------------------------
Invesco V.I. Seeks long-term growth of capital. Invesco Advisers, Inc.
International
Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 21
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Invesco V.I. Mid Seeks long-term growth of capital. Invesco Advisers, Inc.
Cap Core Equity
Fund, Series II
Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I.
American
Franchise Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth and income through Invesco Advisers, Inc.
Kampen V.I. investments in equity securities, including
Comstock Fund, common stocks, preferred stocks and
Series II Shares securities convertible into common and
preferred stocks.
----------------------------------------------------------------------------------------
Invesco Van Seeks capital growth. Invesco Advisers, Inc.
Kampen V.I. Mid
Cap Growth Fund,
Series II Shares
----------------------------------------------------------------------------------------
Invesco Van Seeks long-term growth of capital. Invesco Advisers, Inc.
Kampen V.I. Value
Opportunities
Fund, Series II
Shares
(previously
Invesco
V.I. - Basic
Value Fund,
Series II Shares)
----------------------------------------------------------------------------------------
Janus Aspen Seeks long-term growth of capital. Janus Capital Management
Series Janus LLC
Portfolio:
Service Shares
----------------------------------------------------------------------------------------
Legg Mason Seeks long-term growth of capital. Legg Mason Partners Fund
ClearBridge Advisor, LLC, adviser;
Variable Small ClearBridge Advisors,
Cap Growth LLC, sub-adviser.
Portfolio - Class
I
----------------------------------------------------------------------------------------
MFS(R) Investors Seeks capital appreciation. MFS(R) Investment
Growth Stock Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) New Seeks capital appreciation. MFS(R) Investment
Discovery Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Total Seeks total return. MFS(R) Investment
Return Management
Series - Service
Class
----------------------------------------------------------------------------------------
MFS(R) Utilities Seeks total return. MFS(R) Investment
Series - Service Management
Class
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide current income and capital Morgan Stanley
UIF Global Real appreciation. Investment Management
Estate Portfolio, Inc., adviser; Morgan
Class II Shares Stanley Investment
Management Limited and
Morgan Stanley
Investment Management
Company, subadvisers.
----------------------------------------------------------------------------------------
Morgan Stanley Seeks long-term capital growth by investing Morgan Stanley
UIF Mid Cap primarily in common stocks and other equity Investment Management
Growth Portfolio, securities. Inc.
Class II Shares
----------------------------------------------------------------------------------------
Morgan Stanley Seeks to provide above average current Morgan Stanley
UIF U.S. Real income and long-term capital appreciation Investment Management
Estate Portfolio, by investing primarily in equity securities Inc.
Class II Shares of companies in the U.S. real estate
industry, including real estate investment
trusts.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Oppenheimer Seeks capital appreciation by investing in OppenheimerFunds, Inc.
Capital securities of well-known, established
Appreciation companies.
Fund/VA, Service
Shares
----------------------------------------------------------------------------------------
Oppenheimer Seeks long-term capital appreciation by OppenheimerFunds, Inc.
Global Securities investing a substantial portion of its
Fund/VA, Service assets in securities of foreign issuers,
Shares "growth-type" companies, cyclical
industries and special situations that are
considered to have appreciation
possibilities.
----------------------------------------------------------------------------------------
Oppenheimer Seeks a high level of current income OppenheimerFunds, Inc.
Global Strategic principally derived from interest on debt
Income Fund/VA, securities.
Service Shares
----------------------------------------------------------------------------------------
Oppenheimer Main Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- &
Mid-Cap
Fund(R)/VA,
Service Shares
----------------------------------------------------------------------------------------
PIMCO VIT All Seeks maximum real return consistent with Pacific Investment
Asset Portfolio, preservation of real capital and prudent Management Company LLC
Advisor Share investment management. (PIMCO)
Class
----------------------------------------------------------------------------------------
Putnam VT Global Seeks capital appreciation. Putnam Investment
Health Care Management, LLC,
Fund - Class IB adviser; Putnam Advisory
Shares Company, LLC, sub-
adviser.
----------------------------------------------------------------------------------------
Putnam VT Seeks capital appreciation. Putnam Investment
International Management, LLC,
Equity adviser; Putnam Advisory
Fund - Class IB Company, LLC, sub-
Shares adviser.
----------------------------------------------------------------------------------------
Putnam VT Multi- Seeks long-term capital appreciation. Putnam Investment
Cap Growth Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Putnam VT Small Seeks capital appreciation. Putnam Investment
Cap Value Management, LLC
Fund - Class IB
Shares
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 2) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Aggr- consistent with an aggressive level of Investment Advisers, LLC
essive Portfolio risk. This is a "fund of funds" and seeks
(Class 4) to achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in underlying funds that
invest in equity securities and also
invests a small amount in underlying funds
that invest in fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 23
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
2) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Cons- consistent with a conservative level of Investment Advisers, LLC
ervative risk. This is a "fund of funds" and seeks
Portfolio (Class to achieve its objective by investing in a
4) combination of underlying funds. The fund
invests primarily in underlying funds that
invest in fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital growth. Columbia Management
Portfolio - Davis Investment Advisers,
New York Venture LLC, adviser; Davis
Fund (Class 3) Selected Advisers, L.P.,
subadviser.
----------------------------------------------------------------------------------------
Variable Seeks long-term growth of capital. Columbia Management
Portfolio - Gold- Investment Advisers,
man Sachs Mid Cap LLC, adviser; Goldman
Value Fund (Class Sachs Asset Management,
3) L.P., subadviser.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 2) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderate level of risk. Investment Advisers, LLC
rate Portfolio This is a "fund of funds" and seeks to
(Class 4) achieve its objective by investing in a
combination of underlying funds. The fund
invests primarily in a balance of
underlying funds that invest in fixed
income securities and underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
2) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately aggressive Investment Advisers, LLC
rately Aggressive level of risk. This is a "fund of funds"
Portfolio (Class and seeks to achieve its objective by
4) investing in a combination of underlying
funds. The fund invests primarily in
underlying funds that invest in equity
securities and also invests a moderate
amount in underlying funds that invest in
fixed income securities.
----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
----------------------------------------------------------------------------------------
INVESTING IN INVESTMENT OBJECTIVE AND POLICIES INVESTMENT ADVISER
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
2) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks high level of total return that is Columbia Management
Portfolio - Mode- consistent with a moderately conservative Investment Advisers, LLC
rately level of risk. This is a "fund of funds"
Conservative and seeks to achieve its objective by
Portfolio (Class investing in a combination of underlying
4) funds. The fund invests primarily in
underlying funds that invest in fixed
income securities and also invests a
moderate amount in underlying funds that
invest in equity securities.
----------------------------------------------------------------------------------------
Variable Seeks long-term capital appreciation. Columbia Management
Portfolio - Part- Investment Advisers,
ners Small Cap LLC, adviser; Barrow,
Value Fund (Class Hanley, Mewhinney &
3) Strauss, Inc., Denver
Investment Advisors LLC,
Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and
Turner Investment
Partners, Inc.,
subadvisers.
----------------------------------------------------------------------------------------
Wanger Seeks long-term capital appreciation. Columbia Wanger Asset
International Management, LLC
----------------------------------------------------------------------------------------
Wanger USA Seeks long-term capital appreciation. Columbia Wanger Asset
Management, LLC
----------------------------------------------------------------------------------------
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The required
minimum investment in each GPA is $1,000. These accounts are not offered after
annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns earned on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. Interest rates offered may vary by state,
but will not be lower than state law allows. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 25
segregated or insulated from the claims of our creditors. The financial
statements contained in the SAI include a further discussion of the risks
inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or the one-year fixed account or withdraw the
contract value (subject to applicable withdrawal provisions). If we do not
receive any instructions at the end of your guarantee period, our current
practice is to automatically transfer the contract value into the shortest GPA
term offered in your state.
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under the Guarantor Withdrawal Benefits for Life rider
or the Guarantor Withdrawal Benefit rider, or you elect an annuity payout plan
while you have contract value invested in a GPA. We will refer to these
transactions as "early withdrawals." The application of an MVA may result in
either a gain or loss of principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; and
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA
--------------------------------------------------------------------------------
26 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
compares to the interest rate of a new GPA for the same number of years as the
guarantee period remaining on your GPA. This is summarized in the following
table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT
Amounts allocated to the fixed account become part of our general account. The
fixed account includes the one-year fixed account and the DCA fixed account. We
credit interest on amounts you allocate to the fixed account at rates we
determine from time to time in our discretion. These rates will be based on
various factors including, but not limited to, the interest rate environment,
returns we earn on our general account investments, the rates currently in
effect for new and existing RiverSource Life annuities, product design,
competition, and RiverSource Life's revenues and expenses. The guaranteed
minimum interest rate on amounts invested in the fixed account may vary by state
but will not be lower than state law allows. We back the principal and interest
guarantees relating to the fixed account. These guarantees are based on the
continued claims-paying ability of RiverSource Life. You should be aware that
our general account is exposed to the risks normally associated with a portfolio
of fixed-income securities, including interest rate, option, liquidity and
credit risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account. The value of the one-
year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Making the Most of
Your Contract -- Transfer policies").
DCA FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The value of the DCA fixed account increases when we credit interest to
the DCA fixed account, and decreases when we make monthly transfers from the DCA
fixed account to your investment allocations. We credit interest only on the
declining balance of the DCA fixed account; we do not credit interest on amounts
that have been transferred from the DCA fixed account. We credit and compound
interest daily based on a 365-day year (366 in a leap year) so as to produce the
annual effective rate which we declare. Generally, we will credit the DCA fixed
account with interest at the same annual effective rate we apply to the one-year
fixed account on the date we receive your purchase payment, regardless of the
length of the term you select. From time to time, we may credit interest to the
DCA fixed account at promotional rates that are higher than those we credit to
the one-year fixed account. We reserve the right to declare different annual
effective rates:
for the DCA fixed account and the one-year fixed account;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 27
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account you instruct us to transfer to the one-
year fixed account;
for amounts in the DCA fixed account you instruct us to transfer to the GPAs;
for amounts in the DCA fixed account you instruct us to transfer to the
subaccounts.
The interest rates in effect for the DCA fixed account when we receive your
purchase payment are guaranteed for the length of the term. When you allocate an
additional purchase payment to an existing DCA fixed account term, the interest
rates applicable to that purchase payment will be the rates in effect for the
DCA fixed account of the same term on the date we receive your purchase payment.
For DCA fixed accounts with an initial term (or, in the case of an additional
purchase payment, a remaining term) of less than twelve months, the net
effective interest rates we credit to the DCA fixed account balance will be less
than the declared annual effective rates.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may
--------------------------------------------------------------------------------
28 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
buy a qualified or nonqualified annuity. Generally, you can own a nonqualified
annuity in joint tenancy with rights of survivorship only in spousal situations.
You cannot own a qualified annuity in joint tenancy. You can become an owner if
you are 85 or younger. (The age limit may be younger for qualified annuities in
some states.)
When you applied, you could have selected (if available in your state):
GPAs, the one-year fixed account, the DCA fixed account (if part of your
contract) and/or subaccounts in which you want to invest;
how you want to make purchase payments;
the length of the withdrawal charge schedule (5 or 7 years from our receipt of
each purchase payment);
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit;
- MAV Death Benefit;
- 5% Accumulation Death Benefit(2); or
- Enhanced Death Benefit(2).
In addition, you could have also selected (if available in your state):
ANY ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PN
PROGRAM):
Accumulation Protector Benefit rider
Guarantor Withdrawal Benefit for Life rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature.
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account, the DCA fixed account (if part of your contract) and/or the
subaccounts of the variable account in even 1% increments subject to the $1,000
required minimum investment for the GPAs. The amount of any purchase payment
allocated to the one-year fixed account in total cannot exceed 30% of the
purchase payment. More than 30% of a purchase payment may be so allocated if you
establish an automated dollar-cost averaging arrangement with respect to the
purchase payment according to procedures currently in effect. We reserve the
right to further limit purchase payment allocations to the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 29
the date specified below. Your selected date can align with your actual
retirement from a job, or it can be a different future date, depending on your
needs and goals and on certain restrictions. You also can change the retirement
date, provided you send us written instructions at least 30 days before annuity
payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 90th(1) birthday or the tenth contract
anniversary, if purchased after age 80(1), or such other date as agreed upon
by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a
date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the retirement date must be no later
than the annuitant's 85th birthday or the tenth contract anniversary, if
purchased after age 75. Ask your investment professional which retirement
date applies to you.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the Code's limits on annual contributions also apply. Additional
purchase payments are restricted during the waiting period after the first
180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider, Enhanced Guarantor
Withdrawal Benefit rider, or Guarantor Withdrawal Benefit for Life rider,
subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
--------------------------------------------------------------------------------
30 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
Purchase payment credits are not available for:
contracts with a five-year withdrawal charge schedule.
contracts with a seven-year withdrawal charge schedule with applications
signed on or after May 1, 2006, in most states. Ask your investment
professional whether purchase payment credits are available under your
contract.
All other contracts will receive a purchase payment credit on any purchase
payment made to the contract. We apply a credit to your contract of 1% of your
current purchase payment. We apply this credit immediately. We allocate the
credit to the GPAs, the one-year fixed account and the subaccounts in the same
proportions as your purchase payment.
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit payment under this contract; or (2) a
request for withdrawal charge waiver due to "Contingent events" (see
"Charges -- Contingent events"), we will assess a charge, similar to a
withdrawal charge, equal to the amount of the purchase payment credits. The
amount we pay to you under these circumstances will always equal or exceed your
withdrawal value. The amount returned to you under the free look provision also
will not include any credits applied to your contract.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available through revenue from higher withdrawal charges and
contract administrative charges than would otherwise be charged. In general, we
do not profit from the higher charges assessed to cover the cost of the purchase
payment credit. We use all the revenue from these higher charges to pay for the
cost of the credits. However, we could profit from the higher charges if market
appreciation is higher than expected or if contract owners hold their contracts
for longer than expected.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 31
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The mortality and expense risk fee you pay is based on the death benefit
guarantee you select, whether the contract is a qualified annuity or a
nonqualified annuity and the withdrawal charge schedule that applies to your
contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR
CONTRACTS WITH APPLICATIONS SIGNED
ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR
STATE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP Death Benefit 0.90% 1.05%
MAV Death Benefit 1.10 1.25
5% Accumulation Death Benefit 1.25 1.40
Enhanced Death Benefit 1.30 1.45
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL
OTHER CONTRACTS
ROP Death Benefit 1.00% 1.15%
MAV Death Benefit 1.20 1.35
5% Accumulation Death Benefit 1.35 1.50
Enhanced Death Benefit 1.40 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP Death Benefit 1.20% 1.35%
MAV Death Benefit 1.40 1.55
5% Accumulation Death Benefit 1.55 1.70
Enhanced Death Benefit 1.60 1.75
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value before annuity payouts begin,
we may deduct a withdrawal charge. As described below, a withdrawal charge
applies to each purchase payment you make. The withdrawal charge lasts for 7
years or
--------------------------------------------------------------------------------
32 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
5 years from our receipt of each purchase payment, depending on which withdrawal
charge schedule you select when you purchase the contract (see "Expense
Summary").
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract includes the Guarantor Withdrawal Benefit for Life rider
or the Guarantor Withdrawal Benefit rider:
CONTRACTS WITHOUT GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER OR THE GUARANTOR
WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and purchase payment credit to be
the prior contract anniversary's contract value during the first contract
year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal
charge schedule attaches to that purchase payment. The withdrawal charge
percentage for each purchase payment declines according to the withdrawal charge
schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 5-
YEAR AND 7-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select the 7-Year withdrawal charge
schedule, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
3%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a withdrawal charge as to that payment.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix C.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 33
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the Guarantor Withdrawal Benefit for Life rider, the greater of
your contract's Remaining Benefit Payment or Remaining Annual Lifetime Payment
to the extent it exceeds the greater of contract earnings or 10% of the
contract value on the prior contract anniversary;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge.)
withdrawals made as a result of one of the "Contingent events"* described
below to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct a charge of 0.55% of the greater of your contract value or the minimum
contract accumulation value on your contract anniversary for this optional
benefit only if you select it. We deduct the charge from the contract value on
the contract anniversary. We prorate this charge among the GPAs, the one-year
fixed account and the subaccounts in the same proportion as your interest in
each bears to your total contract value. We will modify this prorated approach
to comply with state regulations where necessary.
--------------------------------------------------------------------------------
34 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each investment
option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this fee among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, the contract value reduces to zero or annuity payouts begin. If the
contract is terminated for any reason or when annuity payouts begin, we will
deduct the charge from the proceeds payable adjusted for the number of calendar
days coverage was in place since we last deducted the fee. If the RBA goes to
zero but the contract value has not been depleted, you will continue to be
charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit for Life rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE
THIS FEE INFORMATION APPLIES TO BOTH RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER
B (SEE APPENDIX H) UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account,
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 35
and the subaccounts in the same proportion as your interest in each bears to
your total contract value. We will modify this prorated approach to comply with
state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the charge that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or
when annuity payouts begin, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum charges shown above. We cannot change the Income Assurer
Benefit charge after the rider effective date, unless you change your PN program
investment option after we have exercised our rights to increase the fee and/or
charge a separate fee for each PN program investment option. If you choose to
change your PN program investment option after we have exercised our rights to
increase the rider fee, you will pay the fee that is in effect on the valuation
date we receive your written request to change your PN program investment
option. On the next contract anniversary, we will calculate an average rider
fee, for the preceding contract year only, that reflects the various different
charges that were in effect that year, adjusted for the number of calendar days
each fee was in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix K.
--------------------------------------------------------------------------------
36 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT AND THE DCA FIXED ACCOUNT.
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
the sum of your purchase payments and any purchase payment credits allocated
to the one-year fixed account and the DCA fixed account (if included), and
transfer amounts to the one-year fixed account (including any positive or
negative MVA on amounts transferred from the GPAs to the one-year fixed
account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 37
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
38 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or one-year GPA to one or more subaccounts. Automated transfers are not
available for GPA terms of two or more years. You can also obtain the benefits
of dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the DCA fixed account. See the "DCA Fixed
Account" and "Portfolio Navigator Program" sections in this prospectus for
details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below).
As long as you are not participating in a PN program, asset rebalancing is
available for use with the DCA fixed account (see "DCA Fixed Account") only if
your subaccount allocation for asset rebalancing is exactly the same as your
subaccount
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 39
allocation for transfers from the DCA fixed account. If you change your
subaccount allocations under the asset rebalancing program or the DCA fixed
account, we will automatically change the subaccount allocations so they match.
If you do not wish to have the subaccount allocation be the same for the asset
rebalancing program and the DCA fixed account, you must terminate the asset
rebalancing program or the DCA fixed account, as you may choose.
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program called Portfolio Navigator. You could elect to participate in
the asset allocation program, and there is no additional charge. If you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you are required to participate
in the PN program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent various asset classes. By spreading your contract value among
these various asset classes, you may be able to reduce the volatility in your
contract value, but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Currently, there are five model portfolios ranging from conservative to
aggressive. You may not use more than one model portfolio at a time. You are
allowed to request a change to another model portfolio twice per contract year.
Each model portfolio specifies allocation percentages to each of the subaccounts
and any GPAs and/or the one-year fixed account that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs and/or one-year fixed
account (if included) according to the allocation percentages stated for the
specific model portfolio you have selected. You also authorize us to
automatically rebalance your contract value quarterly beginning three months
after the effective date of your contract in order to maintain alignment with
the allocation percentages specified in the model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account (if included) that make up the model portfolio you selected
and the allocation percentages to those subaccounts, any GPAs and/or the one-
year fixed account (if included) will not change unless we adjust the
composition of the model portfolio to reflect the liquidation, substitution or
merger of an underlying fund, a change of investment objective by an underlying
fund or when an underlying fund stops selling its shares to the variable
account. We reserve the right to change the terms and conditions of the asset
allocation program upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
40 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
REQUIRED USE OF ASSET ALLOCATION PROGRAM WITH ACCUMULATION PROTECTOR BENEFIT
RIDER, GUARANTOR WITHDRAWAL BENEFIT RIDER OR INCOME ASSURER BENEFIT RIDER
If you are required to participate in the asset allocation program because you
purchased an optional Accumulation Protector Benefit rider, Guarantor Withdrawal
Benefit rider or Income Assurer Benefit rider, you may not discontinue your
participation in the asset allocation program unless permitted by the terms of
the rider as summarized below:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the model
portfolios. The Accumulation Protector Benefit rider automatically ends at the
end of the waiting period as does the requirement that you participate in the
asset allocation program. At all other times, if you do not want to
participate in any of the model portfolios, you must terminate your contract
by requesting a full withdrawal. Withdrawal charges and tax penalties may
apply. THEREFORE, YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE MODEL
PORTFOLIOS UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT RIDER: Because the Guarantor Withdrawal Benefit
rider requires that your contract value be invested in one of the model
portfolios for the life of the contract, and you cannot terminate the
Guarantor Withdrawal Benefit rider once you have selected it, you must
terminate your contract by requesting a full withdrawal if you do not want to
participate in any of the model portfolios. Withdrawal charges and tax
penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN ONE OF THE
MODEL PORTFOLIOS FOR THE LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: You can terminate the Income Assurer Benefit
rider during a 30-day period after the first rider anniversary and at any time
after the expiration of the waiting period. At all other times, if you do not
want to participate in any of the model portfolios, you must terminate your
contract by requesting a full withdrawal. Withdrawal charges and tax penalties
may apply. As long as the Income Assurer Benefit rider is in effect, your
contract value must be invested in one of the model portfolios. THEREFORE, YOU
SHOULD NOT SELECT THE INCOME ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN ONE OF THE MODEL PORTFOLIOS DURING THE PERIOD OF
TIME THE INCOME ASSURER BENEFIT RIDER IS IN EFFECT.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 41
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
--------------------------------------------------------------------------------
42 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The Guarantor Withdrawal Benefit
for Life rider requires that your contract value be invested in one of the PN
program investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the Guarantor Withdrawal Benefit for Life
rider once you have selected it, you must terminate your contract by
requesting a full withdrawal if you do not want to invest in any of the PN
program investment options. Withdrawal charges and tax penalties may apply.
THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT
NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or the DCA fixed account, to another subaccount before annuity
payouts begin. Certain restrictions apply to transfers involving the GPAs and
the one-year fixed account. You may not transfer contract value to the DCA fixed
account.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 43
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer. We reserve the right to further limit transfers to the one-year
fixed account if the interest rate we are then currently crediting to the one-
year fixed account is equal to the minimum interest rate stated in the
contract.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. We reserve the right to further limit
transfers to or from the one-year fixed account if the interest rate we are
then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values from the DCA fixed account to any of the investment options
available under your contract, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and
the GPA, as described above. (See "DCA Fixed Account.")
Once annuity payouts begin, you may not make transfers to or from the GPAs or
the fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest. When annuity payments
begin, you must transfer all contract value out of your GPAs and DCA accounts.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS
--------------------------------------------------------------------------------
44 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN WHICH THE SUBACCOUNTS INVEST HAVE
THEIR OWN MARKET TIMING POLICIES AND PROCEDURES. THE MARKET TIMING POLICIES OF
THE UNDERLYING FUNDS MAY BE MORE RESTRICTIVE THAN THE MARKET TIMING POLICIES AND
PROCEDURES WE APPLY TO TRANSFERS AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY
INCLUDE REDEMPTION FEES. WE RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING
POLICIES AND PROCEDURES AT ANY TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 45
FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING POLICIES AND PROCEDURES ADOPTED
BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS,
INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
GPAs, one-year fixed account or the subaccounts or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months.
Transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA Fixed Account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
--------------------------------------------------------------------------------
46 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
If you have a Guarantor Withdrawal Benefit for Life rider or Guarantor
Withdrawal Benefit rider, you may set up automated partial withdrawals up to
the benefit available for withdrawal under the rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). In addition, purchase payment credits
may be reversed. You cannot make withdrawals after annuity payouts begin except
under Annuity Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout
Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider and your
partial withdrawals in any contract year exceed the permitted withdrawal amount
under the terms of the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider, your benefits under the rider may be reduced
(see "Optional Benefits"). Any partial withdrawal request that exceeds the
amount allowed under the riders and impacts the guarantees provided, will not be
considered in good order until we receive a signed form Benefit Impact
Acknowledgement showing the projected effect of the withdrawal on the rider
benefits or a verbal acknowledgement that you understand and accept the impacts
that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts and GPAs,
the DCA fixed account, and/or the one-year fixed account in the same proportion
as your value in each account correlates to your total contract value, unless
requested otherwise. After executing a partial withdrawal, the value in each
subaccount, one-year fixed account or GPA must be either zero or at least $50.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 47
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding on us when we receive and record it. We will honor any
change of ownership request received in good order that we believe is authentic
and we will use reasonable procedures to confirm authenticity. If we follow
these procedures, we will not take any responsibility for the validity of the
change.
--------------------------------------------------------------------------------
48 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (see "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit rider and/or Benefit Protector Plus rider,
the rider will terminate upon transfer of ownership of the annuity contract. The
Accumulation Protector Benefit, the Guarantor Withdrawal Benefit for Life and
the Guarantor Withdrawal Benefit riders will continue upon transfer of ownership
of your annuity contract. For the Guarantor Withdrawal Benefit for Life riders,
any ownership change that impacts the guarantees provided will not be considered
in good order until we receive a signed Benefit Impact Acknowledgement form
showing the projected effect of the ownership change on the rider benefits or a
verbal acknowledgement that you understand and accept the impacts that have been
explained to you. Continuance of the Benefit Protector is optional. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit, less any purchase payment
credits subject to reversal, to your beneficiary upon the earlier of your death
or the annuitant's death. We will base the benefit paid on the death benefit
coverage you chose when you purchased the contract. If a contract has more than
one person as the owner, we will pay benefits upon the first to die of any owner
or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial withdrawals.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 49
minus adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial withdrawal or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer of partial withdrawal.
The amount of purchase payments and any purchase payment credits withdrawn or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
withdrawn or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for withdrawals. If you or the annuitant die before annuity
payouts begin and while this contract is in force, the death benefit will be the
greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the 5% variable account floor.
--------------------------------------------------------------------------------
50 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix D.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus
riders, if selected, will terminate. The Accumulation Protector Benefit, the
Guarantor Withdrawal Benefit for Life rider and the Guarantor Withdrawal Benefit
riders, if selected, will continue. Continuance of the Benefit Protector rider
is optional. (See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and the Benefit Protector Plus riders, if
selected, will terminate. The Accumulation Protector Benefit rider, the
Guarantor Withdrawal Benefit for Life and Guarantor Withdrawal Benefit riders,
if selected, will continue. Continuance of the Benefit Protector is optional.
(See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 51
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
OPTIONAL LIVING BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit riders
or any Income Assurer Benefit rider.
The Accumulation Protector Benefit rider may not be available in all states.
--------------------------------------------------------------------------------
52 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
PN program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those used to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step up option (described below) or your
surviving spouse exercises the spousal continuation elective step up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program investment option to one
that causes the Accumulation Protector Benefit rider charge to increase (see
"Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credit. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 53
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix E.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
your contract application was signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the retirement date, you
have the right to withdraw some or all of your contract value, less applicable
administrative, withdrawal and rider charges imposed under the contract at the
time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals").
Because your contract value will fluctuate depending on the performance of the
underlying funds in which the subaccounts invest, the contract itself does not
guarantee that you will be able to take a certain withdrawal
--------------------------------------------------------------------------------
54 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
amount each year before the annuity payouts begin, nor does it guarantee the
length of time over which such withdrawals can be made before the annuity
payouts begin.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and do not
intend to elect an annuity payout before the annuity payouts begin and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time will total
an amount equal to, at minimum, your purchase payments. Key terms associated
with the basic withdrawal benefit are "Guaranteed Benefit Payment (GBP),"
"Remaining Benefit Payment (RBP)," "Guaranteed Benefit Amount (GBA)," and
"Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year;
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below). Please note
that each of the two benefits has its own definition of the allowed annual
withdrawal amount. Therefore a partial withdrawal may be considered an excess
withdrawal for purposes of the lifetime withdrawal benefit only, the basic
withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 55
contract or may require you to elect the step up (see "Annual Step Up" heading
below). If you exercise the annual step up election, the spousal continuation
step up election (see "Spousal Continuation Step Up" heading below) or change
your Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below) unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect this rider. (See "Making the Most of Your Contract -- Asset
Allocation Program.") You may allocate qualifying purchase payments and any
purchase payment credits to the DCA fixed account, when available, and we will
make monthly transfers into the PN program investment option you have chosen.
Subject to state restrictions, we reserve the right to limit the number of
investment options from which you can select based on the dollar amount of
purchase payments you make.
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may incur a 10%
IRS early withdrawal penalty and may be considered taxable income. You should
consult your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. For additional
information, see Appendix G. Additionally, RMD rules follow the calendar year
which most likely does not coincide with your contract year and therefore may
limit when you can take your RMD and not be subject to excess withdrawal
processing. You should consult your tax advisor before you select this
optional rider if you have any questions about the use of this rider in your
tax situation.
--------------------------------------------------------------------------------
56 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit for Life rider may be of limited value to you. You should
consult your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or annuity payouts begin.
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal procedures described below for the GBA, RBA
and ALP.
For an example see Appendix F.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any withdrawal charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 57
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal that payment's GBA to (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
--------------------------------------------------------------------------------
58 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 59
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from this contract
and the RMD calculated separately for this contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of the RMD that
exceeds the RBP or RALP will not be subject to excess withdrawal processing
provided that the following conditions are met:
The RMD is the life expectancy RMD for this contract alone, and
The RMD amount is based on the requirements of section 401(a)(9), related Code
provisions and regulations thereunder that were in effect on the effective
date of this rider.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above.
See Appendix G for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
--------------------------------------------------------------------------------
60 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life(R) rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 61
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered
person reaches age 65, and then receive the ALP annually until the
latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered
person, or (ii) the RBA is reduced to zero. We will notify you of this
option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life(R) rider and the contract will
terminate under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
--------------------------------------------------------------------------------
62 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life(R) rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 63
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that you may
select for an additional annual charge if (1):
you purchase your contract on or after May 1, 2006(2) in those states where
the Guarantor Withdrawal Benefit for Life rider is not available(3);
you and the annuitant are 79 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
(2) The disclosures in this section also apply to contract owners with contract
applications signed on or after April 29, 2005. In previous disclosures, we
have referred to this rider as Rider A. We also offered an earlier version
of this rider, previously referred to as Rider B. See Appendix H for
information regarding Rider B which is no longer offered. See the rider
attached to your contract for the actual terms of the benefit you purchased.
(3) Ask your investment professional if this rider is available in your state.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
64 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the PN
program if you purchase a contract on or after May 1, 2006 with this rider
(see "Making the Most of Your Contract -- Portfolio Navigator Program"). If
you selected this Guarantor Withdrawal Benefit rider before May 1, 2006, you
must participate in the asset allocation program (see "Making the Most of Your
Contract -- Asset Allocation Program"), however, you may have elected to
participate in the PN program after May 1, 2006. The program and the asset
allocation program limit your choice of investments. This means you will not
be able to allocate contract value to all of the subaccounts, GPAs or the one-
year fixed account that are available under the contract to contract owners
who do not elect this rider. You may allocate qualifying purchase payments and
any purchase payment credits to the DCA fixed account, when available, and we
will make monthly transfers into the investment option you have chosen;
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2
may incur a 10% IRS early withdrawal penalty and may be considered taxable
income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change. See Appendix I for additional information. Please
note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing. You should
consult your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current purchase payment restrictions, please
see "Buying Your Contract -- Purchase Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 65
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups:
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary (see "Elective Step Up" above). The GBP is equal to 7% of the
GBA.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted. The GBP is the lesser of (a) 7% of the GBA; or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
--------------------------------------------------------------------------------
66 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
If you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
If you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
If you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 67
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
--------------------------------------------------------------------------------
68 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
INCOME ASSURER BENEFIT RIDERS
There are three optional Income Assurer Benefit riders available under your
contract:
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider. This section is followed by a description of each specific Income Assurer
Benefit rider and how it is calculated.
You should consider whether an Income Assurer Benefit rider is appropriate for
you because:
you must participate in the Portfolio Navigator program if you purchase a
contract on or after May 1, 2006 with this rider (see "Making the Most of Your
Contract -- Portfolio Navigator Asset Allocation Program"). If you selected
this rider before May 1, 2006, you must participate in the asset allocation
program (see "Making the Most of Your Contract -- Asset Allocation Program"),
however, you may elect to participate in the Portfolio Navigator program after
May 1, 2006. The Portfolio Navigator program and the asset allocation program
limit your choice of subaccounts, the one-year fixed account and GPAs (if
available), to those that are in the investment option you select. This means
you will not be able to allocate contract value to all of the subaccounts,
GPAs or the one-year fixed account that are available under the contract to
other contract owners who do not elect this rider;
if you are purchasing the contract as a qualified annuity, such as an IRA, and
you are planning to begin annuity payouts after the date on which minimum
distributions required by the Code must begin, you should consider whether an
Income Assurer Benefit is appropriate for you (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals you take
from the contract, including those used to satisfy RMDs, will reduce the
guaranteed income benefit base (defined below), which in turn may reduce or
eliminate the amount of any annuity payouts available under the rider. Consult
a tax advisor before you purchase any Income Assurer Benefit rider with a
qualified annuity;
you must hold the Income Assurer Benefit for 10 years unless you elect to
terminate the rider within 30 days following the first anniversary after the
effective date of the rider;
the 10-year waiting period may be restarted if you elect to change the PN
program investment option to one that causes the rider charge to increase (see
"Charges -- Income Assurer Benefit");
the Income Assurer Benefit rider terminates* 30 days following the contract
anniversary after the annuitant's 86th birthday; and
you can only exercise the Income Assurer Benefit within 30 days after a
contract anniversary following the expiration of the 10-year waiting period.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 69
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
If the Income Assurer Benefit rider is available in your state and the annuitant
is 75 or younger at contract issue, you may choose this optional benefit at the
time you purchase your contract for an additional charge. The amount of the
charge is determined by the Income Assurer Benefit you select (see
"Charges -- Income Assurer Benefit Rider Fee"). The effective date of the rider
will be the contract issue date. The Guarantor Withdrawal Benefit for Life, the
Guarantor Withdrawal Benefit and the Accumulation Protector Benefit riders are
not available with any Income Assurer Benefit rider. If the annuitant is between
age 73 and age 75 at contract issue, you should consider whether an Income
Assurer Benefit rider is appropriate for your situation because of the 10-year
waiting period requirement. Be sure to discuss with your investment professional
whether an Income Assurer Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as excluded investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your investment option to one that causes the rider charge to
increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the retirement date must be between 50 to 86 years old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
-- Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account
--------------------------------------------------------------------------------
70 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
of such termination. Exception: if you are still living, and the annuitant is
between 50 and 86 years old, an amount equal to the guaranteed income benefit
base will be paid to you under the annuity payout plan and frequency that you
select, based upon the fixed or variable annuity payouts described above. The
guaranteed income benefit base will be calculated and annuitization will occur
at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit(R) rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit(R) - MAV is
the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the maximum anniversary value.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 71
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial withdrawals. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, credits, and partial
withdrawals occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial withdrawals and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and any purchase
payment credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and any purchase payment credit and subtracting adjusted withdrawals and
adjusted transfers. On each subsequent contract anniversary after the first
anniversary of the effective date of this rider, prior to the earlier of your or
the annuitant's 81st birthday, we increase the variable account floor by adding
the amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
The amount of purchase payment and any purchase payment credits withdrawn from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current withdrawal or transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
--------------------------------------------------------------------------------
72 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the
value from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit(SM) - Greater
of MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments (described
above).
For an example of how benefits under each Income Assurer Benefit are calculated,
see Appendix K.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective
date. The Benefit Protector does not provide any additional benefit before the
first rider anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 73
your rider effective date will be the contract issue date. You may not select
this rider if you select the Benefit Protector Plus rider, the 5% Accumulation
Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
For an example, see Appendix L.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date. It does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Be sure to discuss with
your investment professional whether or not the Benefit Protector Plus is
appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
--------------------------------------------------------------------------------
74 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix M.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs and the DCA fixed account are not available during this payout
period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 75
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
retirement date. If the annuitant outlives the elected guaranteed payout
period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.")
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR GUARANTOR
WITHDRAWAL BENEFIT RIDER): This fixed annuity payout option is an alternative
--------------------------------------------------------------------------------
76 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid over the life of the
annuity will not exceed the total RBA at the time you begin this fixed payout
option (see "Optional Benefits -- Guarantor Withdrawal Benefit for Life Rider"
or "Optional Benefits -- Guarantor Withdrawal Benefit Rider"). The amount paid
in the current contract year will be reduced for any prior withdrawals in that
year. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at the time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 77
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges:
--------------------------------------------------------------------------------
78 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
(1) the exchange of a life insurance policy for another life insurance policy or
for an endowment, annuity or qualified long-term care insurance contract, (2)
the exchange of an endowment contract for an annuity contract, or for an
endowment contract under which payments will begin no later than payments would
have begun under the contract exchanged, (3) the exchange of an annuity contract
for another annuity contract or for a qualified long-term insurance contract,
and (4) the exchange of a qualified long-term care insurance contract for a
qualified long-term care insurance contract. However, if the insurance policy
has an outstanding loan, there may be tax consequences. Depending on the issue
date of your original policy or contract, there may be tax or other benefits
that are given up to gain the benefits of the new policy or contract. Consider
whether the features and benefits of the new policy or contract outweigh any tax
or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 79
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
--------------------------------------------------------------------------------
80 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 81
subaccount. If we do not receive your reallocation instructions by the due date,
we automatically will reallocate to the subaccount investing in the Columbia
Variable Portfolio -- Cash Management Fund (Class 3). You may then transfer this
reallocated amount in accordance with the transfer provisions of your contract
(see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. ("RiverSource Distributors"), our affiliate,
serves as the principal underwriter of the contract. Its offices are located at
70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource
Distributors is a wholly-owned subsidiary of Ameriprise Financial, Inc.
Although we no longer offer the contract for sale, you may continue to make
purchase payments if permitted under the terms of your contract. We pay
commissions to an affiliated selling firm of up to 7.0% each time a purchase
payment is made as well as service/trail commissions of up to 1.00% of the
contract value based on annual total contract value for as long as the contract
remains in effect. We also may pay an additional sales commission of up to 1% of
purchase payments for a period of time we select. These commissions do not
change depending on which subaccounts you choose to allocate your purchase
payments.
From time to time and in accordance with applicable laws and regulations, we may
also pay or provide the selling firm with various cash and non-cash promotional
incentives including, but not limited to bonuses, short-term sales incentive
payments, marketing allowances, costs associated with sales conferences and
educational seminars and sales recognition awards.
A portion of the payments made to the selling firm may be passed on to its sales
representatives in accordance with its internal compensation programs. Those
programs may also include other types of cash and non-cash compensation and
other benefits.
Ask your sales representative for further information about what your sales
representative and the selling firm for which he or she works may receive in
connection with your contract.
We pay the commissions and other compensation described above from our assets.
Our assets include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a withdrawal from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The funds"); and
revenues we receive from other contracts and policies we sell that are not
securities and other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part of all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including withdrawal
charges; and
fees and expenses charged by the underlying funds in which the subaccounts you
select invest, to the extent we or one of our affiliates receive revenue from
the funds or an affiliated person.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment
--------------------------------------------------------------------------------
82 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
practices and procedures, RiverSource Life is responding to regulatory audits,
market conduct examinations and other inquiries (including inquiries from the
State of Minnesota). RiverSource Life has cooperated with and will continue to
cooperate with the applicable regulators regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 83
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 85 p. 25
Appendix B: Example -- Income Assurer Charges -- Income Assurer Benefit Rider
Benefit Rider Fee p. 87 Fee p. 36
Appendix C: Example -- Withdrawal Charges -- Withdrawal Charges
Charges p. 88 p. 32
Appendix D: Example -- Death Benefits p. 93 Benefits in Case of Death p. 49
Appendix E: Example -- Accumulation Optional Benefits -- Accumulation
Protector Benefit Rider p. 96 Protector Benefit Rider p. 52
Appendix F: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit for Life Rider p. 97 Benefit for Life Rider p. 54
Appendix G: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
for Life Rider -- Benefit for Life Rider
Additional RMD Disclosure p. 99 p. 54
Appendix H: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit -- Benefit Rider
Rider B Disclosure p. 101 p. 64
Appendix I: Guarantor Withdrawal Benefit Optional Benefits -- Guarantor Withdrawal
Rider -- Benefit Rider
Additional RMD Disclosure p. 106 p. 64
Appendix J: Example -- Guarantor Optional Benefits -- Guarantor Withdrawal
Withdrawal Benefit Rider p. 107 Benefit Rider p. 64
Appendix K: Example -- Income Assurer Optional Benefits -- Income Assurer
Benefit Riders p. 109 Benefit Riders p. 69
Appendix L: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 114 Death Benefit Rider p. 73
Appendix M: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 115 Plus Death Benefit Rider p. 74
Appendix N: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 117 (Unaudited) p. 15
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, DCA fixed account, and one-year
fixed account and the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices D through F and
J through M include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
84 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
GENERAL EXAMPLES
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 85
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 7%, if you elected the
seven-year withdrawal charge schedule and 4% if you elected a five-year
withdrawal charge schedule. (See "Charges -- Withdrawal Charge.") We do not
apply MVAs to the amounts we deduct for withdrawal charges, so we would deduct
the withdrawal charge from your early withdrawal after we applied the MVA. Also
note that when you request an early withdrawal, we withdraw an amount from your
GPA that will give you the net amount you requested after we apply the MVA and
any applicable withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
86 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
EXAMPLE -- INCOME ASSURER BENEFIT RIDER FEE
ASSUMPTIONS:
You purchase the contract with a payment of $50,000 and allocate all of your
payment to the Protected Investment Options and make no transfers, add-ons or
withdrawals; and
On the first contract anniversary your total contract value is $55,545; and
On the second contract anniversary your total contract value is $53,270.
WE WOULD CALCULATE THE GUARANTEED INCOME BENEFIT BASE FOR EACH INCOME ASSURER
BENEFIT ON THE SECOND ANNIVERSARY AS FOLLOWS:
THE INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE IS THE GREATEST
OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - MAV GUARANTEED INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE IS
THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - 5% ACCUMULATION GUARANTEED INCOME BENEFIT BASE $55,125
THE INCOME ASSURER BENEFIT -- GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE
IS THE GREATEST OF THE FOLLOWING VALUES:
Purchase Payments less adjusted partial withdrawals: $50,000
Contract value on the second anniversary: $53,270
Maximum Anniversary Value: $55,545
5% Variable Account Floor = 1.05 x 1.05 x $50,000 $55,125
----------------------------------------------------------------------------------
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION GUARANTEED
INCOME BENEFIT BASE $55,545
THE INCOME ASSURER BENEFIT FEE DEDUCTED FROM YOUR CONTRACT VALUE WOULD BE:
INCOME ASSURER BENEFIT - MAV FEE = .30% X $55,545 = $166.64
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE FEE = .60% X $55,125 = $330.75
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION
BENEFIT BASE FEE = .65% X $55,545 = $361.04
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 87
APPENDIX C: EXAMPLE -- WITHDRAWAL CHARGES
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling:
- up to 10% of your prior anniversary's contract value or your contract's
remaining benefit payment if you elected the Guarantor Withdrawal Benefit
rider and your remaining benefit payment is greater than 10% of your prior
anniversary's contract value. We do not assess a withdrawal charge on this
amount.
- up to 10% of your prior anniversary's contract value or the greater of your
contract's remaining benefit payment or remaining annual lifetime payment if
you elected the Guarantor Withdrawal Benefit for Life rider, and the greater
of your remaining annual lifetime payment and your remaining benefit payment
is greater than 10% of your prior anniversary's contract value. We do not
assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA, the one-year
fixed account or the DCA fixed account. If the contract value is less than
purchase payments received and not previously withdrawn (PPNPW) then contract
earnings are zero.
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for a contract with a seven-year withdrawal charge
schedule. Each example illustrates the amount of the withdrawal charge for both
a contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
88 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
FULL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you withdraw the contract for its total value.
The withdrawal charge percentage in the fourth year after a purchase payment
is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously withdrawn 50,000.00 50,000.00
(PPNPW):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CF - TFA) X (PPNPW -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 89
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
--------- ---------
NET FULL WITHDRAWAL PROCEEDS: 56,460.00 36,754.00
--------------------------------------------------------------------------------
90 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
PARTIAL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial withdrawal of
$15,000.00. The withdrawal charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings available
in the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously withdrawn 50,000.00 50,000.00
(PPNPW):
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,376.34 16,062.31
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 5,376.34 16,062.31
STEP 4. Next we determine XSF, the amount by which 10% of the
prior anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
--------- ---------
PPW = 5,376.34 19,375.80
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 91
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you request
to withdraw:
PPW: 5,376.34 19,375.80
less XSF: 0.00 4,200.00
--------- ---------
amount of PPW subject to a withdrawal charge: 5,376.34 15,175.80
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
--------- ---------
withdrawal charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,376.34 16,062.31
WITHDRAWAL CHARGE: (376.34) (1,062.31)
--------- ---------
NET PARTIAL WITHDRAWAL PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
92 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
You purchase the contract with a payment of $20,000; and
On the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including withdrawal charge) partial withdrawal; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
CONTRACT VALUE AT DEATH: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
$22,000 = -1,704.55
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
On the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
$22,000 = -1,704.55
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
$22,000 = -1,772.73
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 93
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
On the first contract anniversary the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
$24,300 = -1,543.21
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
$19,000 = -1,657.89
----------
variable account floor benefit: $19,342.11
plus the GPA account value: +5,300.00
----------
5% variable account floor (value of the GPA or the one-year fixed account
and the variable
account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
94 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
On the first contract anniversary the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
$24,300 = -1,543.21
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
$24,300 = -1,543.21
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary,
calculated as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
$19,000 = -1,657.89
----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
----------
5% variable account floor (value of the GPAs, the one-year fixed account
and the variable
account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX E: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
The example assumes:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000.
You make no additional purchase payments.
You do not exercise the Elective Step-up option
INITIAL PAYMENT 100,000
HYPOTHETICAL
END OF PARTIAL WITHDRAWAL MCAV ADJUSTMENT ASSUMED
CONTRACT (BEGINNING OF FOR PARTIAL ACCUMULATION CONTRACT
YEAR YEAR) WITHDRAWAL MCAV BENEFIT AMOUNT VALUE
1 0 0 100,000 0 112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
96 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 97
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ 6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 7,200-
0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 (4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
98 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER --
ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor Withdrawal Benefit for Life(R) rider to satisfy the RMD rules under
Section 401(a)(9) of the Code without application of the excess withdrawal
processing described in the rider. We reserve the right to modify this
administrative practice at any time upon 30 days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
Guarantor Withdrawal Benefit for Life(R) rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the Guarantor
Withdrawal Benefit for Life(R) rider.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor Withdrawal
Benefit for Life(R) rider is attached as of the date we make the
determination; and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 99
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor
Withdrawal Benefit for Life(R) rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of your
GBA, RBA, and/or ALP as described under the excess withdrawal provision of the
rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
100 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: GUARANTOR WITHDRAWAL BENEFIT -- RIDER B DISCLOSURE
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit rider is an optional benefit that was offered
for an additional annual charge if (1):
your contract application was signed prior to April 29, 2005(2);
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
(2) In previous disclosure, we have referred to this rider as Rider B. This
rider is no longer available for purchase. See the Guarantor Withdrawal
Benefit for Life and Guarantor Withdrawal Benefit sections in this
prospectus for information about currently offered versions of this benefit.
See the rider attached to your contract for the actual terms of the benefit
you purchased.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). This benefit may not be available in your state. The
original rider you receive at contract issue offers an elective annual step-up
and any withdrawal after a step up during the first three years is considered an
excess withdrawal, as described below. The rider effective date of the original
rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PN PROGRAM REQUIRED: You must participate in the asset allocation
program (see "Making the Most of Your Contract -- Asset Allocation Program"),
however, you may elect to participate in the Portfolio Navigator program after
May 1, 2006 (see "Making the Most of Your Contract -- Portfolio Navigator
Asset Allocation Program"). The Portfolio Navigator program and the asset
allocation program limit your choice of investments. This means you will not
be able to allocate contract value to all of the subaccounts, GPAs or the one-
year fixed account that are available under the contract to contract owners
who do not elect this rider;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 101
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty and may be considered taxable income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
procedures described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change. See Appendix I for additional information. Please note
that RMD rules follow the calendar year which most likely does not coincide
with your contract year and therefore may limit when you can take your RMD and
not be subject to excess withdrawal processing. You should consult your tax
advisor before you select this optional rider if you have any questions about
the use of this rider in your tax situation;
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments. For current purchase payment restrictions, please
see "Buying Your Contract -- Purchase Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal procedures for the GBA and RBA described below.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTOR WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three years,
the GBA and the GBP are calculated after the reversal of any prior step
ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. If the partial withdrawal
is taken during the first three years, the GBA and the GBP are calculated
after the reversal of any prior step ups:
c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal of
any prior step ups:
--------------------------------------------------------------------------------
102 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. If the partial withdrawal
is taken during the first three years, the RBA and the GBP are calculated
after the reversal of any prior step ups;
c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED TO
THE RBA. If the partial withdrawal is taken during the first three years,
the RBA and the GBP are calculated after the reversal of any prior step
ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under both the original and enhanced riders, the GBP is the lesser of (a) 7% of
the GBA; or (b) the RBA.
If you withdraw less than the GBP in a contract year, there is no carry over to
the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 103
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three contract years, you
may step up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three contract years, the annual
elective step up will not be available until the third contract anniversary;
if you step up on the first or second contract anniversary but then take a
withdrawal prior to the third contract anniversary, you will lose any prior
step ups and the withdrawal will be considered an excess withdrawal subject to
the GBA and RBA excess withdrawal procedures discussed under the "Guaranteed
Benefit Amount" and "Remaining Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may only step up if your contract anniversary value is greater than the RBA.
The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP, and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three contract years, any
previously applied step ups will be reversed and the annual step up will not
be available until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
--------------------------------------------------------------------------------
104 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
A spousal continuation step up occurs automatically when the spouse elects to
continue the contract. The rider charge will not change upon this automatic step
up.
Under this step up, the RBA will be reset to the greater of the RBA on the
valuation date we receive the spouse's written request to continue the contract
and the death benefit that would otherwise have been paid; the GBA will be reset
to the greater of the GBA on the valuation date we receive the spouse's written
request to continue the contract and the death benefit that would otherwise have
been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
For an example, see Appendix J.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 105
APPENDIX I: GUARANTOR(R) WITHDRAWAL BENEFIT RIDER --
ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
Guarantor(R) Withdrawal Benefit rider (including Riders A and B) to satisfy the
RMD rules under 401(a)(9) of the Code without application of the excess
withdrawal processing described in the rider. We reserve the right to modify
this administrative practice at any time upon 30 days' written notice to you.
For owners subject to RMD rules under Section 401(a)(9) amounts you withdraw to
satisfy these rules will not prompt excess withdrawal processing, subject to the
following rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current contract
year, an Additional Benefit Amount (ABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and reduce
the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any additional
amounts withdrawn will count against and reduce any ABA. These withdrawals
will not be considered excess withdrawals as long as they do not exceed the
remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor(R) Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor(R)
Withdrawal Benefit rider is attached as of the date we make the
determination; and
(3) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable, on the effective date of this
prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your Guarantor(R)
Withdrawal Benefit rider may not be sufficient to satisfy the requirements under
the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your RBP amount
and may result in the reduction of your GBA and RBA as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g. ownership
by a trust or a charity), we will calculate the life expectancy RMD amount
calculated by us as zero in all years. The life expectancy required minimum
distribution amount calculated by us will also equal zero in all years.
--------------------------------------------------------------------------------
106 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX J: EXAMPLE -- GUARANTOR(R) WITHDRAWAL BENEFIT RIDER
EXAMPLE OF THE GUARANTOR(R) WITHDRAWAL BENEFIT -- THIS EXAMPLE ILLUSTRATES BOTH
RIDER A (SEE "OPTIONAL BENEFITS") AND RIDER B (SEE APPENDIX H).
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 107
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
108 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program model portfolios or
investment options include protected investment options and excluded investment
options (Columbia Variable Portfolio - Cash Management Fund, and if available
under the contract, GPAs and/or the one-year fixed account). Excluded investment
options are not included in calculating the 5% variable account floor under the
Income Assurer Benefit - 5% Accumulation Benefit Base rider and the Income
Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because
the examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment options; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT(R) - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE - MAV(2)
--------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 109
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
110 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE - INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 111
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
112 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 113
APPENDIX L : EXAMPLE -- BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR(R)
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
You select the MAV Death Benefit and the 7-year withdrawal charge schedule.
During the first contract year the contract value grows to $105,000.
The death benefit under the MAV Death Benefit equals the contract
value, or $105,000. You have not reached the first contract
anniversary so the Benefit Protector(R) does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector(R) benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector(R) benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charges. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619
plus the Benefit Protector(R) benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $ 58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector(R) benefit (40% of earnings at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector(R) value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector(SM) benefit (40% of earnings at death,
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector(R) changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector(R) benefit (40% of earnings at death
up to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
114 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX M: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR(R)PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
You select the MAV Death Benefit and the 7-year withdrawal charge schedule.
During the first contract year the contract value grows to $105,000.
The death benefit equals the MAV Death Benefit, which is the
contract value, or $105,000. You have not reached the first contract
anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any additional benefit
beyond what is provided by the Benefit Protector at this time. The
death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($110,000 -- $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 -- $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $ 57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $ 64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals
40% of earnings at death, up to a maximum of 100%
of purchase payments not previously withdrawn
that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of
contract issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 115
On the tenth contract anniversary you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals
40% of earnings at death, up to a maximum of 100% of purchase
payments not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of
contract issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV rider minus payments not previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
116 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX N: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.11 $1.01 $0.82 $1.00 -- --
Accumulation unit value at end of period $1.06 $1.11 $1.01 $0.82 -- --
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit value at beginning of period $1.07 $0.91 $0.60 $1.16 $1.00 --
Accumulation unit value at end of period $0.81 $1.07 $0.91 $0.60 $1.16 --
Number of accumulation units outstanding at end of period
(000 omitted) 10 10 10 -- -- --
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit value at beginning of period $0.89 $0.80 $0.67 $1.15 $1.11 $1.00
Accumulation unit value at end of period $0.94 $0.89 $0.80 $0.67 $1.15 $1.11
Number of accumulation units outstanding at end of period
(000 omitted) 64 71 36 20 9 3
------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit value at beginning of period $0.74 $0.72 $0.54 $1.17 $1.12 $1.00
Accumulation unit value at end of period $0.59 $0.74 $0.72 $0.54 $1.17 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) 190 193 14,182 15,838 6,819 2,227
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.22 $1.17 $1.08 $1.10 $1.02 $1.00
Accumulation unit value at end of period $1.35 $1.22 $1.17 $1.08 $1.10 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) 130 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INTERNATIONAL, CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.02 $0.91 $0.69 $1.26 $1.08 $1.00
Accumulation unit value at end of period $0.89 $1.02 $0.91 $0.69 $1.26 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of period $1.02 $0.86 $0.67 $0.90 $1.00 --
Accumulation unit value at end of period $1.00 $1.02 $0.86 $0.67 $0.90 --
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.02 $0.89 $0.67 $1.15 $0.97 $1.00
Accumulation unit value at end of period $1.02 $1.02 $0.89 $0.67 $1.15 $0.97
Number of accumulation units outstanding at end of period
(000 omitted) 8 8 11 11 22 4,219
------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (05/01/2006)
Accumulation unit value at beginning of period $1.01 $0.90 $0.76 $1.05 $1.12 $1.00
Accumulation unit value at end of period $1.00 $1.01 $0.90 $0.76 $1.05 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) 6 6 7 -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.05 $1.07 $1.07 $1.06 $1.02 $1.00
Accumulation unit value at end of period $1.04 $1.05 $1.07 $1.07 $1.06 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) 204 344 6,729 1,399 321 67
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.22 $1.14 $1.01 $1.09 $1.04 $1.00
Accumulation unit value at end of period $1.29 $1.22 $1.14 $1.01 $1.09 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 341 374 36,842 27,863 19,798 8,562
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.98 $0.84 $0.67 $1.14 $1.06 $1.00
Accumulation unit value at end of period $0.92 $0.98 $0.84 $0.67 $1.14 $1.06
Number of accumulation units outstanding at end of period
(000 omitted) 271 304 38,327 27,148 12,478 5,812
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 117
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.90 $0.77 $0.63 $1.10 $1.08 $1.00
Accumulation unit value at end of period $0.94 $0.90 $0.77 $0.63 $1.10 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) 30 30 28 -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.45 $1.22 $0.71 $1.55 $1.13 $1.00
Accumulation unit value at end of period $1.13 $1.45 $1.22 $0.71 $1.55 $1.13
Number of accumulation units outstanding at end of period
(000 omitted) 118 124 6,961 8,276 3,593 1,590
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.19 $1.15 $1.09 $1.10 $1.03 $1.00
Accumulation unit value at end of period $1.29 $1.19 $1.15 $1.09 $1.10 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 238 269 27,402 11,339 9,543 6,089
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (05/01/2006)
Accumulation unit value at beginning of period $1.26 $1.14 $0.80 $1.08 $1.07 $1.00
Accumulation unit value at end of period $1.33 $1.26 $1.14 $0.80 $1.08 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 42 43 35 18 27 1,524
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.36 $1.20 $0.79 $1.07 $1.06 $1.00
Accumulation unit value at end of period $1.42 $1.36 $1.20 $0.79 $1.07 $1.06
Number of accumulation units outstanding at end of period
(000 omitted) 6 7 477 490 517 761
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.35 $1.21 $0.86 $1.07 $1.05 $1.00
Accumulation unit value at end of period $1.42 $1.35 $1.21 $0.86 $1.07 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 154 173 20,105 10,342 7,039 2,214
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.00 $0.88 $0.70 $1.19 $1.07 $1.00
Accumulation unit value at end of period $0.86 $1.00 $0.88 $0.70 $1.19 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.93 $0.80 $0.59 $1.08 $1.05 $1.00
Accumulation unit value at end of period $0.89 $0.93 $0.80 $0.59 $1.08 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) -- 9 24 1,417 997 --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of period $1.02 $0.85 $0.67 $1.13 $1.00 --
Accumulation unit value at end of period $0.98 $1.02 $0.85 $0.67 $1.13 --
Number of accumulation units outstanding at end of period
(000 omitted) 281 307 34,403 19,916 9,765 --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of period $0.89 $0.79 $0.58 $1.14 $1.00 --
Accumulation unit value at end of period $0.74 $0.89 $0.79 $0.58 $1.14 --
Number of accumulation units outstanding at end of period
(000 omitted) 55 39 39 32 20 --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.19 $0.95 $0.59 $1.08 $0.96 $1.00
Accumulation unit value at end of period $1.00 $1.19 $0.95 $0.59 $1.08 $0.96
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.92 $0.76 $0.54 $1.00 $1.00 --
Accumulation unit value at end of period $0.83 $0.92 $0.76 $0.54 $1.00 --
Number of accumulation units outstanding at end of period
(000 omitted) 7 7 7 -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.99 $0.88 $0.70 $1.13 $1.09 $1.00
Accumulation unit value at end of period $1.00 $0.99 $0.88 $0.70 $1.13 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 197 186 195 7 4 2
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $0.97 $0.81 $0.65 $1.08 $1.10 $1.00
Accumulation unit value at end of period $0.94 $0.97 $0.81 $0.65 $1.08 $1.10
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.10 $1.08 $1.03 $1.07 $1.03 $1.00
Accumulation unit value at end of period $1.10 $1.10 $1.08 $1.03 $1.07 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 158 160 4,815 1,449 711 239
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
118 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (05/01/2006)
Accumulation unit value at beginning of period $1.10 $0.88 $0.71 $1.00 $1.04 $1.00
Accumulation unit value at end of period $1.02 $1.10 $0.88 $0.71 $1.00 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 189 199 24,798 13,624 7,836 5
------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of period $0.99 $0.86 $0.72 $1.10 $1.00 --
Accumulation unit value at end of period $0.85 $0.99 $0.86 $0.72 $1.10 --
Number of accumulation units outstanding at end of period
(000 omitted) 22 18 4 -- -- --
------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.98 $0.78 $0.58 $0.99 $0.98 $1.00
Accumulation unit value at end of period $0.97 $0.98 $0.78 $0.58 $0.99 $0.98
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.28 $1.00 $0.64 $1.11 $0.98 $1.00
Accumulation unit value at end of period $1.17 $1.28 $1.00 $0.64 $1.11 $0.98
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- 2 950
------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.13 $0.99 $0.82 $1.18 $1.12 $1.00
Accumulation unit value at end of period $1.22 $1.13 $0.99 $0.82 $1.18 $1.12
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.84 $0.77 $0.62 $1.10 $1.00 --
Accumulation unit value at end of period $0.71 $0.84 $0.77 $0.62 $1.10 --
Number of accumulation units outstanding at end of period
(000 omitted) 8 13 14 3 2 --
------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.90 $0.88 $0.68 $1.10 $1.07 $1.00
Accumulation unit value at end of period $0.73 $0.90 $0.88 $0.68 $1.10 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 9 8 5 -- -- --
------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of period $1.10 $1.02 $0.71 $0.99 $1.00 --
Accumulation unit value at end of period $1.11 $1.10 $1.02 $0.71 $0.99 --
Number of accumulation units outstanding at end of period
(000 omitted) 114 121 13,404 8,170 4,857 --
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.05 $0.91 $0.68 $1.20 $1.03 $1.00
Accumulation unit value at end of period $1.01 $1.05 $0.91 $0.68 $1.20 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) 204 243 7,928 17,964 12,765 9,751
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.03 $0.84 $0.66 $1.27 $1.01 $1.00
Accumulation unit value at end of period $1.01 $1.03 $0.84 $0.66 $1.27 $1.01
Number of accumulation units outstanding at end of period
(000 omitted) 5 5 5 2 5 5
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.24 $1.17 $1.02 $1.07 $1.04 $1.00
Accumulation unit value at end of period $1.32 $1.24 $1.17 $1.02 $1.07 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 222 238 16,651 11,995 8,725 859
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.19 $0.94 $0.68 $1.13 $0.99 $1.00
Accumulation unit value at end of period $1.05 $1.19 $0.94 $0.68 $1.13 $0.99
Number of accumulation units outstanding at end of period
(000 omitted) 103 135 9,053 11,273 4,921 1,866
------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.94 $0.85 $0.68 $1.22 $1.05 $1.00
Accumulation unit value at end of period $0.77 $0.94 $0.85 $0.68 $1.22 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 26 30 906 1,281 1,053 434
------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.19 $1.07 $0.79 $1.14 $1.11 $1.00
Accumulation unit value at end of period $1.21 $1.19 $1.07 $0.79 $1.14 $1.11
Number of accumulation units outstanding at end of period
(000 omitted) 276 240 181 120 132 6
------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.03 $0.87 $0.75 $1.03 $1.07 $1.00
Accumulation unit value at end of period $1.09 $1.03 $0.87 $0.75 $1.03 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 3 27 27 27 27 1
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 119
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.12 $0.88 $0.62 $1.09 $0.99 $1.00
Accumulation unit value at end of period $1.05 $1.12 $0.88 $0.62 $1.09 $0.99
Number of accumulation units outstanding at end of period
(000 omitted) 3 3 3 3 3 2
------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.96 $0.87 $0.70 $1.12 $1.09 $1.00
Accumulation unit value at end of period $0.94 $0.96 $0.87 $0.70 $1.12 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 39 63 66 66 83 2,313
------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $1.61 $1.42 $1.21 $1.15 $1.05 $1.00
Accumulation unit value at end of period $1.58 $1.61 $1.42 $1.21 $1.15 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 231 238 14,147 11,041 9,216 3,787
------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of period $0.88 $0.83 $0.64 $1.12 $1.11 $1.00
Accumulation unit value at end of period $0.81 $0.88 $0.83 $0.64 $1.12 $1.11
Number of accumulation units outstanding at end of period
(000 omitted) 100 139 160 105 116 1
------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.12 $0.90 $0.69 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.03 $1.12 $0.90 $0.69 $1.10 $1.08
Number of accumulation units outstanding at end of period
(000 omitted) 117 110 7,647 7,744 5,921 3,150
------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.79 $0.70 $0.59 $0.94 $1.00 --
Accumulation unit value at end of period $0.81 $0.79 $0.70 $0.59 $0.94 --
Number of accumulation units outstanding at end of period
(000 omitted) 31 15 16 3 2 --
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit value at beginning of period $0.84 $0.74 $0.62 $1.09 $0.99 $1.00
Accumulation unit value at end of period $0.77 $0.84 $0.74 $0.62 $1.09 $0.99
Number of accumulation units outstanding at end of period
(000 omitted) 40 32 1,288 1,224 1,210 493
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund,
Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit value at beginning of period $0.95 $0.81 $0.58 $1.11 $1.01 $1.00
Accumulation unit value at end of period $0.87 $0.95 $0.81 $0.58 $1.11 $1.01
Number of accumulation units outstanding at end of period
(000 omitted) -- -- 3 -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Mid Cap Growth Fund, Series II Shares on April 27, 2012.
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.95 $0.92 $0.73 $1.03 $1.00 --
Accumulation unit value at end of period $0.98 $0.95 $0.92 $0.73 $1.03 --
Number of accumulation units outstanding at end of period
(000 omitted) 3 5 8 -- -- --
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.91 $0.82 $0.61 $1.05 $1.00 --
Accumulation unit value at end of period $0.84 $0.91 $0.82 $0.61 $1.05 --
Number of accumulation units outstanding at end of period
(000 omitted) 198 214 27,658 9,069 4,018 --
------------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.15 $1.02 $0.80 $1.13 $1.04 $1.00
Accumulation unit value at end of period $1.07 $1.15 $1.02 $0.80 $1.13 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.98 $0.85 $0.67 $1.06 $1.09 $1.00
Accumulation unit value at end of period $0.95 $0.98 $0.85 $0.67 $1.06 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 107 126 11,689 12,787 7,163 5,339
------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.78 $0.74 $0.51 $1.06 $1.06 $1.00
Accumulation unit value at end of period $0.75 $0.78 $0.74 $0.51 $1.06 $1.06
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.96 $0.85 $0.63 $1.06 $1.00 --
Accumulation unit value at end of period $0.90 $0.96 $0.85 $0.63 $1.06 --
Number of accumulation units outstanding at end of period
(000 omitted) 240 267 29,424 20,536 11,694 --
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
120 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of period $1.06 $0.86 $0.61 $1.03 $1.00 --
Accumulation unit value at end of period $1.07 $1.06 $0.86 $0.61 $1.03 --
Number of accumulation units outstanding at end of period
(000 omitted) 4 9 20 -- -- --
------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit value at beginning of period $1.08 $0.97 $0.70 $1.13 $1.03 $1.00
Accumulation unit value at end of period $1.07 $1.08 $0.97 $0.70 $1.13 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit value at beginning of period $1.32 $0.98 $0.61 $1.02 $1.00 $1.00
Accumulation unit value at end of period $1.17 $1.32 $0.98 $0.61 $1.02 $1.00
Number of accumulation units outstanding at end of period
(000 omitted) 4 5 5 2 2 5
------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit value at beginning of period $1.07 $0.99 $0.85 $1.10 $1.07 $1.00
Accumulation unit value at end of period $1.07 $1.07 $0.99 $0.85 $1.10 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 11 15 32 -- -- --
------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit value at beginning of period $1.40 $1.25 $0.95 $1.54 $1.22 $1.00
Accumulation unit value at end of period $1.48 $1.40 $1.25 $0.95 $1.54 $1.22
Number of accumulation units outstanding at end of period
(000 omitted) 15 15 15 10 9 2
------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.79 $0.66 $0.47 $0.85 $1.00 --
Accumulation unit value at end of period $0.71 $0.79 $0.66 $0.47 $0.85 --
Number of accumulation units outstanding at end of period
(000 omitted) 48 53 6,317 7,158 2,329 --
------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $1.21 $0.92 $0.59 $1.13 $1.00 --
Accumulation unit value at end of period $1.11 $1.21 $0.92 $0.59 $1.13 --
Number of accumulation units outstanding at end of period
(000 omitted) 30 31 30 12 12 --
------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.01 $0.79 $0.62 $1.01 $1.23 $1.00
Accumulation unit value at end of period $1.05 $1.01 $0.79 $0.62 $1.01 $1.23
Number of accumulation units outstanding at end of period
(000 omitted) 69 72 75 75 71 46
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.95 $0.88 $0.62 $1.15 $1.02 $1.00
Accumulation unit value at end of period $0.93 $0.95 $0.88 $0.62 $1.15 $1.02
Number of accumulation units outstanding at end of period
(000 omitted) 49 49 49 30 32 12
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.04 $0.91 $0.66 $1.12 $1.07 $1.00
Accumulation unit value at end of period $0.94 $1.04 $0.91 $0.66 $1.12 $1.07
Number of accumulation units outstanding at end of period
(000 omitted) 39 33 36 22 10 1
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.27 $1.12 $0.96 $1.13 $1.04 $1.00
Accumulation unit value at end of period $1.27 $1.27 $1.12 $0.96 $1.13 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) 249 266 27,967 18,542 13,059 3,108
------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.99 $0.81 $0.60 $0.98 $1.00 $1.00
Accumulation unit value at end of period $0.95 $0.99 $0.81 $0.60 $0.98 $1.00
Number of accumulation units outstanding at end of period
(000 omitted) 14 24 25 24 24 20
------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of period $1.16 $1.04 $0.86 $1.04 $1.00 --
Accumulation unit value at end of period $1.17 $1.16 $1.04 $0.86 $1.04 --
Number of accumulation units outstanding at end of period
(000 omitted) 154 174 15,157 17,312 11,741 --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit value at beginning of period $1.05 $1.04 $0.83 $1.01 $1.03 $1.00
Accumulation unit value at end of period $1.03 $1.05 $1.04 $0.83 $1.01 $1.03
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.87 $0.80 $0.65 $1.17 $1.09 $1.00
Accumulation unit value at end of period $0.72 $0.87 $0.80 $0.65 $1.17 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 121
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- --
Accumulation unit value at end of period $1.06 $1.13 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit value at beginning of period $0.87 $0.70 $0.54 $0.90 $1.04 $1.00
Accumulation unit value at end of period $0.82 $0.87 $0.70 $0.54 $0.90 $1.04
Number of accumulation units outstanding at end of period
(000 omitted) -- -- -- -- 6 1,670
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 472 509 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.12 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 31,406 35,636 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 884 947 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 28,351 22,295 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.87 $0.78 $0.60 $0.99 $1.00 --
Accumulation unit value at end of period $0.83 $0.87 $0.78 $0.60 $0.99 --
Number of accumulation units outstanding at end of period
(000 omitted) 258 295 36,770 16,104 7,996 --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.13 $0.94 $0.69 $1.10 $1.05 $1.00
Accumulation unit value at end of period $1.04 $1.13 $0.94 $0.69 $1.10 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 2 2 2 -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 6,568 7,272 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- --
Accumulation unit value at end of period $1.09 $1.09 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 229,158 241,303 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 4,069 3,301 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- --
Accumulation unit value at end of period $1.09 $1.11 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 113,447 126,812 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 2,521 2,064 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- --
Number of accumulation units outstanding at end of period
(000 omitted) 33,464 37,757 -- -- -- --
------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.12 $0.91 $0.67 $0.99 $1.05 $1.00
Accumulation unit value at end of period $1.06 $1.12 $0.91 $0.67 $0.99 $1.05
Number of accumulation units outstanding at end of period
(000 omitted) 4 5 733 845 639 --
------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
122 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (05/01/2006)
Accumulation unit value at beginning of period $1.24 $1.01 $0.68 $1.26 $1.09 $1.00
Accumulation unit value at end of period $1.05 $1.24 $1.01 $0.68 $1.26 $1.09
Number of accumulation units outstanding at end of period
(000 omitted) 106 119 8,978 10,601 4,011 2,127
------------------------------------------------------------------------------------------------------------------
WANGER USA (05/01/2006)
Accumulation unit value at beginning of period $1.07 $0.88 $0.62 $1.05 $1.00 $1.00
Accumulation unit value at end of period $1.02 $1.07 $0.88 $0.62 $1.05 $1.00
Number of accumulation units outstanding at end of period
(000 omitted) 67 70 7,396 5,499 3,212 306
------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of period $1.08 $1.00 $0.82 $1.00 -- -- -- --
Accumulation unit value at end of period $1.03 $1.08 $1.00 $0.82 -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit value at beginning of period $1.04 $0.89 $0.59 $1.15 $1.00 -- -- --
Accumulation unit value at end of period $0.78 $1.04 $0.89 $0.59 $1.15 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 28 28 28 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.03 $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 130 124 89 113 168 170 126 90
----------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.92 $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19
Number of accumulation units outstanding at end of
period (000 omitted) 6,871 7,882 19,909 27,146 17,556 13,071 8,418 3,162
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05 $1.00
Accumulation unit value at end of period $1.32 $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05
Number of accumulation units outstanding at end of
period (000 omitted) 7,945 11,844 13,423 13,696 23,067 24,580 21,086 7,249
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INTERNATIONAL, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.38 $1.24 $0.95 $1.76 $1.52 $1.24 $1.12 $1.00
Accumulation unit value at end of period $1.19 $1.38 $1.24 $0.95 $1.76 $1.52 $1.24 $1.12
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- 68 68 -- -- --
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of period $0.99 $0.85 $0.66 $0.90 $1.00 -- -- --
Accumulation unit value at end of period $0.96 $0.99 $0.85 $0.66 $0.90 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- 9 -- -- --
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06 $1.00
Accumulation unit value at end of period $1.01 $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06
Number of accumulation units outstanding at end of
period (000 omitted) 2,936 4,147 5,039 6,040 6,538 19,124 6,266 2,495
----------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09 $1.00
Accumulation unit value at end of period $1.12 $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 87 16 16 19 24 29 15 26
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99 $1.00
Accumulation unit value at end of period $1.00 $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99
Number of accumulation units outstanding at end of
period (000 omitted) 2,045 2,910 11,536 5,320 3,584 1,771 839 136
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.25 $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 2,517 3,451 52,732 52,913 49,906 27,709 237 220
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.25 $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 7,706 10,251 47,600 45,615 31,206 25,297 8,506 34
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 123
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.03 $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of accumulation units outstanding at end of
period (000 omitted) 5,131 7,801 9,323 10,215 10,759 11,734 14,054 9,019
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17 $1.00
Accumulation unit value at end of period $1.93 $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17
Number of accumulation units outstanding at end of
period (000 omitted) 2,042 2,330 8,001 12,125 7,826 7,742 4,979 2,159
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.14 $1.12 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.23 $1.14 $1.12 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,527 2,123 39,552 22,934 24,803 19,914 -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit value at beginning of period $1.22 $1.11 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.27 $1.22 $1.11 $0.78 $1.06 $1.06 -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,238 1,849 2,437 3,077 4,084 8,585 -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.54 $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 1,037 1,429 3,043 3,808 4,514 5,751 3,150 830
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of period $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.52 $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 724 967 23,958 16,287 14,534 6,780 8 8
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14 $1.00
Accumulation unit value at end of period $1.20 $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14
Number of accumulation units outstanding at end of
period (000 omitted) 2 2 2 2 2 2 1 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.01 $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 258 361 910 3,801 2,883 38 38 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of period $0.99 $0.83 $0.66 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $0.94 $0.99 $0.83 $0.66 $1.12 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,287 1,574 44,625 33,416 21,154 -- -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of period $0.86 $0.78 $0.57 $1.13 $1.00 -- -- --
Accumulation unit value at end of period $0.71 $0.86 $0.78 $0.57 $1.13 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 70 70 70 21 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07 $1.00
Accumulation unit value at end of period $1.13 $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 430 548 702 933 906 1,023 1,088 697
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.89 $0.74 $0.54 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.80 $0.89 $0.74 $0.54 $0.99 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 145 167 3 98 69 -- -- --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.11 $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 198 211 155 94 147 142 132 48
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.12 $0.94 $0.76 $1.29 $1.32 $1.13 $1.10 $1.00
Accumulation unit value at end of period $1.08 $1.12 $0.94 $0.76 $1.29 $1.32 $1.13 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- 14 23 23 24 --
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00 $1.00
Accumulation unit value at end of period $1.04 $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00
Number of accumulation units outstanding at end of
period (000 omitted) 1,924 2,722 10,350 5,772 5,294 3,802 1,781 218
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
124 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit value at beginning of period $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17 $1.00
Accumulation unit value at end of period $1.33 $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17
Number of accumulation units outstanding at end of
period (000 omitted) 585 721 23,264 17,911 14,170 -- -- --
----------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of period $0.96 $0.84 $0.71 $1.10 $1.00 -- -- --
Accumulation unit value at end of period $0.82 $0.96 $0.84 $0.71 $1.10 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 47 33 32 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.23 $0.98 $0.74 $1.27 $1.27 $1.21 $1.13 $1.00
Accumulation unit value at end of period $1.20 $1.23 $0.98 $0.74 $1.27 $1.27 $1.21 $1.13
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03 $1.00
Accumulation unit value at end of period $1.22 $1.35 $1.06 $0.69 $1.20 $1.07 $1.04 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 1,184 1,653 2,265 2,987 3,110 6,310 2,901 1,117
----------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02 $1.00
Accumulation unit value at end of period $1.25 $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02
Number of accumulation units outstanding at end of
period (000 omitted) 48 48 48 100 112 67 71 72
----------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.81 $0.75 $0.62 $1.09 $1.00 -- -- --
Accumulation unit value at end of period $0.68 $0.81 $0.75 $0.62 $1.09 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- 8 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14 $1.00
Accumulation unit value at end of period $0.98 $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14
Number of accumulation units outstanding at end of
period (000 omitted) 24 21 19 38 24 24 26 7
----------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of period $1.06 $0.99 $0.70 $0.98 $1.00 -- -- --
Accumulation unit value at end of period $1.07 $1.06 $0.99 $0.70 $0.98 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 562 719 17,706 14,635 11,432 -- -- --
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11 $1.00
Accumulation unit value at end of period $1.30 $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11
Number of accumulation units outstanding at end of
period (000 omitted) 10,938 14,844 26,124 44,134 42,111 45,962 19,309 6,485
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.09 $0.90 $0.72 $1.38 $1.11 $1.06 $1.03 $1.00
Accumulation unit value at end of period $1.07 $1.09 $0.90 $0.72 $1.38 $1.11 $1.06 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) -- 15 15 36 15 15 -- --
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.28 $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 3,767 5,353 28,571 28,234 30,874 10,450 8,474 3,024
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.57 $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21
Number of accumulation units outstanding at end of
period (000 omitted) 1,681 2,112 10,749 15,569 9,998 6,670 2,154 194
----------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10 $1.00
Accumulation unit value at end of period $1.04 $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 2,343 2,808 4,655 4,812 4,606 5,282 5,025 3,210
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12 $1.00
Accumulation unit value at end of period $1.35 $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12
Number of accumulation units outstanding at end of
period (000 omitted) 1,057 1,140 1,013 1,631 1,849 1,382 1,066 516
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.18 $1.00 $0.87 $1.21 $1.27 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.23 $1.18 $1.00 $0.87 $1.21 $1.27 $1.11 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 70 96 51 137 151 68 53 34
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 125
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.28 $1.02 $0.73 $1.29 $1.18 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.20 $1.28 $1.02 $0.73 $1.29 $1.18 $1.11 $1.08
Number of accumulation units outstanding at end of
period (000 omitted) 19 36 39 141 125 98 115 111
----------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.16 $1.06 $0.86 $1.39 $1.37 $1.18 $1.09 $1.00
Accumulation unit value at end of period $1.13 $1.16 $1.06 $0.86 $1.39 $1.37 $1.18 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 252 289 305 485 542 6,611 374 369
----------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.76 $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16
Number of accumulation units outstanding at end of
period (000 omitted) 3,114 4,186 21,774 22,313 26,747 18,800 7,744 2,656
----------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12 $1.00
Accumulation unit value at end of period $1.00 $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12
Number of accumulation units outstanding at end of
period (000 omitted) 103 119 114 115 148 112 57 25
----------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.39 $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19
Number of accumulation units outstanding at end of
period (000 omitted) 3,562 4,764 13,524 16,698 17,019 14,517 6,833 2,746
----------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.76 $0.69 $0.58 $0.94 $1.00 -- -- --
Accumulation unit value at end of period $0.78 $0.76 $0.69 $0.58 $0.94 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- 27 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06 $1.00
Accumulation unit value at end of period $0.88 $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06
Number of accumulation units outstanding at end of
period (000 omitted) 96 107 2,537 2,458 2,494 2,008 3 3
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares
changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.12 $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 9 9 17 70 73 19 19 12
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap
Growth Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.92 $0.90 $0.72 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $0.94 $0.92 $0.90 $0.72 $1.03 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 25 25 45 3 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.89 $0.80 $0.61 $1.04 $1.00 -- -- --
Accumulation unit value at end of period $0.81 $0.89 $0.80 $0.61 $1.04 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 940 984 35,468 16,452 9,747 -- -- --
----------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.31 $1.18 $0.92 $1.32 $1.23 $1.13 $1.07 $1.00
Accumulation unit value at end of period $1.21 $1.31 $1.18 $0.92 $1.32 $1.23 $1.13 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 401 569 679 796 1,038 1,204 1,379 900
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.09 $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13
Number of accumulation units outstanding at end of
period (000 omitted) 13,815 18,929 34,501 43,308 39,815 41,096 23,606 8,260
----------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of period $0.88 $0.84 $0.58 $1.22 $1.23 $1.11 $1.07 $1.00
Accumulation unit value at end of period $0.83 $0.88 $0.84 $0.58 $1.22 $1.23 $1.11 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 2,083 2,907 3,241 4,292 3,865 4,263 5,023 3,225
----------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.93 $0.83 $0.62 $1.05 $1.00 -- -- --
Accumulation unit value at end of period $0.86 $0.93 $0.83 $0.62 $1.05 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,082 1,257 38,185 34,319 25,309 -- -- --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
126 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of period $1.03 $0.84 $0.60 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.02 $1.03 $0.84 $0.60 $1.03 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 54 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $1.17 $1.06 $0.78 $1.26 $1.15 $1.10 $1.07 $1.00
Accumulation unit value at end of period $1.15 $1.17 $1.06 $0.78 $1.26 $1.15 $1.10 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 14 14 14 14 14 14 34 22
----------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $1.51 $1.13 $0.71 $1.19 $1.19 $1.07 $1.04 $1.00
Accumulation unit value at end of period $1.33 $1.51 $1.13 $0.71 $1.19 $1.19 $1.07 $1.04
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- 4 9 10 11 12
----------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09 $1.00
Accumulation unit value at end of period $1.15 $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09
Number of accumulation units outstanding at end of
period (000 omitted) 65 69 69 94 102 106 69 53
----------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24 $1.00
Accumulation unit value at end of period $2.11 $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24
Number of accumulation units outstanding at end of
period (000 omitted) 43 55 58 91 120 32 1 1
----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- --
Accumulation unit value at end of period $0.68 $0.77 $0.64 $0.46 $0.85 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 249 265 8,046 11,790 4,909 -- -- --
----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $1.17 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $1.07 $1.17 $0.90 $0.58 $1.12 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37 $1.00
Accumulation unit value at end of period $1.74 $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37
Number of accumulation units outstanding at end of
period (000 omitted) 257 328 604 694 728 573 619 292
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06 $1.00
Accumulation unit value at end of period $1.00 $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06
Number of accumulation units outstanding at end of
period (000 omitted) 4,615 6,424 7,178 8,981 8,700 10,182 8,509 3,218
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.26 $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 113 127 149 169 231 209 177 72
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07 $1.00
Accumulation unit value at end of period $1.32 $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07
Number of accumulation units outstanding at end of
period (000 omitted) 4,711 6,319 41,343 38,121 38,909 20,731 11,203 4,674
----------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.29 $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of accumulation units outstanding at end of
period (000 omitted) 89 24 25 61 71 75 59 31
----------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of period $1.12 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.12 $1.12 $1.01 $0.85 $1.03 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 718 853 20,192 30,027 26,289 -- -- --
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03 $1.00
Accumulation unit value at end of period $1.10 $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03
Number of accumulation units outstanding at end of
period (000 omitted) 23 44 56 84 144 142 109 57
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.21 $1.13 $0.92 $1.67 $1.57 $1.26 $1.14 $1.00
Accumulation unit value at end of period $0.99 $1.21 $1.13 $0.92 $1.67 $1.57 $1.26 $1.14
Number of accumulation units outstanding at end of
period (000 omitted) 10 10 10 10 27 -- -- --
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 127
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of period $1.13 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) -- 9 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18 $1.00
Accumulation unit value at end of period $1.09 $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18
Number of accumulation units outstanding at end of
period (000 omitted) 69 84 147 179 192 4,666 76 17
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 242 2,128 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 37,081 45,459 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 3,605 2,840 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 37,774 34,075 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.84 $0.77 $0.59 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.79 $0.84 $0.77 $0.59 $0.99 -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,246 1,481 47,054 29,241 19,856 -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10 $1.00
Accumulation unit value at end of period $1.17 $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10
Number of accumulation units outstanding at end of
period (000 omitted) 8 8 -- 28 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 4,056 2,407 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 206,439 248,214 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 1,555 774 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 118,725 154,365 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 2,095 1,480 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end of
period (000 omitted) 34,697 43,744 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.35 $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 4,585 6,248 9,697 11,631 12,674 11,121 10,647 4,456
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
128 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit value at beginning of period $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20 $1.00
Accumulation unit value at end of period $1.77 $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20
Number of accumulation units outstanding at end of
period (000 omitted) 1,529 1,843 8,675 12,927 7,675 6,793 3,916 1,854
----------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of period $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15 $1.00
Accumulation unit value at end of period $1.30 $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15
Number of accumulation units outstanding at end of
period (000 omitted) 2,605 3,655 12,068 12,713 11,339 6,970 5,234 2,030
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS 129
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
130 RIVERSOURCE INNOVATIONS CLASSIC SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45312 M (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
ACCESSCHOICE SELECT VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM COMBINATION FIXED/DEFERRED
VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM COMBINATION FIXED/DEFERRED
VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing in
AccessChoice Select Variable Annuity Contract Option L and Contract Option C.
The information in this prospectus applies to both contracts unless stated
otherwise.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Variable Insurance Funds
Invesco Van Kampen Variable Insurance Funds
Janus Aspen Series: Series Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley UIF
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contract described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to annuity account values. The fees and charges you
will pay when buying, owning and withdrawing money from the contract we describe
in this prospectus may be more or less than the fees and charges of other
variable annuities we issue. A securities broker dealer authorized to sell the
contract described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contract and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contract described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contract and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION............. 14
FINANCIAL STATEMENTS........................ 14
THE VARIABLE ACCOUNT AND THE FUNDS.......... 14
THE GUARANTEE PERIOD ACCOUNTS (GPAS)........ 27
THE FIXED ACCOUNT........................... 29
BUYING YOUR CONTRACT........................ 31
CHARGES..................................... 33
VALUING YOUR INVESTMENT..................... 40
MAKING THE MOST OF YOUR CONTRACT............ 41
WITHDRAWALS................................. 49
TSA -- SPECIAL PROVISIONS................... 49
CHANGING OWNERSHIP.......................... 50
BENEFITS IN CASE OF DEATH................... 51
OPTIONAL BENEFITS........................... 53
THE ANNUITY PAYOUT PERIOD................... 70
TAXES....................................... 73
VOTING RIGHTS............................... 76
SUBSTITUTION OF INVESTMENTS................. 77
ABOUT THE SERVICE PROVIDERS................. 77
ADDITIONAL INFORMATION...................... 79
APPENDICES TABLE OF CONTENTS
AND CROSS-REFERENCE TABLE................. 80
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 81
APPENDIX B: EXAMPLE --
WITHDRAWAL CHARGES FOR CONTRACT OPTION L.. 83
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 88
APPENDIX D: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 91
APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS.. 92
APPENDIX F: SECURESOURCE RIDERS --
ADDITIONAL RMD DISCLOSURE................. 96
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 98
APPENDIX H: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 100
APPENDIX I: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED BEFORE
MAY 1, 2006............................... 102
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER DISCLOSURE..................... 103
APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT
RIDER DISCLOSURE.......................... 115
APPENDIX L: INCOME ASSURER BENEFIT RIDERS
DISCLOSURE................................ 123
APPENDIX M: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 132
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 143
--------------------------------------------------------------------------------
2 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the one-year fixed account and
the DCA fixed account. Amounts you allocate to the fixed account earn interest
rates we declare periodically. For Contract Option C, the one-year fixed account
may not be available or may be significantly limited in some states.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments or transfer contract value of at least $1,000.
These accounts have guaranteed interest rates for guarantee periods we declare
when you allocate purchase payments or transfer contract value to a GPA. These
guaranteed rates and periods of time may vary by state. Unless an exception
applies, transfers or withdrawals from a GPA done more than 30 days before the
end of the guarantee period will receive a market value adjustment, which may
result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
This prospectus describes two contracts. Each contract has different expenses.
Contract Option L has lower expenses than Contract Option C. Contract Option L
has a four-year withdrawal charge schedule that applies to each purchase payment
you make. Contract Option C eliminates the purchase payment withdrawal charge
schedule, but has a higher mortality and expense risk fee than Contract Option
L. Currently, both contracts(1) include the option to purchase a living benefit
rider. Your investment professional can help you determine which contract is
best suited to your needs based on factors such as your investment goals and how
long you intend to keep your contract.
(1) Living benefit riders were not available on Contract Option C prior to Jan.
26, 2009, but were available on Contract Option C prior to May 1, 2007.
PURPOSE: These contracts allow you to accumulate money for retirement or similar
long term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the one-year fixed account (if part of your
contract), the DCA fixed account (if part of your contract), GPAs and/or
subaccounts of the variable account under the contract; however you risk losing
amounts you invest in the subaccounts of the variable account. These accounts,
in turn, may earn returns that increase the value of a contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. You may be able to purchase an optional benefit
to reduce the investment risk you assume. Beginning at a specified time in the
future called the retirement date, these contracts provide lifetime or other
forms of payouts of your contract value (less any applicable premium tax).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates that we declare when you allocate purchase
payments or transfer contract value to these accounts. Some states restrict
the amount you can allocate to these accounts. The required minimum investment
in a GPA is $1,000. (See "The Guarantee Period Accounts (GPAs)").
the one-year fixed account (if part of your contract), which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract" and "Transfer policies"). (See "The Fixed Account").
DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract value
can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
Transfers out of the GPAs done more than 30 days before the end of the guarantee
period will be subject to an MVA, unless an exception applies. You may establish
automated transfers among the accounts. Transfers into the DCA fixed account are
not permitted. We reserve the right to further limit transfers to the one-year
fixed account if the interest rate we are then currently crediting is equal to
the minimum interest rate stated in the contract. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer
optional death benefits. We offer optional living benefits, including: a
guaranteed contract value on a future date ("Accumulation Protector Benefit
Rider") and a guaranteed minimum withdrawal benefit that permits you to withdraw
a guaranteed amount from the contract over a period of time, which may include,
under limited circumstances, the lifetime of a single person
(SecureSource - Single Life) or the lifetime of you and your spouse
(SecureSource - Joint Life) ("SecureSource Riders"). Optional living benefits
require the use of a Portfolio Navigator program (PN program) investment option
which may limit transfers and allocations; may limit the timing, amount and
allocation of purchase payments; and may limit the amount of withdrawals that
can be taken under the optional benefit during a contract year. We previously
offered other optional living benefits under both Contract Option L and Contract
Option C. Optional benefits vary by state and may have eligibility requirements.
(See "Optional Benefits -- Optional Living Benefits").
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
and the DCA fixed account are not available during the payout period. (See "The
Annuity Payout Period").
--------------------------------------------------------------------------------
6 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You select either contract Option L or Option C at the time of application.
Option C has no withdrawal charge schedule but carries a higher mortality and
expense risk fee than Option L.
CONTRACT OPTION L
YEARS FROM PURCHASE PAYMENT RECEIPT WITHDRAWAL CHARGE PERCENTAGE
1-2 8%
3 7
4 6
Thereafter 0
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE DEATH
BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND
EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO
THE MORTALITY AND EXPENSE RISK FEE.
TOTAL MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
Return of Purchase Payment (ROP) Death 0.15% 1.70%
Benefit 1.55%
Maximum Anniversary Value (MAV) Death 0.15 1.90
Benefit 1.75
5% Accumulation Death Benefit 1.90 0.15 2.05
Enhanced Death Benefit 1.95 0.15 2.10
IF YOU SELECT CONTRACT OPTION C AND:
ROP Death Benefit 1.65% 0.15% 1.80%
MAV Death Benefit 1.85 0.15 2.00
5% Accumulation Death Benefit 2.00 0.15 2.15
Enhanced Death Benefit 2.05 0.15 2.20
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. Each optional living benefit requires participation
in the PN program. The fees apply only if you have selected one of these
benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: CURRENT:
1.75% 0.80%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
2.00% 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
2.50% 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO
JAN. 26, 2009
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
1.50% 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
1.75% 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR CONTRACTS WITH APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
1.50% 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
1.75% 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(2)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(2)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(2)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For contracts purchased prior to Jan. 26, 2009, the current charge is 0.55%.
(2) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
8 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50 0.25 0.31 -- 1.06(4)
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75% 0.25% 0.11% --% 1.11%
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
--------------------------------------------------------------------------------
10 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Variable Portfolio - Conservative Portfolio (Class 2) --% 0.25% 0.02% 0.61% 0.88%
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value Fund
(Class 2).
(2) Other expenses have been restated to reflect contractual changes to certain
other fees.
(3) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4) Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5) The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(9) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
(11) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15) PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
12 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CONTRACT OPTION L AND CONTRACT OPTION C
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider and the Benefit Protector Plus
Death Benefit(2). Although your actual costs may be lower, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,420 $2,703 $3,410 $6,627 $700 $2,070 $3,410 $6,627
Contract Option C 710 2,098 3,455 6,703 710 2,098 3,455 6,703
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT OR
IF YOU WITHDRAW YOUR CONTRACT IF YOU SELECT AN ANNUITY PAYOUT PLAN AT
AT THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,004 $1,490 $1,382 $2,911 $266 $813 $1,382 $2,911
Contract Option C 276 843 1,433 3,013 276 843 1,433 3,013
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix M.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
14 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making withdrawal from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
16 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser.
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. The
required minimum investment in each GPA is $1,000. These accounts are not
available in all states and are not offered after annuity payouts begin.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or the one-year fixed account, if available or
withdraw the contract value (subject to applicable withdrawal provisions). If we
do not receive any instructions at the end of your guarantee period, our current
practice is to automatically transfer the contract value into the shortest GPA
term offered in your state.
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30 day rule). At all other
times, and unless one of the exceptions to the 30 day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under a SecureSource rider or the Guarantor Withdrawal
Benefit for Life rider or you elect an annuity payout plan while you have
contract value invested in a GPA. We will refer to these transactions as "early
withdrawals." The application of an MVA may result in either a gain or loss of
principal.
--------------------------------------------------------------------------------
28 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA will apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; or
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. The
fixed account includes the one-year fixed account and the DCA fixed account. We
credit interest on amounts you allocate to the fixed account at rates we
determine from time to time in our discretion. These rates will be based on
various factors including, but not limited to, the interest rate environment,
returns we earn on our general account investments, the rates currently in
effect for new and existing RiverSource Life annuities, product design,
competition, and RiverSource Life's revenues and expenses. The guaranteed
minimum interest rate on amounts invested in the fixed account may vary by state
but will not be lower than state law allows. We back the principal and interest
guarantees relating to the fixed account. These guarantees are based on the
continued claims-paying ability of RiverSource Life. You should be aware that
our general account is exposed to the risks normally associated with a portfolio
of fixed-income securities, including interest rate, option, liquidity and
credit risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account.(1) The value of the
one-year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Buying Your
Contract" and "Making the Most of Your Contract -- Transfer policies").
(1) For Contract Option C, the one-year fixed account may not be available, or
may be significantly limited in some states. See your contract for the
actual terms of the one-year fixed account you purchased.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The value of the DCA fixed account increases when we credit interest to
the DCA fixed account, and decreases when we make monthly transfers from the DCA
fixed account to your investment allocations. We credit interest only on the
declining balance of the DCA fixed account; we do not credit interest on amounts
that have been transferred from the DCA fixed account. We credit and compound
interest daily based on a 365-day year (366 in a leap year) so as to produce the
annual effective rate which we declare. Generally, we will credit the DCA fixed
account with interest at the same annual effective rate we apply to the one-year
fixed account on the date we receive your purchase payment, regardless of the
length of the term you select. From time to time, we may credit interest to the
DCA fixed account at promotional rates that are higher than those we credit to
the one-year fixed account. We reserve the right to declare different annual
effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account you instruct us to transfer to the one-
year fixed account if available under your contract;
for amounts in the DCA fixed account you instruct us to transfer to the GPAs;
for amounts in the DCA fixed account you instruct us to transfer to the
subaccounts.
The interest rates in effect for the DCA fixed account when we receive your
purchase payment are guaranteed for the length of the term. When you allocate an
additional purchase payment to an existing DCA fixed account term, the interest
rates applicable to that purchase payment will be the rates in effect for the
DCA fixed account of the same term on the date we receive your purchase payment.
For DCA fixed accounts with an initial term (or, in the case of an additional
purchase payment, a remaining term) of less than twelve months, the net
effective interest rates we credit to the DCA fixed account balance will be less
than the declared annual effective rates.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program model portfolio or investment option in effect;
if no PN program investment option is in effect, to the one-year fixed account
if available under your contract, the GPAs and/or the subaccounts, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account if available under your contract, the GPAs and/or the subaccounts,
subject to investment minimums and other restrictions we may impose on
investments in the one-year fixed account and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
--------------------------------------------------------------------------------
30 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
investment instructions to us to the one-year fixed account if available under
your contract, the GPAs and the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs, including but not limited to, any limitations described in this
prospectus on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account if available under
your contract, the GPAs and/or the subaccounts, subject to investment minimums
and other restrictions we may impose on investments in the one-year fixed
account and the GPAs, including but not limited to, any limitations described in
this prospectus on transfers (see "Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of Your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. Your investment professional will
help you complete and submit an application and send it along with your initial
purchase payment to our corporate office. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. You may buy Contract Option L
or Contract Option C. Contract Option L has a four-year withdrawal charge
schedule. Contract Option C eliminates the per purchase payment withdrawal
charge schedule in exchange for a higher mortality and expense risk fee. Both
contracts have the same underlying funds. As the owner, you have all rights and
may receive all benefits under the contract.
You may select a qualified or nonqualified annuity. You can own a nonqualified
annuity in joint tenancy with rights of survivorship only in spousal situations.
You cannot own a qualified annuity in joint tenancy. You can become an owner if
you are 85 or younger. (The age limit may be younger for qualified annuities in
some states.)
When you applied, you could have selected; (if available in your state):
contract Option L or Option C;
GPAs, the one-year fixed account (if included), the DCA fixed account (if part
of your contract) and/or subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit
- MAV Death Benefit
- 5% Accumulation Death Benefit(2)
- Enhanced Death Benefit(2)
In addition,(3) you also could have selected (if available in your state):
ONE OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PN
PROGRAM):
Accumulation Protector Benefit rider
SecureSource rider
Guarantor Withdrawal Benefit for Life rider
Guarantor Withdrawal Benefit rider
Income Assurer Benefit - MAV rider
Income Assurer Benefit - 5% Accumulation Benefit Base rider
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(4)
Benefit Protector Plus Death Benefit rider(4)
(1) There is no additional charge for this feature.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Living benefit riders were not available on Contract Option C prior to Jan.
26, 2009, but were available on Contract Option C prior to May 1, 2007.
(4) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit riders.
This contract provides for allocations of purchase payments to the GPAs, the
one-year fixed account, the DCA fixed account (if part of your contract) and/or
to the subaccounts in even 1% increments subject to the required $1,000 required
minimum investment for the GPAs. For Contract Option L, the amount of any
purchase payment allocated to the one-year fixed account in total cannot exceed
30% of the purchase payment. More than 30% of a purchase payment may be so
allocated if you establish an automated dollar-cost averaging arrangement with
respect to the purchase payment according to procedures currently in effect. We
reserve the right to further limit purchase payment allocations to the one-year
fixed account if the interest rate we are then crediting on new purchase
payments allocated to the one-year fixed account is equal to the minimum
interest rate stated in the contract. For Contract Option C, the one-year fixed
account may not be available or may be significantly limited in some states. See
your contract for the actual terms of the one-year fixed account you purchased.
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the retirement date, provided you send us written instructions at least
30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 90th(1) birthday or the tenth contract
anniversary, if purchased after age 80(1), or such other date as agreed upon
by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a
date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the retirement date must be no later
than the annuitant's 85th birthday or the tenth contract anniversary, if
purchased after age 75. Ask your investment professional which retirement
date applies to you.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
--------------------------------------------------------------------------------
32 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract. The
rider will terminate if the surviving covered spouse can not utilize the spousal
continuation provision of the contract when the death benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the Code's limits on annual contributions also apply. Additional
purchase payments are restricted during the waiting period after the first
180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider, Enhanced Guarantor
Withdrawal Benefit rider, Guarantor Withdrawal Benefit for Life rider, or
SecureSource riders, subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary. We prorate this charge
among the GPAs, the fixed account and the subaccounts in the same proportion
your
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
interest in each account bears to your total contract value. Some states also
limit any contract charge allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The contract (either Option L or Option C) and the death benefit guarantee you
select determines the mortality and expense risk fee you pay:
CONTRACT CONTRACT
OPTION L OPTION C
ROP Death Benefit 1.55% 1.65%
MAV Death Benefit 1.75 1.85
5% Accumulation Death Benefit 1.90 2.00
Enhanced Death Benefit 1.95 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge for contract Option L will cover sales and distribution
expenses.
WITHDRAWAL CHARGE
You select either contract Option L or Option C at the time of application.
Contract Option C has no purchase payment withdrawal charge schedule but carries
a higher mortality and expense risk fee than contract Option L.
If you select contract Option L and you withdraw all or part of your contract
value before annuity payouts begin, we may deduct a withdrawal charge. As
described below, a withdrawal charge schedule applies to each purchase payment
you make. The withdrawal charge lasts for four years from the date of each
purchase payment (see "Expense Summary").
--------------------------------------------------------------------------------
34 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract includes the SecureSource rider, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider:
CONTRACT WITHOUT SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
OR THE GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACT WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment to be the prior contract
anniversary's contract value during the first contract year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract Option L, a
withdrawal charge schedule attaches to that purchase payment. The withdrawal
charge percentage for each purchase payment declines according to the withdrawal
charge schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR
THE 4-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select contract Option L, during the first
two years after a purchase payment is made, the withdrawal charge percentage
attached to that payment is 8%. The withdrawal charge percentage for that
payment during the fourth year after it is made is 6%. At the beginning of the
fifth year after that purchase payment is made, and thereafter, there is no
longer a withdrawal charge as to that payment.
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix B.
WAIVER OF WITHDRAWAL CHARGES FOR CONTRACT OPTION L
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the SecureSource rider or the Guarantor Withdrawal Benefit for
Life rider, the greater of your contract's Remaining Benefit Payment or
Remaining Annual Lifetime Payment to the extent it exceeds the greater of
contract earnings or 10% of the contract value on the prior contract
anniversary;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge. This
exception also applies to contract Option C.)
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity payouts begin, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full withdrawal
from your contract.
OPTIONAL LIVING BENEFITS
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 0.80%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. We prorate this charge among the GPAs, the
one-year fixed account and the subaccounts in the same proportion as your
interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct
--------------------------------------------------------------------------------
36 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
the charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the charge.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider charge, for the preceding contract year only,
that reflects the various different fees that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) For contracts with applications signed prior to Jan. 26, 2009, the current
charge is 0.55%.
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider charge will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE
We deduct a charge of 0.65% of the greater of the contract anniversary value or
the total Remaining Benefit Amount (RBA) for this optional feature only if you
select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, the contract value reduces to zero or annuity payouts begin. If the
contract is terminated for any reason or when annuity payouts begin, we will
deduct the charge from the proceeds payable adjusted for the number of calendar
days coverage was in place since we last deducted the fee. If the RBA goes to
zero but the contract value has not been depleted, you will continue to be
charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to
increase this fee and/or vary the rider fee for each PN program investment
option. The Guarantor Withdrawal Benefit for Life rider fee will not exceed a
maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we
--------------------------------------------------------------------------------
38 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) See disclosure in Appendix K.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or on
the annuitization start date, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix L.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocated to the GPAs directly in dollars. The value of
a GPA equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT IF AVAILABLE UNDER YOUR
CONTRACT, AND THE DCA FIXED ACCOUNT.
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
the sum of your purchase payments allocated to the one-year fixed account (if
included) and the DCA fixed account (if included), and transfer amounts to the
one-year fixed account (if included (including any positive or negative MVA on
amounts transferred from the GPAs to the one-year fixed account));
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges for Contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial withdrawal, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
withdrawal charge or fee for any optional riders with annual charges (if
applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
--------------------------------------------------------------------------------
40 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or one-year GPA to one or more subaccounts. Automated transfers are not
available for GPA terms of two or more years. You can also obtain the benefits
of dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the DCA fixed account. See the "DCA Fixed
Account" and "Portfolio Navigator Program" sections in this prospectus for
details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix I -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in the PN program, asset rebalancing is
available for use with the DCA fixed account (see "DCA Fixed Account") only if
your subaccount allocation for asset rebalancing is exactly the same as your
subaccount allocation for transfers from the DCA fixed account. If you change
your subaccount allocations under the asset rebalancing program or the DCA fixed
account, we will automatically change the subaccount allocations so they match.
If you do not wish to have the subaccount allocation be the same for the asset
rebalancing program and the DCA fixed account, you must terminate the asset
rebalancing program or the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
--------------------------------------------------------------------------------
42 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
periodic updating means that existing underlying funds will not be replaced as
may be appropriate due to poor performance, changes in management personnel, or
other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
44 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The SecureSource
rider or the Guarantor Withdrawal Benefit for Life rider requires that your
contract value be invested in one of the PN program investment options for the
life of the contract. Subject to state restrictions, we reserve the right to
limit the number of investment options from which you can select based on the
dollar amount of purchase payments you make. Because you cannot terminate the
SecureSource rider or the Guarantor Withdrawal Benefit for Life rider once you
have selected it, you must terminate your contract by requesting a full
withdrawal if you do not want to invest in any of the PN program investment
options. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD
NOT SELECT THE SECURESOURCE OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF
YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW
EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or the DCA fixed account, to another subaccount before annuity
payouts begin. Certain restrictions apply to transfers involving the GPAs and
the one-year fixed account. You may not transfer contract value to the DCA fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account (if included) at any time. However, if you made a transfer from the
one-year fixed account to the subaccounts or the GPAs, you may not make a
transfer from any subaccount or GPA back to the one-year fixed account for six
months following that transfer. We reserve the right to further limit
transfers to the one-year fixed
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
account if the interest rate we are then currently crediting to the one-year
fixed account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from the one-year fixed account (if included)
to the subaccounts or the GPAs once a year on or within 30 days before or
after the contract anniversary (except for automated transfers, which can be
set up at any time for certain transfer periods subject to certain minimums).
Transfers from the one-year fixed account are not subject to an MVA. For
Contract Option L, the amount of contract value transferred to the one-year
fixed account cannot result in the value of the one-year fixed account being
greater than 30% of the contract value; transfers out of the one-year fixed
account are limited to 30% of one-year fixed account values at the beginning
of the contract year or $10,000, whichever is greater. For Contract Option C,
transfers to the one-year fixed account and transfers out of the one-year
fixed account may not be available or may be significantly limited. See your
contract for the actual terms of the one-year fixed account you purchased. For
both Contract Option L and Contract Option C, we reserve the right to further
limit transfers to or from the one-year fixed account if the interest rate we
are then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Because of these limitations, it may
take several years to transfer all your contract value from the one-year fixed
account. You should carefully consider whether the one-year fixed account
meets your investment criteria before you invest. Transfers made more than 30
days before the end of the guarantee period will receive an MVA, which may
result in a gain or loss of contract value, unless an exception applies (see
"The Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values from the DCA fixed account to any of the investment options
available under your contract, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and
the GPA, as described above. (See "DCA Fixed Account.")
Once annuity payouts begin, you may not make transfers to or from the GPAs or
the fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest. When annuity payments
begin, you must transfer all contract value out of your GPAs and the DCA fixed
account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
46 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
subaccounts, the one-year fixed account or GPAs or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA fixed account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have a SecureSource rider, Guarantor Withdrawal Benefit for Life rider,
or Guarantor Withdrawal Benefit rider, you may set up automated partial
withdrawals up to the benefit available for withdrawal under the rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
--------------------------------------------------------------------------------
48 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity
Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the SecureSource rider,
the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal
Benefit rider and your partial withdrawals in any contract year exceed the
permitted withdrawal amount under the terms of the SecureSource rider, the
Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit
rider, your benefits under the rider may be reduced (see "Optional Benefits").
Any partial withdrawal request that exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the withdrawal on the rider benefits or a verbal acknowledgement that
you understand and accept the impacts that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the
DCA fixed account, and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1) After executing a partial withdrawal, the value in the
one-year fixed account and each GPA and subaccount must be either zero or at
least $50.
(1) If you elected a SecureSource rider, you do not have the option to request
from which account to withdraw.
RECEIVING PAYMENT
By regular or express mail:
payable to owner;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the withdrawal amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit and/or Benefit Protector Plus rider, the
rider will terminate upon transfer of ownership of the annuity contract. The
SecureSource - Joint Life rider, if selected, only allows transfer of the
ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force.
The Accumulation Protector Benefit, the SecureSource - Single Life, the
Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit
riders will continue upon transfer of ownership of the annuity contract. For the
SecureSource and Guarantor Withdrawal Benefit for Life riders, any ownership
change that impacts the guarantees provided will not be considered in good order
until we receive a signed Benefit Impact Acknowledgement form showing the
projected effect of the ownership change on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
--------------------------------------------------------------------------------
50 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit;
Enhanced Death Benefit
If it is available in your state and if both you and the annuitant are 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit to your beneficiary upon the
earlier of your death or the annuitant's death. We will base the benefit paid on
the death benefit coverage you chose when you purchased the contract. If a
contract has more than one person as the owner, we will pay benefits upon the
first to die of any owner or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal
CV = contract value on the date of (but prior to) the partial withdrawal
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments applied to the contract minus adjusted partial
withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by adjusted partial withdrawals. Every contract anniversary after that
prior to the earlier of your or the annuitant's 81st birthday, we compare the
MAV to the current contract value and we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: This is the sum of the value of your GPAs, the one-
year fixed account and the variable account floor. There is no variable account
floor prior to the first contract anniversary. On the first contract
anniversary, we establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts or the DCA fixed account and subtract adjusted transfers and partial
withdrawals from the subaccounts or the DCA fixed account. On each contract
anniversary after the first, through age 80, we add an amount to the variable
account floor equal to 5% of the prior anniversary's variable account floor. We
stop adding this amount after you or the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR ADJUSTED PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial withdrawal or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer of partial withdrawal.
The amount of purchase payments withdrawn or transferred from any subaccount or
fixed account (if applicable) or GPA account is calculated as (a) times (b)
where:
(a) is the amount of purchase payments in the account or subaccount on the date
of but prior to the current withdrawal or transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments allocated to the subaccounts and the
DCA fixed account that have not been withdrawn or transferred out of the
subaccounts or the DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for
withdrawals. If you or the annuitant die before annuity payouts begin and while
this contract is in force, the death benefit will be the greater of these two
values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written
--------------------------------------------------------------------------------
52 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
instructions to continue the contract as owner. There will be no withdrawal
charges on contract Option L from that point forward unless additional payments
are made. If you elected any optional contract features or riders, your spouse
and the new annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and Benefit Protector Plus riders, if
selected, will terminate. The SecureSource - Joint Life rider, if selected, will
continue only if the spouse electing the spousal continuation provision of the
contract is a covered spouse and continues the contract as the new owner. The
Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor
Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders, if
selected, will continue. Continuance of the Benefit Protector is optional. (See
"Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on contract
Option L from that point forward unless additional payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and Benefit Protector Plus riders, if
selected, will terminate. The SecureSource - Joint Life rider, if selected,
will continue only if the spouse electing the spousal continuation provision
of the contract is a covered spouse and continues the contract as the new
owner. The Accumulation Protector Benefit, the SecureSource - Single Life, the
Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal Benefit
riders, if selected, will continue. Continuance of the Benefit Protector is
optional. (See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after your death, the payouts to your beneficiary
will continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS(1)
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit at the time you purchase your contract and the rider effective
date will be the contract issue date. The Accumulation Protector Benefit rider
may not be terminated once you have elected it, except as described in the
"Terminating the Rider" section below. An additional charge for the Accumulation
Protector Benefit rider will be assessed annually during the waiting period. The
rider ends when the waiting period expires and no further benefit will be
payable and no further fees for the rider will be deducted. After the waiting
period, you have the following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource, the Guarantor Withdrawal Benefit for Life rider or the Guarantor
Withdrawal Benefit riders.
The Accumulation Protector Benefit rider may not be available in all states.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must be invested in one of the
available investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, one-year fixed account (if included) and GPAs that are
available under the contract to contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial withdrawals, including
those you take to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of
(1) Effective Jan. 26, 2009, optional living benefits were available under
Contract Option C. Optional living benefits were not available under
Contract Option C for contracts issued between May 1, 2007 and Jan. 25,
2009.
--------------------------------------------------------------------------------
54 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
10 years from the effective date of the Accumulation Protector Benefit rider,
which is the length of the waiting period under the Accumulation Protector
Benefit rider, in order to receive the benefit, if any, provided by the
Accumulation Protector Benefit rider. In some cases, as described below, you
may need to hold the contract longer than 10 years in order to qualify for any
benefit the Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step up Option (described below) or your
surviving spouse exercises the spousal continuation elective step up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program model portfolio or
investment option to one that causes the Accumulation Protector Benefit rider
charge to increase (see "Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment. It is increased by
the amount of any subsequent purchase payments received within the first 180
days that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix D.
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit
--------------------------------------------------------------------------------
56 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Payment (GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit
Amount (GBA)" and "Remaining Benefit Amount (RBA)." See these headings below
for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
withdrawals you take under the contract will reduce the value of the death
benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate purchase payments to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen. You may make two elective investment option
changes per contract year; we reserve the right to limit elective investment
option changes if required to comply with the written instructions of a fund
(see "Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your model
portfolio or investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed investment option changes per contract
year and will not cause your rider fee to increase.
The target investment option is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment
option that is more aggressive than the current target investment option after
30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your model portfolio or investment option to the target investment
option or
--------------------------------------------------------------------------------
58 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
any model portfolio or investment option that is more conservative than the
target investment option without a benefit reset as described below. If you
are in a withdrawal phase and you choose to allocate your contract value to an
investment option that is more aggressive than the target investment option,
your rider benefit will be reset as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option (or change from the model
portfolio to an investment option) by written request on an authorized form or
by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered spouse who is the owner of the contract (or
annuitant in the case of nonnatural ownership). The rider will terminate at
the death of the contract owner (or annuitant in the case of nonnatural
ownership) because the original spouse will be unable to elect the spousal
continuation provision of the contract (see "Joint Life only: Covered Spouses"
below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the guaranteed amount of withdrawal available under the rider and
such withdrawals may reduce future benefits guaranteed under the rider. While
the
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
withdrawal charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an interim
value used to calculate the amount available for withdrawals each year under the
basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time,
the total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
--------------------------------------------------------------------------------
60 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. Please note that if the withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
--------------------------------------------------------------------------------
62 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups may increase
your ALP, they may reduce or eliminate any benefit of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix F for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
--------------------------------------------------------------------------------
64 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
waiting period is cancelled and any waiting period limitations on withdrawals
and step-ups terminate. The surviving covered spouse can name a new beneficiary,
however, a new covered spouse cannot be added to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
--------------------------------------------------------------------------------
66 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set to the
ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
waiting period and prior to any withdrawals, the RALP will be reset to equal
the lesser of the ALP or total purchase payments multiplied by 6%. If the time
period ends at any other time, the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
OPTIONAL LIVING BENEFITS
(FOR THE CONTRACT APPLICATIONS SIGNED BEFORE MAY 1, 2007)
If you bought a contract before May 1, 2007 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living
--------------------------------------------------------------------------------
68 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
benefit rider you purchased, ask your investment professional, or contact us at
the telephone number or address shown on the first page of this prospectus.
--------------------------------------------------------------------------------------------------
AND YOU SELECTED ONE OF THE
IF YOU PURCHASED FOLLOWING OPTIONAL LIVING DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
--------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit Appendix K
("Rider B")
--------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit Appendix K
2006 ("Rider A")
--------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit Appendix J
for Life
--------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix L
--------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective. The
Benefit Protector does not provide any additional benefit before the first rider
anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date of death.
For an example, see Appendix G.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are age 70 or older at the rider
effective date. It does not provide any additional benefit before the first
rider anniversary and it does not provide any benefit beyond what is offered
under the Benefit Protector rider during the second rider year.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector
Plus to you contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE AGE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the ROP death benefit (see "Benefits in Case of Death") plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three & Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix H.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
--------------------------------------------------------------------------------
70 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). You may reallocate this contract value to the
subaccounts to provide variable annuity payouts. Additionally, we currently
allow you to use part of the amount available to purchase payouts, leaving any
remaining contract value to accumulate on a tax-deferred basis. If you select a
variable annuity payout, we reserve the right to limit the number of subaccounts
in which you may invest. The GPAs and the DCA fixed account are not available
during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. Fixed payouts remain
the same from month to month.
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
retirement date. If the annuitant outlives the elected guaranteed payout
period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix J: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix K: Guarantor Withdrawal Benefit Rider"). The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in the
frequency that you elect. The frequencies will be among those offered by us at
the time but will be no less frequent than annually. If, at the death of the
owner, total payouts have been made for less than the RBA, the remaining
payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
--------------------------------------------------------------------------------
72 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
taxpayer's "net investment income." Net investment income includes taxable
income from nonqualified annuities. Annuity holders are advised to consult their
tax advisor regarding the possible implications of this additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible
--------------------------------------------------------------------------------
74 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
contributions; or (2) you rolled after-tax dollars from a retirement plan into
your IRA; or (3) the contract is used to fund a retirement plan and you or your
employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
--------------------------------------------------------------------------------
76 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 4.00% for contract Option
L and 1.00% for contract Option C each time a purchase payment is made. We may
also pay ongoing trail commissions of up to 1.25% of the contract value. We do
not pay or withhold payment of trail commissions based on which investment
options you select.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
We may pay selling firms an additional sales commission of up to 1.00% of
purchase payments for both contract options offered for a period of time we
select. For example, we may offer to pay an additional sales commission to get
selling firms to market a new or enhanced contract or to increase sales during
the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
--------------------------------------------------------------------------------
78 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 81 p. 27
Appendix B: Example -- Withdrawal Charges -- Withdrawal Charges
Charges for Contract Option L p. 83 p. 34
Appendix C: Example -- Death Benefits p. 88 Benefits in Case of Death p. 51
Appendix D: Example -- Accumulation Optional Benefits -- Accumulation
Protector Benefit Rider p. 91 Protector Benefit Rider p. 54
Appendix E: Example -- SecureSource Optional Benefits -- SecureSource Riders
Riders p. 92 p. 56
Appendix F: SecureSource Optional Benefits -- SecureSource Riders
Riders -- Additional RMD Disclosure p. 96 p. 56
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 98 Death Benefit Rider p. 69
Appendix H: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 100 Plus Death Benefit Rider p. 69
Appendix I: Asset Allocation Program for
Contracts With Applications Signed
Before May 1, 2006 p. 102
Appendix J: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 103
Appendix K: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 115
Appendix L: Example -- Income Assurer N/A
Benefit Riders Disclosure p. 123
Appendix M: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 132 (Unaudited) p. 14
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, DCA fixed account, and one-year
fixed account and the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices C through E and
J through L include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
80 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 6% due to the withdrawal
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
charge schedule under contract Option L. (See "Charges -- Withdrawal Charge").
We do not apply MVAs to the amounts we deduct for withdrawal charges, so we
would deduct the withdrawal charge from your early withdrawal after we applied
the MVA. Also note that when you request an early withdrawal, we withdraw an
amount from your GPA that will give you the net amount you requested after we
apply the MVA (and any applicable withdrawal charge under contract Option L),
unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
82 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES FOR CONTRACT OPTION L
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling:
- up to 10% of your prior anniversary's contract value or your contract's
remaining benefit payment if you elected the Guarantor Withdrawal Benefit
rider and your remaining benefit payment is greater than 10% of your prior
anniversary's contract value. We do not assess a withdrawal charge on this
amount.
- up to 10% of your prior anniversary's contract value or the greater of your
contract's remaining benefit payment or remaining annual lifetime payment
if you elected the SecureSource rider or the Guarantor Withdrawal Benefit
for Life rider, and the greater of your RALP and your remaining benefit
payment is greater than 10% of your prior anniversary's contract value. We
do not assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA, the one-year
fixed account or the DCA fixed account. If the contract value is less than
purchase payments received and not previously withdrawn (PPNPW) then contract
earnings are zero.
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for Contract Option L with a four-year withdrawal
charge schedule. Each example illustrates the amount of the withdrawal charge
for both a contract that experiences gains and a contract that experiences
losses, given the same set of assumptions.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
FULL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
with the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You withdraw the contract for its total value during the fourth contract year
after you made the single purchase payment. The withdrawal charge percentage
in the fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
---------- ----------
Earnings in the contact (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Now we can determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
84 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: $50,000.00 $50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
---------- ----------
withdrawal charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
---------- ----------
NET FULL WITHDRAWAL PROCEEDS: $56,960.00 $37,212.00
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
PARTIAL WITHDRAWAL CHARGE CALCULATION -- FOUR-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a four-year (from the date of EACH purchase payment) withdrawal charge schedule
with the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You request a net partial withdrawal of $15,000.00 during the fourth contract
year after you made the single purchase payment. The withdrawal charge
percentage in the fourth year after a purchase payment is 6.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS
FOLLOWS:
----------------------------------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings available
in the contract at the time of withdrawal as:
Contract value just prior to withdrawal (CV): $60,000.00 $40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
withdrawn (PPNPW):
---------- ----------
Earnings in the contact (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,319.15 15,897.93
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,319.15 15,897.93
STEP 4. Next we determine XSF, the amount by which 10% of the
prior anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 5,319.15 19,165.51
--------------------------------------------------------------------------------
86 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you request
to withdraw:
PPW: $ 5,319.15 $19,165.51
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 5,319.15 14,965.51
multiplied by the withdrawal charge rate: x 6.0% x 6.0%
---------- ----------
withdrawal charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,319.15 15,897.93
WITHDRAWAL CHARGE: (319.15) (897.93)
---------- ----------
NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
APPENDIX C: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000. You select contract
Option L; and
On the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 partial withdrawal, including withdrawal charge; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
$22,000 = -1,704.55
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. You select contract
Option L; and
On the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
$22,000 = -1,704.55
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
$22,000 = -1,772.73
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
88 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
On the first contract anniversary, the GPA value is $5,200 and the subaccount
value is $17,000. Total contract value is $23,200; and
During the second contract year the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000 -1,543.21
$24,300 =
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
----------------- = -$1,657.89
$19,000
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs, one-year fixed account and
the variable account floor): $24,642.11
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPAs and $20,000 allocated to the subaccounts. You select Contract Option
L; and
On the first contract anniversary, the GPAs value is $5,200 and the subaccount
value is $17,000. Total contract value is $23,200; and
During the second contract year, the GPA value is $5,300 and the subaccount
value is $19,000. Total contract value is $24,300. You take a $1,500 partial
withdrawal (including withdrawal charges) all from the subaccounts, leaving
the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000 -1,543.21
$24,300 =
for a ROP Death Benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
----------------- = -1,543.21
$24,300
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
----------------- = -$1,657.89
$19,000
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
5% variable account floor (value of the GPAs and the variable account
floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE
ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
90 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
The example assumes:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000.
You make no additional purchase payments.
You do not exercise the Elective Step-up option
The Accumulation Protector Benefit rider fee is 0.80%.
PARTIAL
END OF ASSUMED WITHDRAWAL ADJUSTED ACCUMULATION
CONTRACT NET RATE OF (BEGINNING OF PARTIAL BENEFIT CONTRACT
YEAR RETURN YEAR) WITHDRAWAL MCAV AMOUNT VALUE
1 12% 0 0 100,000 0 111,104
2 15% 0 0 101,398 0 126,747
3 3% 0 0 103,604 0 129,505
4 -8% 0 0 103,604 0 118,192
5 -15% 0 0 103,604 0 99,634
6 20% 2,000 2,080 101,525 0 116,224
7 15% 0 0 106,071 0 132,588
8 -10% 0 0 106,071 0 118,375
9 -20% 5,000 4,480 101,590 0 89,851
10 -12% 0 0 101,590 23,334 78,256
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target investment option under the contract is
the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate investment option if you
are invested more aggressively than the Moderate investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the Covered Person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
92 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new Covered Person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The Annual Step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the Waiting Period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the Waiting Period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied Annual Step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target investment option under the contract is
the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate investment option if you are invested more
aggressively than the Moderate investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
94 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the Waiting Period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the Waiting Period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX F: SECURESOURCE RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under a
SecureSource rider to satisfy the RMD rules under 401(a)(9) of the Code without
application of the excess withdrawal processing described in the rider. We
reserve the right to modify this administrative practice at any time upon 30
days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
rider.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based on your initial purchase payment and not the actual contract value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource rider is
attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your SecureSource
rider may not be sufficient to satisfy the requirements under the Code for these
types of distributions. In such a situation, amounts withdrawn to satisfy such
distribution requirements will exceed your available RBP or RALP amount and may
result in the reduction of your GBA, RBA, and/or ALP as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by
--------------------------------------------------------------------------------
96 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
us as zero in all years. The life expectancy required minimum distribution
amount calculated by us will also equal zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing the SecureSource rider.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV death benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the second contract year the contract value falls to
$105,000. The death benefit equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit on equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
98 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV death benefit minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The MAV Death Benefit on equals the contract value. You have not
reached the first contract anniversary so the Benefit Protector Plus
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any benefit beyond what
is provided by the Benefit Protector at this time. The death benefit
equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charge for contract Option L. We will
withdraw $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the
withdrawal is subject to a 7% withdrawal charge because your payment
is in the third year of the withdrawal charge schedule, so we will
withdraw $39,500 ($36,735 + $2,765 in withdrawal charges) from your
contract value. Altogether, we will withdraw $50,000 and pay you
$47,235. We calculate purchase payments not previously withdrawn as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
withdrawal is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
100 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts and any GPAs that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts and/or any GPAs that make up
the model portfolio you selected and the allocation percentages to those
subaccounts and/or any GPAs will not change unless we adjust the composition of
the model portfolio to reflect the liquidation, substitution or merger of an
underlying fund, a change of investment objective by an underlying fund or when
an underlying fund stops selling its shares to the variable account. We reserve
the right to change the terms and conditions of the asset allocation program
upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
102 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
your contract application was signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the retirement date, you
have the right to withdraw some or all of your contract value, less applicable
administrative, withdrawal and rider charges imposed under the contract at the
time of the withdrawal (see "Making the Most of Your Contract -- Withdrawals").
Because your contract value will fluctuate depending on the performance of the
underlying funds in which the subaccounts invest, the contract itself does not
guarantee that you will be able to take a certain withdrawal amount each year
before the annuity payouts begin, nor does it guarantee the length of time over
which such withdrawals can be made before the annuity payouts begin.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all
--------------------------------------------------------------------------------
104 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program.") You may
allocate purchase payments to the DCA fixed account, when available, and we
will make monthly transfers into the PN program investment option you have
chosen. Subject to state restrictions, we reserve the right to limit the
number of investment options from which you can select based on the dollar
amount of purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or annuity payouts begin.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment limitations, please see "Buying Your Contract -- Purchase
Payments."
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may incur a 10%
IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to discontinue our administrative practice described
above and will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit for Life rider may be of limited value to you.
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a
surrender of the contract. The partial withdrawal amount is a gross amount and
will include any withdrawal charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
--------------------------------------------------------------------------------
106 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
payment has its own GBP, which is equal to the lesser of that payment's RBA or
7% of that payment's GBA, and the total GBP is the sum of the individual GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The Covered Person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
--------------------------------------------------------------------------------
108 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
--------------------------------------------------------------------------------
110 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero. We will notify you of this option. If
no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life rider.
--------------------------------------------------------------------------------
112 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
114 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR WITHDRAWAL BENEFIT RIDER
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
RIDER A
you purchase(d) your contract on or after April 30, 2005 in those states where
the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life rider
are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
your contract application was signed prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a withdrawal charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your PN
program model portfolio or investment option, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
I: Asset Allocation Program for Contracts Purchased Before May 1, 2006"),
however, you may elect to participate in the Portfolio Navigator program after
May 1, 2006. The Portfolio Navigator program and the asset allocation program
limit your choice of investments. This means you will not be able to allocate
contract value to all of the subaccounts, GPAs or the one-year fixed account
that are available under the contract to contract owners who do not elect this
rider. You may allocate purchase payments to the DCA fixed account, when
available, and we will make monthly transfers into the PN program investment
option you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment limitations, please see "Buying Your Contract -- Purchase
Payments."
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw in a contract year
under the contract's TFA provision that exceeds the GBP is subject to the
excess withdrawal processing for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or annuity
payouts begin.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
--------------------------------------------------------------------------------
116 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to discontinue our administrative practice described
above and will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit rider may be of limited value to you. You should consult
your tax advisor before you select this optional rider if you have any
questions about the use of this rider in your tax situation;
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment. The total GBA
when an additional purchase payment is added is the sum of the individual GBAs
immediately prior to the receipt of the additional purchase payment, plus the
GBA associated with the additional purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below);
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. Note that if the partial withdrawal is taken during the first
three years, the GBA and the GBP are calculated after the reversal of any
prior step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken
during the first three years, the GBA and the GBP are calculated after the
reversal of any prior step ups.
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below);
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED
TO THE RBA. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups.
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
--------------------------------------------------------------------------------
118 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have been paid;
the GBA will be reset to the greater of the GBA on the valuation date we receive
the spouse's written request to continue the contract and the death benefit that
would otherwise have been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this
--------------------------------------------------------------------------------
120 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
settlement option subject to the distribution requirements of the contract. We
reserve the right to adjust the remaining schedule of GBPs if necessary to
comply with the Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
122 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX L : EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if your contract application was signed prior to May 1, 2007.
These riders are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments paid in the last five years
before exercise of the benefit which we reserve the right to exclude from the
calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the retirement date must be between 50 to 86 years old; and
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 123
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund; Joint and Last
Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
--------------------------------------------------------------------------------
124 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments made to the contract minus proportionate adjustments for
partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by proportionate adjustments for partial withdrawals. Every contract
anniversary after that prior to the earlier of your or the annuitant's 81st
birthday, we compare the MAV to the current contract value and we reset the MAV
to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such purchase
payment. The estimated contract value at such anniversary is calculated by
assuming that payments, any credits, and partial withdrawals occurring in a
contract year take place at the beginning of the year for that anniversary and
every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments made to the protected investment options minus
adjusted partial withdrawals and transfers from the protected investment
options; plus
an amount equal to 5% of your initial purchase payment allocated to the
protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments to or withdraw or
transfer amounts from the protected investment options, we adjust the variable
account floor by adding the additional purchase payment and subtracting adjusted
withdrawals and adjusted transfers. On each subsequent contract anniversary
after the first anniversary of the effective date of this rider, prior to the
earlier of your or the annuitant's 81st birthday, we increase the variable
account floor by adding the amount ("roll-up amount") equal to 5% of the prior
contract anniversary's variable account floor.
The amount of purchase payment withdrawn from or transferred between the
excluded investment options and the protected investment options is calculated
as (a) times (b) where:
(a) is the amount of purchase payment in the investment options being
withdrawn or transferred on the date of but prior to the current
withdrawal or transfer; and
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 125
(b) is the ratio of the amount of the transfer or withdrawal to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the
value from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments less excluded payments, less proportionate
adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments made to the contract minus proportionate
adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments less excluded payments, less proportionate
adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
--------------------------------------------------------------------------------
126 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program investment options
include protected investment options and excluded investment options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and the one-year fixed account). Excluded investment options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE(2)
--------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 127
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
128 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 129
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
130 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB -- MAX PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB -- MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 131
APPENDIX M: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of
period $1.09 $1.00 $0.82 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.04 $1.09 $1.00 $0.82 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 2 2 2 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of
period $1.60 $1.37 $0.91 $1.76 $1.50 $1.40 $1.38 $1.33 $0.94 $1.00
Accumulation unit value at end of period $1.20 $1.60 $1.37 $0.91 $1.76 $1.50 $1.40 $1.38 $1.33 $0.94
Number of accumulation units outstanding
at end of period (000 omitted) 108 107 100 100 107 16 16 16 15 --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of
period $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.32 $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95
Number of accumulation units outstanding
at end of period (000 omitted) 40 56 61 84 154 167 189 109 52 8
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 $1.00 -- --
Accumulation unit value at end of period $0.93 $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 7,923 8,703 28,798 37,213 21,915 15,378 8,725 1,580 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 $1.00 -- --
Accumulation unit value at end of period $1.34 $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 8,705 12,467 14,455 14,852 23,568 25,472 20,290 3,919 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of
period $0.99 $0.85 $0.67 $0.90 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.97 $0.99 $0.85 $0.67 $0.90 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 6 9 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.03 $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4,210 5,777 7,197 7,837 8,361 23,813 6,935 1,154 -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 $1.00 -- --
Accumulation unit value at end of period $1.14 $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 57 76 102 77 74 88 26 18 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of
period $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit value at end of period $0.98 $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of accumulation units outstanding
at end of period (000 omitted) 4,164 3,587 19,621 8,230 5,476 2,192 1,151 399 76 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit value at beginning of
period $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 $1.00
Accumulation unit value at end of period $1.32 $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01
Number of accumulation units outstanding
at end of period (000 omitted) 3,083 4,009 84,971 77,286 67,959 33,990 1,077 842 152 40
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit value at end of period $1.52 $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86
Number of accumulation units outstanding
at end of period (000 omitted) 8,456 10,953 63,435 55,414 35,371 27,624 9,764 608 392 325
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67
Accumulation unit value at end of period $0.67 $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51
Number of accumulation units outstanding
at end of period (000 omitted) 7,129 9,784 12,306 14,085 14,409 15,807 17,584 7,616 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 $1.00 -- --
Accumulation unit value at end of period $1.96 $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,530 2,741 12,170 16,976 10,106 9,010 5,172 1,070 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.15 $1.12 $1.07 $1.09 $1.02 $1.00 -- -- -- --
Accumulation unit value at end of period $1.25 $1.15 $1.12 $1.07 $1.09 $1.02 -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,043 2,737 67,428 34,578 35,149 26,599 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
132 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit value at beginning of
period $1.23 $1.11 $0.79 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.28 $1.23 $1.11 $0.79 $1.07 $1.07 -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,446 2,071 2,632 3,351 4,145 9,940 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90
Accumulation unit value at end of period $1.61 $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83
Number of accumulation units outstanding
at end of period (000 omitted) 1,679 2,244 4,591 5,601 6,703 8,935 4,144 855 325 80
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of
period $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.55 $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,002 1,436 41,498 25,442 20,776 8,355 8 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.27 $1.01 $1.73 $1.56 $1.28 $1.14 $1.00 -- --
Accumulation unit value at end of period $1.22 $1.42 $1.27 $1.01 $1.73 $1.56 $1.28 $1.14 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 13 13 13 20 20 20 16 1 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 $1.00 -- --
Accumulation unit value at end of period $1.02 $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 231 331 809 5,059 3,798 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of
period $0.99 $0.83 $0.67 $1.12 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.95 $0.99 $0.83 $0.67 $1.12 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,550 1,822 76,608 52,069 30,376 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of
period $0.87 $0.78 $0.57 $1.13 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.72 $0.87 $0.78 $0.57 $1.13 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 40 44 70 20 17 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit value at beginning of
period $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 $1.00
Accumulation unit value at end of period $1.41 $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02
Number of accumulation units outstanding
at end of period (000 omitted) 258 314 406 643 597 708 735 335 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.90 $0.74 $0.54 $1.00 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.81 $0.90 $0.74 $0.54 $1.00 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 174 171 136 136 136 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 $1.00 -- --
Accumulation unit value at end of period $1.12 $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 255 408 405 374 367 227 227 174 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10
Accumulation unit value at end of period $1.20 $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) 2,096 2,681 13,727 7,345 6,207 5,084 3,085 1,544 1,019 864
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit value at beginning of
period $1.47 $1.18 $0.96 $1.36 $1.42 $1.21 $1.17 $1.00 -- --
Accumulation unit value at end of period $1.35 $1.47 $1.18 $0.96 $1.36 $1.42 $1.21 $1.17 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 802 962 40,544 28,150 20,212 23 4 2 -- --
---------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of
period $0.97 $0.84 $0.72 $1.10 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.83 $0.97 $0.84 $0.72 $1.10 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 395 456 200 140 135 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.24 $0.99 $0.75 $1.28 $1.28 $1.21 $1.13 $1.00 -- --
Accumulation unit value at end of period $1.22 $1.24 $0.99 $0.75 $1.28 $1.28 $1.21 $1.13 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 13 19 21 20 19 22 15 13 -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.27 $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 1 9 14 1 1 1 1 -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.82 $0.76 $0.62 $1.09 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.68 $0.82 $0.76 $0.62 $1.09 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 18 18 19 17 18 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 $1.00 -- --
Accumulation unit value at end of period $0.99 $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 6 14 63 66 115 87 57 9 -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 133
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of
period $1.07 $1.00 $0.70 $0.98 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 $1.00 $0.70 $0.98 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 986 1,158 31,381 22,672 16,330 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit value at beginning of
period $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 $1.00
Accumulation unit value at end of period $1.65 $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97
Number of accumulation units outstanding
at end of period (000 omitted) 10,705 13,957 27,907 47,719 43,300 45,089 16,531 3,067 152 --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit value at beginning of
period $1.03 $0.84 $0.67 $1.29 $1.04 $0.99 $0.96 $0.94 $0.73 $1.00
Accumulation unit value at end of period $1.01 $1.03 $0.84 $0.67 $1.29 $1.04 $0.99 $0.96 $0.94 $0.73
Number of accumulation units outstanding
at end of period (000 omitted) 107 128 125 129 305 368 324 327 68 --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.30 $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4,787 6,648 45,428 40,566 40,253 12,953 8,188 1,336 -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06
Accumulation unit value at end of period $2.05 $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94
Number of accumulation units outstanding
at end of period (000 omitted) 1,684 2,096 12,835 18,330 11,091 7,570 3,100 1,208 722 290
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.05 $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,997 2,249 4,907 4,814 4,416 4,843 4,036 1,573 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit value at end of period $1.69 $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96
Number of accumulation units outstanding
at end of period (000 omitted) 1,164 1,832 2,044 2,501 3,051 2,743 2,554 2,119 1,118 777
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.01 $0.88 $1.22 $1.28 $1.11 $1.09 $1.00 -- --
Accumulation unit value at end of period $1.25 $1.20 $1.01 $0.88 $1.22 $1.28 $1.11 $1.09 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 110 113 134 142 160 63 38 14 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35 $0.50
Accumulation unit value at end of period $0.59 $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35
Number of accumulation units outstanding
at end of period (000 omitted) 487 738 838 1,058 1,427 1,612 1,719 1,992 1,273 1,008
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01 $1.17
Accumulation unit value at end of period $1.45 $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01
Number of accumulation units outstanding
at end of period (000 omitted) 1,054 1,353 1,660 1,878 2,787 9,197 2,844 3,112 870 324
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit value at end of period $1.79 $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,899 4,938 34,264 32,433 35,814 23,082 7,734 1,493 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.12 $1.06 $0.82 $1.45 $1.44 $1.20 $1.12 $1.00 -- --
Accumulation unit value at end of period $1.02 $1.12 $1.06 $0.82 $1.45 $1.44 $1.20 $1.12 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 165 269 256 311 510 376 226 177 -- --
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit value at end of period $2.68 $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46
Number of accumulation units outstanding
at end of period (000 omitted) 2,277 2,833 10,008 11,967 11,638 9,377 4,128 1,284 550 386
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61 $0.79
Accumulation unit value at end of period $0.82 $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61
Number of accumulation units outstanding
at end of period (000 omitted) 266 322 468 492 587 636 956 816 519 391
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of
period $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 $1.00
Accumulation unit value at end of period $0.88 $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79
Number of accumulation units outstanding
at end of period (000 omitted) 349 380 4,126 3,856 4,110 3,472 324 329 238 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of
period $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 $1.00
Accumulation unit value at end of period $1.45 $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94
Number of accumulation units outstanding
at end of period (000 omitted) 28 86 97 110 133 147 153 163 29 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
134 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.93 $0.90 $0.72 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.95 $0.93 $0.90 $0.72 $1.03 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 27 29 14 17 9 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.89 $0.81 $0.61 $1.04 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.82 $0.89 $0.81 $0.61 $1.04 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,321 1,471 61,756 25,377 13,924 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.33 $1.19 $0.93 $1.33 $1.24 $1.14 $1.08 $1.00 -- --
Accumulation unit value at end of period $1.22 $1.33 $1.19 $0.93 $1.33 $1.24 $1.14 $1.08 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 342 426 560 664 808 912 1,051 427 -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of
period $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 $1.00
Accumulation unit value at end of period $1.42 $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98
Number of accumulation units outstanding
at end of period (000 omitted) 12,380 16,064 35,637 43,373 36,774 36,888 18,912 3,700 73 --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit value at beginning of
period $1.12 $1.07 $0.74 $1.56 $1.56 $1.41 $1.36 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.07 $1.12 $1.07 $0.74 $1.56 $1.56 $1.41 $1.36 $1.24 $0.95
Number of accumulation units outstanding
at end of period (000 omitted) 1,475 1,830 2,251 2,882 2,554 2,791 3,249 1,479 220 70
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.94 $0.83 $0.62 $1.05 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.87 $0.94 $0.83 $0.62 $1.05 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,385 1,565 65,361 54,012 36,050 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of
period $1.04 $0.84 $0.60 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.03 $1.04 $0.84 $0.60 $1.03 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 66 80 45 27 10 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of
period $1.47 $1.10 $0.69 $1.16 $1.15 $1.04 $1.00 $0.96 $0.73 $1.00
Accumulation unit value at end of period $1.29 $1.47 $1.10 $0.69 $1.16 $1.15 $1.04 $1.00 $0.96 $0.73
Number of accumulation units outstanding
at end of period (000 omitted) 92 92 96 101 141 155 155 138 107 1
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of
period $1.24 $1.15 $0.99 $1.30 $1.28 $1.16 $1.15 $1.06 $0.93 $1.00
Accumulation unit value at end of period $1.24 $1.24 $1.15 $0.99 $1.30 $1.28 $1.16 $1.15 $1.06 $0.93
Number of accumulation units outstanding
at end of period (000 omitted) 513 617 632 661 1,039 1,095 1,130 1,184 348 7
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of
period $2.38 $2.13 $1.63 $2.67 $2.13 $1.65 $1.44 $1.13 $0.85 $1.00
Accumulation unit value at end of period $2.49 $2.38 $2.13 $1.63 $2.67 $2.13 $1.65 $1.44 $1.13 $0.85
Number of accumulation units outstanding
at end of period (000 omitted) 37 43 56 66 103 85 72 63 37 9
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.68 $0.77 $0.64 $0.46 $0.85 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 296 333 14,104 18,345 7,208 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $1.18 $0.91 $0.59 $1.12 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.18 $0.91 $0.59 $1.12 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 18 19 10 9 8 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 $1.00 -- --
Accumulation unit value at end of period $1.77 $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 199 289 498 554 553 510 443 177 -- --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of
period $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 $1.00
Accumulation unit value at end of period $1.25 $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97
Number of accumulation units outstanding
at end of period (000 omitted) 4,237 5,659 6,442 7,744 7,383 8,562 6,720 1,419 14 --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 $1.00
Accumulation unit value at end of period $1.40 $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77
Number of accumulation units outstanding
at end of period (000 omitted) 320 469 582 612 831 683 680 562 136 --
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 $1.00
Accumulation unit value at end of period $1.58 $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 5,377 6,880 57,951 47,806 44,474 21,466 9,445 2,076 137 5
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of
period $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.77 $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95
Number of accumulation units outstanding
at end of period (000 omitted) 160 185 206 207 221 168 168 143 64 18
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 135
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of
period $1.13 $1.02 $0.85 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.13 $1.13 $1.02 $0.85 $1.03 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,040 1,090 33,919 46,677 37,481 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 $1.00
Accumulation unit value at end of period $1.11 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84
Number of accumulation units outstanding
at end of period (000 omitted) 7 23 97 123 136 162 175 177 188 73
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit value at beginning of
period $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47 $0.58
Accumulation unit value at end of period $0.60 $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47
Number of accumulation units outstanding
at end of period (000 omitted) 526 877 955 1,134 1,511 1,624 1,716 1,786 1,760 1,350
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of
period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 84 125 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 $1.00 -- --
Accumulation unit value at end of period $1.10 $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 285 299 325 340 355 5,948 89 5 -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,578 3,678 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 57,497 68,262 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 4,700 2,476 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 53,602 58,932 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.84 $0.77 $0.60 $0.99 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.80 $0.84 $0.77 $0.60 $0.99 -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1,741 2,012 81,300 45,483 28,284 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.19 $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 7 7 7 7 7 8 8 2 -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 36,336 32,170 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 458,939 516,525 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 28,278 25,057 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 213,018 254,807 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.06 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 9,842 6,739 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 69,228 81,004 -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
136 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of
period $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.50 $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of accumulation units outstanding
at end of period (000 omitted) 4,522 5,828 9,670 11,364 11,900 10,097 9,125 1,935 72 20
---------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit value at beginning of
period $2.14 $1.74 $1.18 $2.21 $1.94 $1.44 $1.20 $1.00 -- --
Accumulation unit value at end of period $1.80 $2.14 $1.74 $1.18 $2.21 $1.94 $1.44 $1.20 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2,072 2,430 14,141 19,452 10,278 8,406 4,181 858 -- --
---------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of
period $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 $1.00 -- --
Accumulation unit value at end of period $1.32 $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3,139 4,208 17,593 17,008 13,828 7,563 5,332 946 -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit value at beginning of
period $1.08 $1.00 $0.82 $1.00 -- -- -- --
Accumulation unit value at end of period $1.02 $1.08 $1.00 $0.82 -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit value at beginning of
period $1.02 $0.88 $0.59 $1.15 $1.00 -- -- --
Accumulation unit value at end of period $0.77 $1.02 $0.88 $0.59 $1.15 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07 $1.00
Accumulation unit value at end of period $1.01 $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.90 $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19
Number of accumulation units outstanding
at end of period (000 omitted) 14 15 24 40 59 67 39 6
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05 $1.00
Accumulation unit value at end of period $1.29 $1.18 $1.15 $1.07 $1.11 $1.03 $1.04 $1.05
Number of accumulation units outstanding
at end of period (000 omitted) 7 8 8 19 141 224 126 22
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of
period $0.98 $0.84 $0.66 $0.89 $1.00 -- -- --
Accumulation unit value at end of period $0.95 $0.98 $0.84 $0.66 $0.89 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06 $1.00
Accumulation unit value at end of period $0.99 $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) 18 19 19 42 91 149 50 --
---------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.09 $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99 $1.00
Accumulation unit value at end of period $0.98 $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99
Number of accumulation units outstanding
at end of period (000 omitted) 5 61 73 353 -- 7 4 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.23 $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 5 11 59 105 66 40 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15 $1.00
Accumulation unit value at end of period $1.22 $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 23 28 51 82 160 181 83 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.00 $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- 2 14 21 19
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16 $1.00
Accumulation unit value at end of period $1.88 $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) 5 7 8 18 32 46 24 3
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 137
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.12 $1.10 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.21 $1.12 $1.10 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 3 6 29 44 38 29 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit value at beginning of
period $1.20 $1.09 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.25 $1.20 $1.09 $0.78 $1.06 $1.06 -- --
Number of accumulation units outstanding
at end of period (000 omitted) 2 2 2 7 42 70 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.51 $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) 1 1 1 6 38 55 30 4
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of
period $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09 $1.00
Accumulation unit value at end of period $1.49 $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) 1 4 14 23 31 14 -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.37 $1.23 $0.99 $1.70 $1.54 $1.27 $1.14 $1.00
Accumulation unit value at end of period $1.18 $1.37 $1.23 $0.99 $1.70 $1.54 $1.27 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07 $1.00
Accumulation unit value at end of period $0.98 $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) 1 1 1 1 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of
period $0.97 $0.82 $0.66 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $0.93 $0.97 $0.82 $0.66 $1.12 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 10 35 35 43 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of
period $0.86 $0.77 $0.57 $1.13 $1.00 -- -- --
Accumulation unit value at end of period $0.70 $0.86 $0.77 $0.57 $1.13 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06 $1.00
Accumulation unit value at end of period $1.10 $1.33 $1.07 $0.67 $1.25 $1.12 $1.15 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- 1 1 1
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.88 $0.73 $0.53 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.79 $0.88 $0.73 $0.53 $0.99 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.08 $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99 $1.00
Accumulation unit value at end of period $1.02 $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99
Number of accumulation units outstanding
at end of period (000 omitted) 3 3 14 21 -- 9 5 --
---------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.15 $0.94 $1.34 $1.40 $1.20 $1.16 $1.00
Accumulation unit value at end of period $1.30 $1.42 $1.15 $0.94 $1.34 $1.40 $1.20 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) -- 3 16 18 30 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of
period $0.95 $0.83 $0.71 $1.10 $1.00 -- -- --
Accumulation unit value at end of period $0.81 $0.95 $0.83 $0.71 $1.10 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $0.97 $0.73 $1.25 $1.26 $1.20 $1.13 $1.00
Accumulation unit value at end of period $1.18 $1.20 $0.97 $0.73 $1.25 $1.26 $1.20 $1.13
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.15 $1.02 $0.85 $1.24 $1.18 $1.04 $1.02 $1.00
Accumulation unit value at end of period $1.22 $1.15 $1.02 $0.85 $1.24 $1.18 $1.04 $1.02
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.80 $0.75 $0.61 $1.09 $1.00 -- -- --
Accumulation unit value at end of period $0.67 $0.80 $0.75 $0.61 $1.09 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
138 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14 $1.00
Accumulation unit value at end of period $0.96 $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of
period $1.05 $0.98 $0.70 $0.98 $1.00 -- -- --
Accumulation unit value at end of period $1.05 $1.05 $0.98 $0.70 $0.98 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- 2 15 27 13 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10 $1.00
Accumulation unit value at end of period $1.27 $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) 26 31 38 83 177 296 101 8
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.07 $0.88 $0.71 $1.37 $1.10 $1.06 $1.03 $1.00
Accumulation unit value at end of period $1.05 $1.07 $0.88 $0.71 $1.37 $1.10 $1.06 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.25 $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) 10 13 36 65 166 215 115 19
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.53 $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21
Number of accumulation units outstanding
at end of period (000 omitted) 5 6 13 23 38 39 16 --
---------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10 $1.00
Accumulation unit value at end of period $1.02 $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 1 2 5 6 5
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12 $1.00
Accumulation unit value at end of period $1.31 $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.16 $0.98 $0.86 $1.20 $1.26 $1.10 $1.09 $1.00
Accumulation unit value at end of period $1.20 $1.16 $0.98 $0.86 $1.20 $1.26 $1.10 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.26 $1.01 $0.72 $1.27 $1.17 $1.10 $1.07 $1.00
Accumulation unit value at end of period $1.17 $1.26 $1.01 $0.72 $1.27 $1.17 $1.10 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $1.05 $0.85 $1.38 $1.36 $1.18 $1.09 $1.00
Accumulation unit value at end of period $1.10 $1.14 $1.05 $0.85 $1.38 $1.36 $1.18 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 7 6 16 -- --
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.72 $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) 3 5 18 34 64 78 39 8
---------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.08 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12 $1.00
Accumulation unit value at end of period $0.98 $1.08 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.36 $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19
Number of accumulation units outstanding
at end of period (000 omitted) 7 12 17 30 58 65 28 3
---------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.75 $0.68 $0.58 $0.93 $1.00 -- -- --
Accumulation unit value at end of period $0.77 $0.75 $0.68 $0.58 $0.93 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06 $1.00
Accumulation unit value at end of period $0.86 $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.09 $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.91 $0.89 $0.71 $1.02 $1.00 -- -- --
Accumulation unit value at end of period $0.93 $0.91 $0.89 $0.71 $1.02 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.88 $0.80 $0.60 $1.04 $1.00 -- -- --
Accumulation unit value at end of period $0.80 $0.88 $0.80 $0.60 $1.04 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- 3 23 20 22 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.29 $1.16 $0.91 $1.31 $1.22 $1.13 $1.07 $1.00
Accumulation unit value at end of period $1.18 $1.29 $1.16 $0.91 $1.31 $1.22 $1.13 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- 1 1 1
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.06 $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13
Number of accumulation units outstanding
at end of period (000 omitted) 31 34 42 78 192 235 119 13
---------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $0.86 $0.82 $0.57 $1.21 $1.22 $1.10 $1.07 $1.00
Accumulation unit value at end of period $0.81 $0.86 $0.82 $0.57 $1.21 $1.22 $1.10 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- 5 5 6
---------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.92 $0.82 $0.62 $1.05 $1.00 -- -- --
Accumulation unit value at end of period $0.85 $0.92 $0.82 $0.62 $1.05 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 7 33 38 55 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of
period $1.02 $0.83 $0.59 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.01 $1.02 $0.83 $0.59 $1.03 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- 4 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of
period $1.48 $1.11 $0.70 $1.18 $1.18 $1.07 $1.04 $1.00
Accumulation unit value at end of period $1.30 $1.48 $1.11 $0.70 $1.18 $1.18 $1.07 $1.04
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of
period $1.13 $1.06 $0.92 $1.21 $1.19 $1.09 $1.08 $1.00
Accumulation unit value at end of period $1.13 $1.13 $1.06 $0.92 $1.21 $1.19 $1.09 $1.08
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of
period $1.98 $1.78 $1.37 $2.25 $1.81 $1.41 $1.24 $1.00
Accumulation unit value at end of period $2.06 $1.98 $1.78 $1.37 $2.25 $1.81 $1.41 $1.24
Number of accumulation units outstanding
at end of period (000 omitted) -- 2 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.76 $0.64 $0.46 $0.84 $1.00 -- -- --
Accumulation unit value at end of period $0.67 $0.76 $0.64 $0.46 $0.84 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- 1 6 9 11 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $1.16 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $1.05 $1.16 $0.90 $0.58 $1.12 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.65 $1.30 $1.03 $1.71 $2.11 $1.57 $1.37 $1.00
Accumulation unit value at end of period $1.70 $1.65 $1.30 $1.03 $1.71 $2.11 $1.57 $1.37
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- 3 3 3
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06 $1.00
Accumulation unit value at end of period $0.98 $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06
Number of accumulation units outstanding
at end of period (000 omitted) 12 12 11 19 57 87 48 8
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15 $1.00
Accumulation unit value at end of period $1.23 $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
140 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07 $1.00
Accumulation unit value at end of period $1.29 $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07
Number of accumulation units outstanding
at end of period (000 omitted) 6 10 34 60 120 136 68 12
---------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.26 $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of
period $1.11 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.11 $1.11 $1.01 $0.85 $1.03 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 5 25 43 46 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03 $1.00
Accumulation unit value at end of period $1.08 $1.11 $1.11 $0.90 $1.11 $1.14 $1.14 $1.03
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.19 $1.11 $0.91 $1.66 $1.56 $1.25 $1.14 $1.00
Accumulation unit value at end of period $0.97 $1.19 $1.11 $0.91 $1.66 $1.56 $1.25 $1.14
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit value at beginning of
period $1.13 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.13 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18 $1.00
Accumulation unit value at end of period $1.06 $1.14 $0.92 $0.72 $1.21 $1.42 $1.23 $1.18
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- 5 4 12 -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 223 266 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.83 $0.76 $0.59 $0.98 $1.00 -- -- --
Accumulation unit value at end of period $0.78 $0.83 $0.76 $0.59 $0.98 -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 1 6 38 35 41 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09 $1.00
Accumulation unit value at end of period $1.14 $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.08 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 47 47 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.08 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 239 257 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- 69 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) -- -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding
at end of period (000 omitted) 61 61 -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.32 $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 10 10 11 17 56 72 43 5
---------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit value at beginning of
period $2.07 $1.70 $1.16 $2.17 $1.91 $1.42 $1.20 $1.00
Accumulation unit value at end of period $1.73 $2.07 $1.70 $1.16 $2.17 $1.91 $1.42 $1.20
Number of accumulation units outstanding
at end of period (000 omitted) 7 7 13 22 46 61 32 3
---------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15 $1.00
Accumulation unit value at end of period $1.27 $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15
Number of accumulation units outstanding
at end of period (000 omitted) 6 8 14 18 49 56 28 4
---------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
142 RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE ACCESSCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
273416 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R)
ENDEAVOR SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contract and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contract described in this prospectus. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, withdrawal
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and withdrawing money from the contract we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contract described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contract and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contract described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contract and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACT IN BRIEF....................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION............. 15
FINANCIAL STATEMENTS........................ 15
THE VARIABLE ACCOUNT AND THE FUNDS.......... 15
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 29
THE FIXED ACCOUNT........................... 30
BUYING YOUR CONTRACT........................ 32
CHARGES..................................... 35
VALUING YOUR INVESTMENT..................... 41
MAKING THE MOST OF YOUR CONTRACT............ 43
WITHDRAWALS................................. 50
TSA -- SPECIAL PROVISIONS................... 51
CHANGING OWNERSHIP.......................... 51
BENEFITS IN CASE OF DEATH................... 52
OPTIONAL BENEFITS........................... 55
THE ANNUITY PAYOUT PERIOD................... 71
TAXES....................................... 73
VOTING RIGHTS............................... 77
SUBSTITUTION OF INVESTMENTS................. 78
ABOUT THE SERVICE PROVIDERS................. 78
ADDITIONAL INFORMATION...................... 80
APPENDICES TABLE OF CONTENTS
AND CROSS-REFERENCE TABLE................. 81
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 82
APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES... 84
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 89
APPENDIX D: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 92
APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS.. 93
APPENDIX F: SECURESOURCE RIDERS --
ADDITIONAL RMD DISCLOSURE................. 97
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 99
APPENDIX H: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 101
APPENDIX I: PURCHASE PAYMENT CREDITS FOR
ELIGIBLE CONTRACTS........................ 103
APPENDIX J: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006........................ 104
APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE(R) RIDER DISCLOSURE.................. 105
APPENDIX L: GUARANTOR WITHDRAWAL
BENEFIT RIDER DISCLOSURE.................. 117
APPENDIX M: INCOME ASSURER BENEFIT RIDERS... 124
APPENDIX N: CONDENSED FINANCIAL
INFORMATION (UNAUDITED)................... 133
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 145
--------------------------------------------------------------------------------
2 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
or annuitant's death while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the one-year fixed account and
the DCA fixed account. Amounts you allocate to the fixed account earn interest
rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): A nonunitized separate account to which you
may allocate purchase payments and purchase payment credits or transfer contract
value of at least $1,000. These accounts have guaranteed interest rates for
guarantee periods we declare when you allocate purchase payments and purchase
payment credits or transfer contract value to a GPA. These guaranteed rates and
periods of time may vary by state. Unless an exception applies, transfers or
withdrawals from a GPA done more than 30 days before the end of the guarantee
period will receive a market value adjustment, which may result in a gain or
loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is withdrawn or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owner(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. When the
contract is owned by a revocable trust, the annuitant selected should be the
grantor of the trust to qualify for income tax deferral.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 3
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RETIREMENT DATE: The date when annuity payouts are scheduled to begin.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract. It is the contract value minus any applicable
charges.
--------------------------------------------------------------------------------
4 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACT IN BRIEF
PURPOSE: The contract allows you to accumulate money for retirement or a similar
long-term goal. You do this by making one or more purchase payments. You may
allocate your purchase payments to the GPAs, one-year fixed account, the DCA
fixed account (if part of your contract) and/or subaccounts of the variable
account under the contract; however, you risk losing amounts you invest in the
subaccounts of the variable account. These accounts, in turn, may earn returns
that increase the value of the contract. If the contract value goes to zero due
to underlying fund's performance or deduction of fees, the contract will no
longer be in force and the contract (including any death benefit riders) will
terminate. You may be able to purchase an optional benefit to reduce the
investment risk you assume under the contract. Beginning at a specified time in
the future called the retirement date, the contract provides lifetime or other
forms of payout of your contract value (less any applicable premium tax).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
ACCOUNTS: Generally, you may allocate your purchase payments among the:
subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at the
retirement date will equal or exceed the total purchase payments you allocate
to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account. (See "The One-Year Fixed
Account")
DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract value
can remain in this account. (See "The Fixed Account -- DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. Transfers out of the GPAs done more than 30 days before the end
of the guarantee period will be subject to an MVA, unless an exception applies.
You may establish automated transfers among the accounts. Transfers into the DCA
fixed account are not permitted. We reserve the right to further limit transfers
to the one-year fixed account if the interest rate we are then currently
crediting is equal to the minimum interest rate stated in the contract. (See
"Making the Most of Your Contract -- Transferring Among Accounts").
WITHDRAWALS: You may withdraw all or part of your contract value at any time
before the retirement date. You also may establish automated partial
withdrawals. Withdrawals may be subject to charges and tax penalties (including
a 10% IRS penalty if you make withdrawals prior to your reaching age 59 1/2) and
may have other tax consequences. Certain other restrictions may apply. (See
"Withdrawals")
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 5
OPTIONAL BENEFITS: You can buy additional benefits with your contract. We offer
optional death benefits. We also offer optional living benefits, including: a
guaranteed contract value on a future date ("Accumulation Protector Benefit
Rider") and a guaranteed minimum withdrawal benefit that permits you to withdraw
a guaranteed amount from the contract over a period of time, which may include,
under limited circumstances, the lifetime of a single person
(SecureSource - Single Life) or the lifetime of you and your spouse
(SecureSource - Joint Life) ("SecureSource Riders"). Optional living benefits
require the use of a Portfolio Navigator program (PN program) investment option
which may limit transfers and allocations; may limit the timing, amount and
allocation of purchase payments; and may limit the amount of withdrawals that
can be taken under the optional benefit during a contract year. We previously
offered other optional living benefits. (See "Optional Benefits -- Optional
Living Benefits"). Optional benefits vary by state and may have eligibility
requirements.
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount based on the death benefit
selected. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the retirement date. You
may choose from a variety of plans to make sure that payouts continue as long as
you like. If you buy a qualified annuity, the payout schedule must meet IRS
requirements. We can make payouts on a fixed or variable basis, or both. During
the annuity payout period, your choices for subaccounts may be limited. The GPAs
and the DCA fixed account are not available during the payout period. (See "The
Annuity Payout Period").
--------------------------------------------------------------------------------
6 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A WITHDRAWAL FROM THE CONTRACT. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAKE A WITHDRAWAL FROM THE CONTRACT. STATE PREMIUM TAXES ALSO MAY BE
DEDUCTED.
CONTRACT OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE
(contingent deferred sales charge as a percentage of purchase payments
withdrawn)
You selected either a seven-year or five-year withdrawal charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE*
YEARS FROM PURCHASE WITHDRAWAL CHARGE YEARS FROM PURCHASE WITHDRAWAL CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
1 8% 1 8%
2 8 2 7
3 7 3 6
4 7 4 4
5 6 5 2
6 5 Thereafter 0
7 3
Thereafter 0
* The five-year withdrawal charge schedule may not be available in all states.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S WITHDRAWAL CHARGE SCHEDULE. THE COMBINATION
YOU CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE
BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR CONTRACTS WITH APPLICATIONS SIGNED ON
OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
Return of Purchase Payment (ROP) Death
Benefit 0.90% 0.15% 1.05%
Maximum Anniversary Value (MAV) Death
Benefit 1.10 0.15 1.25
5% Accumulation Death Benefit 1.25 0.15 1.40
Enhanced Death Benefit 1.30 0.15 1.45
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.05 0.15 1.20
MAV Death Benefit 1.25 0.15 1.40
5% Accumulation Death Benefit 1.40 0.15 1.55
Enhanced Death Benefit 1.45 0.15 1.60
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 7
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL OTHER CONTRACTS
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP Death Benefit 1.00% 0.15% 1.15%
MAV Death Benefit 1.20 0.15 1.35
5% Accumulation Death Benefit 1.35 0.15 1.50
Enhanced Death Benefit 1.40 0.15 1.55
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.15 0.15 1.30
MAV Death Benefit 1.35 0.15 1.50
5% Accumulation Death Benefit 1.50 0.15 1.65
Enhanced Death Benefit 1.55 0.15 1.70
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP Death Benefit 1.20% 0.15% 1.35%
MAV Death Benefit 1.40 0.15 1.55
5% Accumulation Death Benefit 1.55 0.15 1.70
Enhanced Death Benefit 1.60 0.15 1.75
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.35 0.15 1.50
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
--------------------------------------------------------------------------------
8 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
OTHER ANNUAL EXPENSES
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full withdrawal.)
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. Each optional living benefit requires participation
in the PN program. The fees apply only if you have selected one of these
benefits.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: CURRENT:
1.75% 0.80%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contracts purchased prior to Jan. 26, 2009, the current charge is 0.55%.
FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
2.00% 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
2.50% 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO
JAN. 26, 2009
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
1.50% 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
1.75% 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR CONTRACTS WITH APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: CURRENT:
1.50% 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: CURRENT:
1.75% 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit -- Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 9
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50 0.25 0.31 -- 1.06(4)
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75 0.25 0.11 -- 1.11
Service Shares
--------------------------------------------------------------------------------
10 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75% 0.25% 0.05% --% 1.05%
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund -- Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
Putnam VT Small Cap Value Fund - Class IB Shares 0.63 0.25 0.15 0.11 1.14
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 11
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Variable Portfolio - Conservative Portfolio (Class 4) --% 0.25% 0.02% 0.61% 0.88%
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for
Columbia Variable Portfolio - High Income Fund (Class 2), 0.845% for
Columbia Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for
Columbia Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for
Columbia Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for
Columbia Variable Portfolio - Marsico International Opportunities Fund
(Class 2), 1.005% for Columbia Variable Portfolio - Mid Cap Growth
Opportunity Fund (Class 3) and 1.03% for Columbia Variable
Portfolio - Small Cap Value Fund (Class 2).
(2)Other expenses have been restated to reflect contractual changes to certain
other fees.
(3)Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4)Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5)The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6)Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7)Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(9)The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
--------------------------------------------------------------------------------
12 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
(11)MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12)The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13)The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15)PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 13
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES(1),
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider and the Benefit Protector Plus
Death Benefit(2). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,370 $2,558 $3,726 $6,236 $650 $1,926 $3,183 $6,236
Five-year
withdrawal charge
schedule 1,400 2,554 3,501 6,473 680 2,012 3,319 6,473
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,355 $2,515 $3,657 $6,115 $635 $1,883 $3,114 $6,115
Five-year
withdrawal charge
schedule 1,385 2,511 3,432 6,355 665 1,969 3,251 6,355
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits. Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT WITHDRAW YOUR CONTRACT
IF YOU WITHDRAW YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $957 $1,346 $1,723 $2,387 $214 $658 $1,123 $2,387
Five-year
withdrawal charge
schedule 985 1,335 1,479 2,705 245 751 1,279 2,705
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
withdrawal charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $943 $1,302 $1,644 $2,225 $199 $611 $1,044 $2,225
Five-year
withdrawal charge
schedule 971 1,291 1,401 2,547 230 704 1,201 2,547
(1) In these examples, the contract administrative charge is $40.
(2) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
14 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix N.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 15
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
16 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 17
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
18 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 19
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser.
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 21
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 27
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time may vary by state. The required
minimum investment in each GPA is $1,000. These accounts are not offered after
annuity payouts begin.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on money
currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns earned on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. Interest rates offered may vary by state,
but will not be lower than state law allows. WE CANNOT PREDICT NOR CAN WE
GUARANTEE WHAT FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or withdraw out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window you may choose to start a new guarantee period of the same length,
transfer the contract value to a GPA of another length, transfer the contract
value to any of the subaccounts or the one-year fixed account, or withdraw the
contract value (subject to applicable withdrawal provisions). If we do not
receive any instructions at the end
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 29
of your guarantee period, our current practice is to automatically transfer the
contract value into the shortest GPA term offered in your state.
We guarantee the contract value allocated to the GPAs, including interest
credited, if you do not make any transfers or withdrawals from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you withdraw or transfer contract value from a
GPA including withdrawals under the SecureSource rider, Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, or you elect
an annuity payout plan while you have contract value invested in a GPA. We will
refer to these transactions as "early withdrawals." The application of an MVA
may result in either a gain or loss of principal.
The 30-day rule does not apply and no MVA will apply to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts withdrawn for fees and charges; and
amounts we pay as death claims.
When you request an early withdrawal, we adjust the early withdrawal amount by
an MVA formula. The early withdrawal amount reflects the relationship between
the guaranteed interest rate you are earning in your current GPA and the
interest rate we are crediting on new GPAs that end at the same time as your
current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the withdrawal, the time remaining in your guarantee period and
your guaranteed interest rate. The MVA is negative, zero or positive depending
on how the guaranteed interest rate on your GPA compares to the interest rate of
a new GPA for the same number of years as the guarantee period remaining on your
GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT
Amounts allocated to the fixed account become part of our general account. The
fixed account includes the one-year fixed account and the DCA fixed account. We
credit interest on amounts you allocate to the fixed account at rates we
determine from time to time in our discretion. These rates will be based on
various factors including, but not limited to, the interest rate environment,
returns we earn on our general account investments, the rates currently in
effect for new and existing RiverSource Life annuities, product design,
competition, and RiverSource Life's revenues and expenses. The guaranteed
minimum interest rate on amounts invested in the fixed account may vary by state
but will not be lower than state law allows. We back the principal and interest
guarantees relating to the fixed account. These guarantees are based on the
continued claims-paying ability of RiverSource Life. You should be aware that
our general account is exposed to the risks normally associated with a portfolio
of fixed-income securities, including interest rate, option, liquidity and
credit risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account. The value of the one-
year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we
--------------------------------------------------------------------------------
30 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
declare. We credit the one-year fixed account with the current guaranteed annual
rate that is in effect on the date we receive your purchase payment or you
transfer contract value to the one-year fixed account. The interest rate we
apply to each purchase payment or transfer to the one-year fixed account is
guaranteed for one year. There are restrictions on the amount you can allocate
to the one-year fixed account as well as on transfers from this account (see
"Making the Most of Your Contract -- Transfer policies").
DCA FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The value of the DCA fixed account increases when we credit interest to
the DCA fixed account, and decreases when we make monthly transfers from the DCA
fixed account to your investment allocations. We credit interest only on the
declining balance of the DCA fixed account; we do not credit interest on amounts
that have been transferred from the DCA fixed account. We credit and compound
interest daily based on a 365-day year (366 in a leap year) so as to produce the
annual effective rate which we declare. Generally, we will credit the DCA fixed
account with interest at the same annual effective rate we apply to the one-year
fixed account on the date we receive your purchase payment, regardless of the
length of the term you select. From time to time, we may credit interest to the
DCA fixed account at promotional rates that are higher than those we credit to
the one-year fixed account. We reserve the right to declare different annual
effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account you instruct us to transfer to the one-
year fixed account;
for amounts in the DCA fixed account you instruct us to transfer to the GPAs;
for amounts in the DCA fixed account you instruct us to transfer to the
subaccounts.
The interest rates in effect for the DCA fixed account when we receive your
purchase payment are guaranteed for the length of the term. When you allocate an
additional purchase payment to an existing DCA fixed account term, the interest
rates applicable to that purchase payment will be the rates in effect for the
DCA fixed account of the same term on the date we receive your purchase payment.
For DCA fixed accounts with an initial term (or, in the case of an additional
purchase payment, a remaining term) of less than twelve months, the net
effective interest rates we credit to the DCA fixed account balance will be less
than the declared annual effective rates.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 31
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information, we reserve the right to refuse issue of your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may buy a qualified
or nonqualified annuity. Generally, you can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can become an owner if you are 85 or
younger. (The age limit may be younger for qualified annuities in some states.)
When you applied, you could have selected (if available in your state):
GPAs, the one-year fixed account, the DCA fixed account (if part of your
contract) and/or subaccounts in which you want to invest;
how you want to make purchase payments;
the length of the withdrawal charge schedule (5 or 7 years from our receipt of
each purchase payment);
a beneficiary;
the optional PN program(1); and
one of the following Death Benefits:
- ROP Death Benefit;
- MAV Death Benefit;
- 5% Accumulation Death Benefit(2); or
- Enhanced Death Benefit(2).
In addition, you could have also selected (if available in your state):
EITHER OF THE FOLLOWING OPTIONAL LIVING BENEFITS (ALL REQUIRE THE USE OF THE PN
PROGRAM):
Accumulation Protector Benefit rider
SecureSource rider
EITHER OF THE FOLLOWING OPTIONAL DEATH BENEFITS:
Benefit Protector Death Benefit rider(3)
Benefit Protector Plus Death Benefit rider(3)
(1) There is no additional charge for this feature.
(2) The 5% Accumulation Death Benefit and Enhanced Death Benefit are not
available with Benefit Protector and Benefit Protector Plus Death Benefit
riders.
(3) Not available with the 5% Accumulation Death Benefit or Enhanced Death
Benefit.
The contract provides for allocation of purchase payments to the GPAs, the one-
year fixed account, the DCA fixed account (if part of your contract) and/or the
subaccounts of the variable account in even 1% increments subject to the $1,000
required minimum investment for the GPAs. The amount of any purchase payment
allocated to the one-year fixed account in total
--------------------------------------------------------------------------------
32 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
cannot exceed 30% of the purchase payment. More than 30% of a purchase payment
may be so allocated if you establish an automated dollar-cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect. We reserve the right to further limit purchase payment
allocations to the one-year fixed account if the interest rate we are then
crediting on new purchase payments allocated to the one-year fixed account is
equal to the minimum interest rate stated in the contract.
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the retirement date.
THE RETIREMENT DATE
Annuity payouts begin on the retirement date. When we processed your
application, we established the retirement date to be the maximum age (or
contract anniversary if applicable) for nonqualified annuities and Roth IRAs and
for qualified annuities the date specified below. Your selected date can align
with your actual retirement from a job, or it can be a different future date,
depending on your needs and goals and on certain restrictions. You also can
change the retirement date, provided you send us written instructions at least
30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS, the retirement date must be:
no earlier than the 30th day after the contract's effective date; and
no later than the annuitant's 90th(1) birthday or the tenth contract
anniversary, if purchased after age 80(1), or such other date as agreed upon
by us.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
retirement date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select a retirement date that is later
than April 1 of the year following the calendar year when they reach age
70 1/2).
If you satisfy your required minimum distributions in the form of partial
withdrawals from this contract, annuity payouts can start as late as the
annuitant's 90th(1) birthday or the tenth contract anniversary, if later, or a
date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, may delay the annuity
payout start date for this contract.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the retirement date must be no later
than the annuitant's 85th birthday or the tenth contract anniversary, if
purchased after age 75. Ask your investment professional which retirement
date applies to you.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
before the retirement date while the contract is in force and before annuity
payouts begin. If there is more than one beneficiary, we will pay each
beneficiary's designated share when we receive their completed claim. A
beneficiary will bear the investment risk of the variable account until we
receive the beneficiary's completed claim. If there is no named beneficiary, the
default provisions of your contract will apply. (See "Benefits in Case of Death"
for more about beneficiaries.)
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract. The
rider will terminate if the surviving covered spouse can not utilize the spousal
continuation provision of the contract when the death benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 33
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
* This limit applies in total to all RiverSource Life annuities you own. We
reserve the right to waive or increase the maximum limit. For qualified
annuities, the Code's limits on annual contributions also apply. Additional
purchase payments are restricted during the waiting period after the first
180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
Effective Jan. 26, 2009, no additional purchase payments are allowed for
contracts with the Guarantor Withdrawal Benefit rider, Enhanced Guarantor
Withdrawal Benefit rider, Guarantor Withdrawal Benefit for Life rider, or
SecureSource riders, subject to state restrictions.
For contracts issued in all states except those listed below certain exceptions
apply and the following additional purchase payments will be allowed on/after
Jan. 26, 2009:
a. Tax Free Exchanges, rollovers, and transfers listed on the annuity
application and received within 180 days from the contract issue date.
b. Prior and current tax year contributions up to a cumulative annual maximum of
$6,000(1) for any Qualified Accounts. This maximum applies to IRAs, Roth
IRAs, and SEP plans
(1) The maximum amount is subject to change in later years and is based on the
limit set by the IRS for individual IRAs (including the catch-up provision).
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract will be limited to $100,000 for the
life of your contract. The limit does not apply to Tax Free Exchanges,
rollovers, and transfers listed on the annuity application and received within
180 days from the contract issue date.
We reserve the right to change these current rules at any time, subject to state
restrictions.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
As of May 1, 2006, we no longer offer purchase payment credits in most states.
Purchase payment credits were available if you:
purchased a contract with the seven-year withdrawal charge schedule with an
application signed date before May 1, 2006; or
purchase(d) a contract with the seven-year withdrawal charge schedule with an
application signed date on or after May 1, 2006 in a state where purchase
payment credits are/were still available at the time you purchase(d) your
contract.
See Appendix I for a description of the purchase payment credits that apply to
your policy.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, withdrawals or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
--------------------------------------------------------------------------------
34 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully withdrawn. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
allocated to the fixed account.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary.
If you take a full withdrawal from your contract, we will deduct the charge at
the time of withdrawal regardless of the contract value. We cannot increase the
annual contract administrative charge and it does not apply after annuity
payouts begin or when we pay death benefits.
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The mortality and expense risk fee you pay is based on the death benefit
guarantee you select, whether the contract is a qualified annuity or a
nonqualified annuity and the withdrawal charge schedule that applies to your
contract.
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR
CONTRACTS WITH APPLICATIONS SIGNED
ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR
STATE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP Death Benefit 0.90% 1.05%
MAV Death Benefit 1.10 1.25
5% Accumulation Death Benefit 1.25 1.40
Enhanced Death Benefit 1.30 1.45
SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE FOR ALL
OTHER CONTRACTS
ROP Death Benefit 1.00% 1.15%
MAV Death Benefit 1.20 1.35
5% Accumulation Death Benefit 1.35 1.50
Enhanced Death Benefit 1.40 1.55
FIVE-YEAR WITHDRAWAL CHARGE SCHEDULE
ROP Death Benefit 1.20% 1.35%
MAV Death Benefit 1.40 1.55
5% Accumulation Death Benefit 1.55 1.70
Enhanced Death Benefit 1.60 1.75
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of owners or annuitants live. If, as a group, owners or annuitants
outlive the life expectancy we assumed in our actuarial tables, then we must
take money from our general assets to meet our obligations. If, as a group,
owners or annuitants do not live as long as expected, we could profit from the
mortality risk fee. We deduct the mortality risk fee from the subaccounts during
the annuity payout period even if the annuity payout plan does not involve a
life contingency.
Expense risk arises because we cannot increase the contract administrative
charge or the variable account administrative charge and these charges may not
cover our expenses. We would have to make up any deficit from our general
assets. We could profit from the expense risk fee if future expenses are less
than expected.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 35
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the withdrawal charge will cover sales and distribution expenses.
WITHDRAWAL CHARGE
If you withdraw all or part of your contract value before annuity payouts begin,
we may deduct a withdrawal charge. As described below, a withdrawal charge
applies to each purchase payment you make. The withdrawal charge lasts for 7
years or 5 years from our receipt of each purchase payment, depending on which
withdrawal charge schedule you select when you purchase the contract (see
"Expense Summary").
You may withdraw an amount during any contract year without a withdrawal charge.
We call this amount the Total Free Amount (TFA). The TFA varies depending on
whether your contract includes the SecureSource rider, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider:
CONTRACTS WITHOUT SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greater of:
10% of the contract value on the prior contract anniversary(1); or
current contract earnings.
CONTRACTS WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
CONTRACTS WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The TFA is the greatest of:
10% of the contract value on the prior contract anniversary(1);
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and any purchase payment credit to
be the prior contract anniversary's contract value during the first contract
year.
Amounts withdrawn in excess of the TFA may be subject to a withdrawal charge as
described below.
A withdrawal charge will apply if the amount you withdraw includes any of your
prior purchase payments that are still within their withdrawal charge schedule.
To determine whether your withdrawal includes any of your prior purchase
payments that are still within their withdrawal charge schedule, we withdraw
amounts from your contract in the following order:
1. We withdraw the TFA first. We do not assess a withdrawal charge on the TFA.
2. We withdraw purchase payments not previously withdrawn, in the order you made
them: the oldest purchase payment first, the next purchase payment second,
etc. until all purchase payments have been withdrawn. By applying this
"first-in, first-out" rule, we do not assess a withdrawal charge on purchase
payments that we received prior to the number of years stated in the
withdrawal charge schedule you select when you purchase the contract. We only
assess a withdrawal charge on purchase payments that are still within the
withdrawal charge schedule you selected.
EXAMPLE: Each time you make a purchase payment under the contract, a withdrawal
charge schedule attaches to that purchase payment. The withdrawal charge
percentage for each purchase payment declines according to the withdrawal charge
schedule shown in your contract. (THE WITHDRAWAL CHARGE PERCENTAGES FOR THE 5-
YEAR AND 7-YEAR WITHDRAWAL CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY" ABOVE.) For example, if you select the 7-Year withdrawal charge
schedule, during the first two years after a purchase payment is made, the
withdrawal charge percentage attached to that payment is 8%. The withdrawal
charge percentage for that payment during the seventh year after it is made is
3%. At the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a withdrawal charge as to that payment.
--------------------------------------------------------------------------------
36 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
We determine your withdrawal charge by multiplying each of your payments
withdrawn by the applicable withdrawal charge percentage (see "Expense
Summary"), and then adding the total withdrawal charges.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge. A partial withdrawal that includes contract value
taken from the guarantee period accounts may also be subject to a market value
adjustment (see "Guarantee Period Accounts -- Market Value Adjustment"). We pay
you the amount you request.
The amount of purchase payments withdrawn is calculated using a prorated formula
based on the percentage of contract value being withdrawn. As a result, the
amount of purchase payments withdrawn may be greater than the amount of contract
value withdrawn.
For an example, see Appendix B.
WAIVER OF WITHDRAWAL CHARGES
We do not assess withdrawal charges for:
withdrawals of any contract earnings;
withdrawals of amounts totaling up to 10% of the contract value on the prior
contract anniversary to the extent it exceeds contract earnings;
if you elected the SecureSource rider or Guarantor Withdrawal Benefit for Life
rider, the greater of your contract's Remaining Benefit Payment or Remaining
Annual Lifetime Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
if you elected the Guarantor Withdrawal Benefit rider, your contract's
Remaining Benefit Payment to the extent it exceeds the greater of contract
earnings or 10% of the contract value on the prior contract anniversary;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which withdrawal charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force;
contracts settled using an annuity payout plan (EXCEPTION: As described below,
if you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a withdrawal charge.)
withdrawals made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions); and
death benefits.
CONTINGENT EVENTS
Withdrawals you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the withdrawal.
To the extent permitted by state law, withdrawals you make if you or the
annuitant are diagnosed in the second or later contract years as disabled with
a medical condition that with reasonable medical certainty will result in
death within 12 months or less from the date of the licensed physician's
statement. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
WITHDRAWAL CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a withdrawal. The amount that you can withdraw is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The withdrawal charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Withdrawal Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and withdrawal charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax when
annuity
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 37
payouts begin, but we reserve the right to deduct this tax at other times such
as when you make purchase payments or when you make a full withdrawal from your
contract.
OPTIONAL LIVING BENEFITS
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 0.80%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. We prorate this charge among the GPAs, the
one-year fixed account and the subaccounts in the same proportion as your
interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or when annuity payouts begin, we
will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the charge.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider fee will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider charge, for the preceding contract year only,
that reflects the various different fees that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) For contracts with applications signed prior to Jan. 26, 2009, the current
charge is 0.55%.
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider charge will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
--------------------------------------------------------------------------------
38 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We charge an annual fee of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, the contract value reduces to zero or annuity payouts begin. If the
contract is terminated for any reason or when annuity payouts begin, we will
deduct the charge from the proceeds payable adjusted for the number of calendar
days coverage was in place since we last deducted the fee. If the RBA goes to
zero but the contract value has not been depleted, you will continue to be
charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit for Life rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) See disclosure in Appendix K.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or when annuity payouts begin, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 39
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider charge will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after annuity payouts begin.
(1) See Appendix L.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or
when annuity payouts begin, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum charges shown above. We cannot change the Income Assurer
Benefit charge after the rider effective date, unless you change your PN program
investment option after we have exercised our rights to increase the fee and/or
charge a separate fee for each PN program investment option. If you choose to
change your PN program investment option after we have exercised our rights to
increase the rider fee, you will pay the fee that is in effect on the valuation
date we receive your written request to change your PN program investment
option. On the next contract anniversary, we will calculate an average rider
fee, for the preceding contract year only, that reflects the various different
charges that were in effect that year, adjusted for the number of calendar days
each fee was in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix M.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot
--------------------------------------------------------------------------------
40 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
increase this annual charge after the rider effective date and it does not apply
after annuity payouts begin or when we pay death benefits.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We charge a fee for the optional feature only if you select it. If selected, we
deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
If the contract is terminated for any reason other than death or when annuity
payouts begin, we will deduct the fee from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the fee. We
cannot increase this annual charge after the rider effective date and it does
not apply after annuity payouts begin or when we pay death benefits.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
THE FIXED ACCOUNT INCLUDES THE ONE-YEAR FIXED ACCOUNT AND THE DCA FIXED ACCOUNT.
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
the sum of your purchase payments and any purchase payment credits allocated
to the one-year fixed account and the DCA fixed account (if included), and
transfer amounts to the one-year fixed account (including any positive or
negative MVA on amounts transferred from the GPAs to the one-year fixed
account);
plus interest credited;
minus the sum of amounts withdrawn (including any applicable withdrawal
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 41
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial withdrawal; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a withdrawal charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial withdrawals;
withdrawal charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- Accumulation Protector Benefit rider;
- SecureSource rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
42 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the one-year fixed account
or one-year GPA to one or more subaccounts. Automated transfers are not
available for GPA terms of two or more years. You can also obtain the benefits
of dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the DCA fixed account. See the "DCA Fixed
Account" and "Portfolio Navigator Program" sections in this prospectus for
details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below).
As long as you are not participating in a PN program, asset rebalancing is
available for use with the DCA fixed account (see "DCA Fixed Account") only if
your subaccount allocation for asset rebalancing is exactly the same as your
subaccount
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 43
allocation for transfers from the DCA fixed account. If you change your
subaccount allocations under the asset rebalancing program or the DCA fixed
account, we will automatically change the subaccount allocations so they match.
If you do not wish to have the subaccount allocation be the same for the asset
rebalancing program and the DCA fixed account, you must terminate the asset
rebalancing program or the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
--------------------------------------------------------------------------------
44 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the funds of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolio investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA Fixed Account,
when available (see "The DCA Fixed Account"), and you are participating in the
PN program, we will make monthly transfers in accordance with your instructions
from the DCA Fixed Account into the investment option or model portfolio you
have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 45
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM:
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full withdrawal. Withdrawal charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER: The SecureSource
rider or the Guarantor Withdrawal Benefit for Life rider requires that your
contract value be invested in one of the PN program investment options for the
life of the contract. Subject to state restrictions, we reserve the right to
limit the number of investment options from which you can select based on the
dollar amount of purchase payments you make. Because you cannot terminate the
SecureSource rider or the Guarantor Withdrawal Benefit for Life rider once you
have selected it, you must terminate your contract by requesting a full
withdrawal if you do not want to invest in any of the PN program investment
options. Withdrawal charges and tax penalties may apply. THEREFORE, YOU SHOULD
NOT SELECT THE SECURESOURCE OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF
YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW
EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full withdrawal if you do not
want to invest in any of the PN program investment options. Withdrawal charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME
ASSURER BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN
PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE
OF THE CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
You may transfer contract value from any one subaccount, GPAs, the one-year
fixed account, or the DCA fixed account, to another subaccount before annuity
payouts begin. Certain restrictions apply to transfers involving the GPAs and
the one-year fixed account. You may not transfer contract value to the DCA fixed
account.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for
--------------------------------------------------------------------------------
46 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
six months following that transfer. We reserve the right to further limit
transfers to the one-year fixed account if the interest rate we are then
currently crediting to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. We reserve the right to further limit
transfers to or from the one-year fixed account if the interest rate we are
then crediting on new purchase payments allocated to the one-year fixed
account is equal to the minimum interest rate stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
If we receive your request on or within 30 days before or after the contract
anniversary date, the transfer from the one-year fixed account to the GPAs
will be effective on the valuation date we receive it.
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values from the DCA fixed account to any of the investment options
available under your contract, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and
the GPA, as described above. (See "DCA Fixed Account.")
Once annuity payouts begin, you may not make transfers to or from the GPAs or
the fixed account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, we reserve the right to limit
the number of subaccounts in which you may invest. When annuity payments
begin, you must transfer all contract value out of your GPAs and DCA accounts.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 47
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
--------------------------------------------------------------------------------
48 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR WITHDRAWAL
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or withdrawal to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
MAXIMUM AMOUNT
Transfers or withdrawals: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of the
distribution.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL WITHDRAWALS
Your investment professional can help you set up automated transfers among your
GPAs, one-year fixed account or the subaccounts or automated partial withdrawals
from the GPAs, one-year fixed account, DCA fixed account or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account to any one of the
subaccounts may not exceed an amount that, if continued, would deplete the
one-year fixed account within 12 months.
Transfers out of the one-year fixed account are limited to 30% of the one-year
fixed account values at the beginning of the contract year or $10,000,
whichever is greater.
Automated withdrawals may be restricted by applicable law under some
contracts.
You may not make additional purchase payments if automated partial withdrawals
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a DCA fixed Account (see "The Fixed
Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial withdrawals may result in IRS taxes and penalties on all or
part of the amount withdrawn.
If you have SecureSource rider, Guarantor Withdrawal for Life rider, or
Guarantor Withdrawal Benefit rider, you may set up automated partial
withdrawals up to the benefit amount available for withdrawal under the rider.
MINIMUM AMOUNT
Transfers or withdrawals: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
Transfers or withdrawals: $500 or entire account balance
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 49
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Withdrawals: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or withdrawal requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone withdrawal within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and withdrawals are automatically available. You may request
that telephone transfers and withdrawals not be authorized from your account by
writing to us.
WITHDRAWALS
You may withdraw all or part of your contract at any time before the retirement
date by sending us a written request or calling us. If we receive your
withdrawal request in good order at our corporate office before the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the valuation date we received your withdrawal request. If we
receive your withdrawal request at our corporate office at or after the close of
business, we will process your withdrawal using the accumulation unit value we
calculate on the next valuation date after we received your withdrawal request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, withdrawal charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make withdrawals after
annuity payouts begin except under Annuity Payout Plan E. (See "The Annuity
Payout Period -- Annuity Payout Plans.")
Any partial withdrawals you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected the SecureSource rider,
the Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal
Benefit rider and your partial withdrawals in any contract year exceed the
permitted withdrawal amount under the terms of the SecureSource rider, the
Guarantor Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit
rider, your benefits under the rider may be reduced (see "Optional Benefits").
Any partial withdrawal request that exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the withdrawal on the rider benefits or a verbal acknowledgement that
you understand and accept the impacts that have been explained to you.
In addition, withdrawals you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
WITHDRAWAL POLICIES
If you have a balance in more than one account and you request a partial
withdrawal, we will automatically withdraw from all your subaccounts, GPAs, the
DCA fixed account, and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1) After executing a partial withdrawal, the value in the
one-year fixed account and each GPA and subaccount must be either zero or at
least $50.
(1) If you elected a SecureSource rider, you do not have the option to request
from which account to withdraw.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
--------------------------------------------------------------------------------
50 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office.
The change will become binding on us when we receive and record it. We will
honor any change of ownership request received in good order that we believe is
authentic and we will use reasonable procedures to confirm authenticity. If we
follow these procedures, we will not take any responsibility for the validity of
the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders, the
new owner and annuitant will be subject to all limitations and/or restrictions
of those features or riders just as if they were purchasing a new contract. If
you have an Income Assurer Benefit and/or Benefit Protector Plus rider, the
rider will terminate upon transfer of ownership of the annuity contract. The
SecureSource - Joint Life rider, if selected, only allows transfer of the
ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force.
The Accumulation Protector Benefit, the SecureSource - Single Life, the
Guarantor Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit
riders will continue upon transfer of ownership of the annuity contract. For the
SecureSource and Guarantor Withdrawal Benefit for Life riders, any
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 51
ownership change that impacts the guarantees provided will not be considered in
good order until we receive a signed Benefit Impact Acknowledgement form showing
the projected effect of the ownership change on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you. Continuance of the Benefit Protector rider is optional. (See
"Optional Benefits.")
BENEFITS IN CASE OF DEATH
There are four death benefit options under your contract if you die before the
retirement start date while this contract is in force. You must select one of
the following death benefits:
ROP Death Benefit;
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
Under each option, we will pay the death benefit, less any purchase payment
credits subject to reversal, to your beneficiary upon the earlier of your death
or the annuitant's death. We will base the benefit paid on the death benefit
coverage you chose when you purchased the contract. If a contract has more than
one person as the owner, we will pay benefits upon the first to die of any owner
or the annuitant.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PW X DB
ADJUSTED PARTIAL WITHDRAWALS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PW = the amount by which the contract value is reduced as a result of the
partial withdrawal.
DB = the death benefit on the date of (but prior to) the partial withdrawal.
CV = contract value on the date of (but prior to) the partial withdrawal.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract anniversary
after the effective date of the rider. On the first contract anniversary after
the effective date of the rider, we set the MAV as the greater of these two
values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial withdrawals.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial withdrawals from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81.
PWT X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL WITHDRAWALS = ---------
SV
PWT = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial withdrawal or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
withdrawal.
SV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer of partial withdrawal.
--------------------------------------------------------------------------------
52 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
The amount of purchase payments and any purchase payment credits withdrawn or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current withdrawal or
transfer; and
(b) is the ratio of the amount of contract value transferred or withdrawn from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current withdrawal or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
withdrawn or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for withdrawals. If you or the annuitant die before annuity
payouts begin and while this contract is in force, the death benefit will be the
greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR ISSUE AGES 75 TO 79 BECAUSE THE BENEFIT VALUES MAY BE LIMITED
AFTER AGE 81. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR
NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the MAV on the date of death.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before annuity payouts begin, the death
benefit will be the greatest of these three values, minus any applicable rider
charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals; or
3. the 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before annuity payouts begin, the death benefit will be
the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial withdrawals;
3. the MAV on the date of death; or
4. the 5% variable account floor.
For an example of how each death benefit is calculated, see Appendix C.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 53
IF YOU DIE BEFORE YOUR RETIREMENT DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
If your spouse is sole beneficiary and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. To do this your spouse must give us
written instructions to continue the contract as owner. There will be no
withdrawal charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to all
limitations and/or restrictions of those features or riders just as if they were
purchasing a new contract. The Income Assurer Benefit and Benefit Protector Plus
riders, if selected, will terminate. The SecureSource - Joint Life rider, if
selected, will continue only if the spouse electing the spousal continuation
provision of the contract is a covered spouse and continues the contract as the
new owner. The Accumulation Protector Benefit, SecureSource - Single Life,
Guarantor Withdrawal Benefit for Life or Guarantor Withdrawal Benefit riders, if
selected, will continue. Continuance of the Benefit Protector rider is optional.
(See "Optional Benefits.")
If your beneficiary is not your spouse, we will pay the beneficiary in a single
sum unless you give us other written instructions. Generally, we must fully
distribute the death benefit within five years of your death. However, the
beneficiary may receive payouts under any annuity payout plan available under
this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
Additionally, the optional SecureSource rider, if selected, will terminate.
QUALIFIED ANNUITIES
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract at any time before
annuity payouts begin. If your spouse elects to assume ownership of the
contract, the contract value will be equal to the death benefit that would
otherwise have been paid. There will be no withdrawal charges on the contract
from that point forward unless additional purchase payments are made. If you
elected any optional contract features or riders, your spouse and the new
annuitant (if applicable) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract. The Income Assurer Benefit and the Benefit Protector Plus riders, if
selected, will terminate. The SecureSource - Joint Life rider, if selected,
will continue only if the spouse electing the spousal continuation provision
of the contract is a covered spouse and continues the contract as the new
owner. The Accumulation Protector Benefit, SecureSource - Single Life,
Guarantor Withdrawal Benefit for Life or Guarantor Withdrawal Benefit riders,
if selected, will continue. Continuance of the Benefit Protector is optional.
(See "Optional Benefits.")
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. In the event
of your beneficiary's death, their beneficiary can elect to take a lump sum
payment or to continue the alternative payment plan following the schedule of
minimum withdrawals established based on the life expectancy of your
beneficiary.
--------------------------------------------------------------------------------
54 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted. The
Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource, Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal
Benefit riders or any Income Assurer Benefit rider. The rider ends when the
waiting period expires and no further benefit will be payable and no further
charges for the rider will be deducted. After the waiting period, you have the
following options:
Continue your contract;
Take partial withdrawals or make a full withdrawal; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be available in all states.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial withdrawals from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 55
Minimum Distributions"). Partial withdrawals, including those used to satisfy
RMDs, will reduce any potential benefit that the Accumulation Protector
Benefit rider provides. You should consult your tax advisor if you have any
questions about the use of this rider in your tax situation;
if you think you may withdraw all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the Elective Step Up Option (described below) or your
surviving spouse exercises the spousal continuation Elective Step Up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your PN program model portfolio or
investment option to one that causes the Accumulation Protector Benefit rider
charge to increase (see "Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL WITHDRAWALS: The adjustment made for each partial
withdrawal from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial withdrawal to the contract value on the date of (but
immediately prior to) the partial withdrawal; and
(b) is the MCAV on the date of (but immediately prior to) the partial
withdrawal.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your PN program investment option (or change from a PN
program model portfolio to a fund of funds) after we have exercised our rights
to increase the rider charge for new contract owners, or if you change your
asset allocation investment option after we have exercised our rights to charge
a separate charge for each model.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credit. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by adjustments for any partial
withdrawals made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
--------------------------------------------------------------------------------
56 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be withdrawn or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full withdrawal; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
The rider will terminate on the benefit date.
For an example, see Appendix D.
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 57
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
withdrawals you take under the contract will reduce the value of the death
benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
--------------------------------------------------------------------------------
58 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate qualifying purchase payments and
purchase payment credits to the DCA fixed account, when available (see "DCA
Fixed Account"), and we will make monthly transfers into the investment option
you have chosen. You may make two elective investment option changes per
contract year; we reserve the right to limit elective investment option
changes if required to comply with the written instructions of a fund (see
"Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed investment option changes per contract
year and will not cause your rider fee to increase. The target investment
option is currently the Moderate investment option. We reserve the right to
change the target
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 59
investment option to an investment option that is more aggressive than the
current target investment option after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, your rider benefit will be
reset as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered spouse who is the owner of the contract (or
annuitant in the case of nonnatural ownership). The rider will terminate at
the death of the contract owner (or annuitant in the case of nonnatural
ownership) because the original spouse will be unable to elect the spousal
continuation provision of the contract (see "Joint Life only: Covered Spouses"
below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
--------------------------------------------------------------------------------
60 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Withdrawals in any contract year that exceed the guaranteed amount available
for withdrawal may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
withdrawal charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an interim
value used to calculate the amount available for withdrawals each year under the
basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time,
the total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 61
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. Please note that if the withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
--------------------------------------------------------------------------------
62 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 63
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups may increase
your ALP, they may reduce or eliminate any benefit of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
--------------------------------------------------------------------------------
64 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments plus any purchase payment
credits.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments plus
any purchase payment credits, multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount plus any purchase
payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix F for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 65
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP
--------------------------------------------------------------------------------
66 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
will be reset to the lesser of the RBA or the anniversary contract value,
multiplied by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 67
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set to the
ALP.
--------------------------------------------------------------------------------
68 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 69
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE MAY 1, 2007)
If you bought a contract before May 1, 2007 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
--------------------------------------------------------------------------------------------------
AND YOU SELECTED ONE OF THE
IF YOU PURCHASED A FOLLOWING OPTIONAL LIVING DISCLOSURE FOR THIS BENEFIT MAY BE
CONTRACT(1)... BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
--------------------------------------------------------------------------------------------------
Before April 30, 2006 Guarantor Withdrawal Benefit Appendix L
--------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit Appendix K
for Life
--------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix M
--------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
OPTIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you or the annuitant are age 70 or older at the rider effective
date. The Benefit Protector does not provide any additional benefit before the
first rider anniversary.
If this rider is available in your state and both you and the annuitant are age
75 or younger at contract issue, you may choose to add the Benefit Protector to
your contract. You must elect the Benefit Protector at the time you purchase
your contract and your rider effective date will be the contract issue date. You
may not select this rider if you select the Benefit Protector Plus rider, the 5%
Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you or the annuitant die after the first
rider anniversary, but before annuity payouts begin, and while this contract is
in force, we will pay the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you and the annuitant were under age 70 on
the rider effective date, up to a maximum of 100% of purchase payments not
previously withdrawn that are one or more years old; or
- 15% of your earnings at death if you or the annuitant were age 70 or older
on the rider effective date, up to a maximum of 37.5% of purchase payments
not previously withdrawn that are one or more years old.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
purchase payments not previously withdrawn. The earnings at death may not be
less than zero and may not be more than 250% of the purchase payments not
previously withdrawn that are one or more years old.
TERMINATING THE BENEFIT PROTECTOR
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the retirement date,
your spouse may keep the contract as owner. Your spouse and the new annuitant
will be subject to all the limitations and restrictions of the rider just as if
they were purchasing a new contract. If your spouse and the new annuitant do not
qualify for the rider on the basis of age we will terminate the rider. If they
do qualify for the rider on the basis of age we will set the contract value
equal to the death benefit that would otherwise have been paid and we will
substitute this new contract value on the date of death for "purchase payments
not previously withdrawn" used in calculating earnings at death. Your spouse
also has the option of discontinuing the Benefit Protector Death Benefit Rider
within 30 days of the date they elect to continue the contract.
For an example, see Appendix G.
--------------------------------------------------------------------------------
70 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you or the annuitant are 70 or older at the rider effective
date. It does not provide any additional benefit before the first rider
anniversary and it does not provide any benefit beyond what is offered under the
Benefit Protector rider during the second rider year. Be sure to discuss with
your investment professional whether or not the Benefit Protector Plus is
appropriate for your situation.
If this rider is available in your state and both you and the annuitant are 75
or younger at contract issue, you may choose to add the Benefit Protector Plus
to your contract. You must elect the Benefit Protector Plus at the time you
purchase your contract and your rider effective date will be the contract issue
date. This rider is only available for transfers, exchanges or rollovers from
another annuity or life insurance policy. You may not select this rider if you
select the Benefit Protector Rider, 5% Accumulation Death Benefit or the
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any withdrawals including
RMDs. Be sure to discuss with your investment professional and tax advisor
whether or not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you or the annuitant die after the
first rider anniversary, but before annuity payouts begin, and while this
contract is in force, we will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously withdrawn as follows:
PERCENTAGE IF YOU AND THE ANNUITANT ARE PERCENTAGE IF YOU OR THE ANNUITANT ARE
RIDER YEAR UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU AND THE ANNUITANT ARE UNDER IF YOU OR THE ANNUITANT ARE AGE 70
RIDER YEAR AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . . OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero Zero
Two 40% x earnings at death (see above) 15% x earnings at death
Three and Four 40% x (earnings at death + 25% of initial purchase 15% x (earnings at death + 25% of initial purchase
payment*) payment*)
Five or more 40% x (earnings at death + 50% of initial purchase 15% x (earnings at death + 50% of initial purchase
payment*) payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously withdrawn.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full withdrawal from the contract or
when annuity payouts begin.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the retirement date, your
spouse may keep the contract as owner with the contract value equal to the death
benefit that would otherwise have been paid. We will then terminate the Benefit
Protector Plus and substitute the applicable death benefit (see "Benefits in
Case of Death").
For an example, see Appendix H.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any withdrawal charges under the payout plans
listed below, except under annuity payout Plan E.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 71
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your retirement date
after any rider charges have been deducted, plus any positive or negative MVA
(less any applicable premium tax). Additionally, we currently allow you to use
part of the amount available to purchase payouts, leaving any remaining contract
value to accumulate on a tax-deferred basis. If you select a variable annuity
payout, we reserve the right to limit the number of subaccounts in which you may
invest. The GPAs and the DCA fixed account are not available during this payout
period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate. (In the case of fixed
annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the retirement date, we
will substitute an annuity table based on an assumed 3.5% investment rate for
the 5% Table A in the contract. The assumed investment rate affects both the
amount of the first payout and the extent to which subsequent payouts increase
or decrease. For example, annuity payouts will increase if the investment return
is above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before contract values are used to purchase the payout plan. Generally,
you may select one of the Plans A through E below or another plan agreed to by
us. Some of the annuity payout plans may not be available if you have selected
the Income Assurer Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
retirement date. If the annuitant outlives the elected guaranteed payout
period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
--------------------------------------------------------------------------------
72 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Withdrawal charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your withdrawal to the full discounted value. A 10% IRS penalty
tax could apply if you take a withdrawal. (See "Taxes.")
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix K: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix L: Guarantor Withdrawal Benefit Rider"). The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in the
frequency that you elect. The frequencies will be among those offered by us at
the time but will be no less frequent than annually. If, at the death of the
owner, total payouts have been made for less than the RBA, the remaining
payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you must select a payout plan as of the retirement date set
forth in your contract. You have the responsibility for electing a payout plan
under your contract that complies with applicable law. Your contract describes
your payout plan options. The options will meet certain IRS regulations
governing RMDs if the payout plan meets the incidental distribution benefit
requirements, if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you or the annuitant die after annuity
payouts begin, we will pay any amount payable to the beneficiary as provided in
the annuity payout plan in effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 73
(and possibly its affiliates) to the same owner during a calendar year be taxed
as a single, unified contract when distributions are taken from any one of those
contracts.
ANNUITY PAYOUTS: Generally, unlike withdrawals described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
WITHDRAWALS: Generally, if you withdraw all or part of your nonqualified annuity
before your annuity payouts begin, including withdrawals under any optional
withdrawal benefit rider, your withdrawal will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for withdrawals of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
withdrawal, including withdrawals under any optional withdrawal benefit rider,
we may deduct federal, and in some cases state withholding against the payment.
Any withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Retirement Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
--------------------------------------------------------------------------------
74 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
the annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a withdrawal for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts, while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity contract, or for an endowment contract under which payments will begin
no later than payments would have begun under the contract exchanged, (3) the
exchange of an annuity contract for another annuity contract or for a qualified
long-term insurance contract, and (4) the exchange of a qualified long-term care
insurance contract for a qualified long-term care insurance contract. However,
if the insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
WITHDRAWALS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire withdrawal will generally be includable as ordinary income
and is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 75
contributions; or (2) you rolled after-tax dollars from a retirement plan into
your IRA; or (3) the contract is used to fund a retirement plan and you or your
employer have contributed after-tax dollars.
WITHDRAWALS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required withdrawals called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a withdrawal, including withdrawals
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full withdrawal) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
--------------------------------------------------------------------------------
76 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Retirement Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when withdrawn or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
withdrawals from your contract. However, the IRS may determine that these
charges should be treated as partial withdrawals subject to taxation to the
extent of any gain as well as the 10% tax penalty for withdrawals before the age
of 59 1/2, if applicable.
We reserve the right to report charges for these riders as partial withdrawals
if we, as a withholding and reporting agent, believe that we are required to
report them. In addition, we will report any benefits attributable to these
riders on the death of you or the annuitant as an annuity death benefit
distribution, not as proceeds from life insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 77
instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 5.25% each time a purchase
payment is made. We may also pay ongoing trail commissions of up to 1.25% of
the contract value. We do not pay or withhold payment of trail commissions
based on which investment options you select.
We may pay selling firms an additional sales commission of up to 1.00% of
purchase payments for a period of time we select. For example, we may offer to
pay an additional sales commission to get selling firms to market a new or
enhanced contract or to increase sales during the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may
--------------------------------------------------------------------------------
78 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
offer these promotional incentives to all selling firms. The terms of such
arrangements differ between selling firms. These promotional incentives may
include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 79
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
80 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 82 p. 29
Appendix B: Example -- Withdrawal Charges -- Withdrawal Charges
Charges p. 84 p. 36
Appendix C: Example -- Death Benefits p. 89 Benefits in Case of Death p. 52
Appendix D: Example -- Accumulation Optional Benefits -- Accumulation
Protector Benefit Rider p. 92 Protector Benefit Rider p. 55
Appendix E: Example -- SecureSource Optional Benefits -- SecureSource Riders
Riders p. 93 p. 57
Appendix F: SecureSource Optional Benefits -- Benefit Protector
Riders -- Additional RMD Disclosure p. 97 Death Benefit Rider p. 70
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 99 Plus Death Benefit Rider p. 71
Appendix H: Example -- Benefit Protector Buying Your Contract -- Purchase Payment
Plus Death Benefit Rider p. 101 Credits p. 34
Appendix I: Purchase Payment Credits for N/A
Eligible Contracts p. 103
Appendix J: Asset Allocation Program for N/A
Contracts with Applications Signed
Before May 1, 2006 p. 104
Appendix K: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 105
Appendix L: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 117
Appendix M: Income Assurer Benefit N/A
Riders p. 124
Appendix N: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 133 (Unaudited) p. 15
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, DCA fixed account, and one-year
fixed account and the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices C through E and
K through M include a partial withdrawal to illustrate the effect of a partial
withdrawal on the particular benefit. These examples are intended to show how
the optional riders operate, and do not take into account whether the rider is
part of a qualified contract. Qualified contracts are subject to required
minimum distributions at certain ages which may require you to take partial
withdrawals from the contract (see "Taxes -- Qualified Annuities -- Required
Minimum Distributions"). If you are considering the addition of certain death
benefits and/or optional riders to a qualified contract, you should consult your
tax advisor prior to making a purchase for an explanation of the potential tax
implications to you.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 81
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early withdrawals."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a withdrawal from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY WITHDRAWAL AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or withdrawn.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 withdrawal from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
3.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early withdrawal of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your
withdrawal new GPAs that we offer with a seven-year guarantee period are earning
2.5%. Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your withdrawal charge percentage is 7%, if you elected the
seven-
--------------------------------------------------------------------------------
82 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
year withdrawal charge schedule and 4% if you elected a five-year withdrawal
charge schedule. (See "Charges -- Withdrawal Charge.") We do not apply MVAs to
the amounts we deduct for withdrawal charges, so we would deduct the withdrawal
charge from your early withdrawal after we applied the MVA. Also note that when
you request an early withdrawal, we withdraw an amount from your GPA that will
give you the net amount you requested after we apply the MVA and any applicable
withdrawal charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 83
APPENDIX B: EXAMPLE -- WITHDRAWAL CHARGES
For purposes of calculating any withdrawal charge, including the examples
illustrated below, we treat amounts withdrawn from your contract value in the
following order:
1. First, in each contract year, we withdraw amounts totaling:
- up to 10% of your prior anniversary's contract value or your contract's
remaining benefit payment if you elected the Guarantor Withdrawal Benefit
rider and your remaining benefit payment is greater than 10% of your prior
anniversary's contract value. We do not assess a withdrawal charge on this
amount.
- up to 10% of your prior anniversary's contract value or the greater of your
contract's remaining benefit payment or remaining annual lifetime payment
if you elected the SecureSource rider or the Guarantor Withdrawal Benefit
for Life rider, and the greater of your RALP and your remaining benefit
payment is greater than 10% of your prior anniversary's contract value. We
do not assess a withdrawal charge on this amount.
2. Next, we withdraw contract earnings, if any, that are greater than the amount
described in number one above. We do not assess a withdrawal charge on
contract earnings.
3. Next we withdraw purchase payments received prior to the withdrawal charge
period shown in your contract. We do not assess a withdrawal charge on these
purchase payments.
4. Finally, if necessary, we withdraw purchase payments received that are still
within the withdrawal charge period you selected and shown in your contract.
We withdraw these payments on a "first-in, first-out" (FIFO) basis. We do
assess a withdrawal charge on these payments.
After withdrawing earnings in numbers one and two above, we next withdraw enough
additional contract value (ACV) to meet your requested withdrawal amount. If the
amount described in number one above was greater than contract earnings prior to
the withdrawal, the excess (XSF) will be excluded from the purchase payments
being withdrawn that were received most recently when calculating the withdrawal
charge. We determine the amount of purchase payments being withdrawn (PPW) in
numbers three and four above as:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
If the additional contract value withdrawn is less than XSF, then PPW will equal
ACV.
We determine current contract earnings (CE) by looking at the entire contract
value (CV), not the earnings of any particular subaccount, GPA, the one-year
fixed account or the DCA fixed account. If the contract value is less than
purchase payments received and not previously withdrawn (PPNPW) then contract
earnings are zero.
The examples below show how the withdrawal charge for a full and partial
withdrawal is calculated for a contract with a seven-year withdrawal charge
schedule. Each example illustrates the amount of the withdrawal charge for both
a contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
84 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
FULL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you withdraw the contract for its total value.
The withdrawal charge percentage in the fourth year after a purchase payment
is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE WITHDRAWAL CHARGE AS FOLLOWS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 1. First, we determine the amount of earnings
available in the contract at the time of withdrawal
as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
withdrawn
(PPNPW): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPW is being
withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 0.00 4,200.00
=
ACV from Step 3 50,000.00 40,000.00
=
CV from Step 1 60,000.00 40,000.00
=
TFA from Step 2 10,000.00 4,200.00
=
PPNPW from Step 1 50,000.00 50,000.00
=
---------- ----------
PPW = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 85
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with a
loss, PPW may be greater than the amount you
request to withdraw:
PPW: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 50,000.00 45,800.00
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
---------- ----------
withdrawal charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full withdrawal is determined as:
Contract value withdrawn: 60,000.00 40,000.00
WITHDRAWAL CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full withdrawal): (40.00) (40.00)
---------- ----------
NET FULL WITHDRAWAL PROCEEDS: $56,460.00 $36,754.00
--------------------------------------------------------------------------------
86 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
PARTIAL WITHDRAWAL CHARGE CALCULATION -- SEVEN-YEAR WITHDRAWAL CHARGE SCHEDULE:
This is an example of how we calculate the withdrawal charge on a contract with
a seven-year (from the date of EACH purchase payment) withdrawal charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial withdrawal of
$15,000.00. The withdrawal charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior withdrawals.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to withdrawal: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be withdrawn in order for
the net partial withdrawal proceeds to match the amount requested. We start with
an estimate of the amount of contract value to withdraw and calculate the
resulting withdrawal charge and net partial withdrawal proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to withdraw that generates the desired net partial withdrawal
proceeds.
WE CALCULATE THE WITHDRAWAL CHARGE FOR EACH ESTIMATE AS FOLLOWS:
--------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings
available in the contract at the time of
withdrawal as:
Contract value just prior to withdrawal (CV): 60,000.00 40,000.00
Less purchase payments received and not
previously withdrawn
(PPNPW): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than 10,000.00 0.00
zero):
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value withdrawn exceeds earnings.
Contract value withdrawn: 15,376.34 16,062.31
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,376.34 16,062.31
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 87
STEP 5. Now we can determine how much of the PPNPW is
being withdrawn (PPW) as follows:
PPW = XSF + (ACV - XSF) / (CV - TFA) X (PPNPW - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPW from Step 1 = 50,000.00 50,000.00
---------- ----------
PPW = 5,376.34 19,375.80
STEP 6. We then calculate the withdrawal charge as a
percentage of PPW. Note that for a contract with
a loss, PPW may be greater than the amount you
request to withdraw:
PPW: 5,376.34 19,375.80
less XSF: 0.00 4,200.00
---------- ----------
amount of PPW subject to a withdrawal charge: 5,376.34 15,175.80
multiplied by the withdrawal charge rate: x 7.0% x 7.0%
---------- ----------
withdrawal charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial withdrawal is determined as:
Contract value withdrawn: 15,376.34 16,062.31
WITHDRAWAL CHARGE: (376.34) (1,062.31)
---------- ----------
NET PARTIAL WITHDRAWAL PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
88 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- DEATH BENEFITS
EXAMPLE -- ROP DEATH BENEFIT
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including withdrawal charge) partial withdrawal; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial withdrawals:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including withdrawal charge) partial withdrawal,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus the death benefit adjusted partial withdrawals, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 89
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
on the first contract anniversary, the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary,
calculated as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the GPA account value: +5,300.00
----------
5% variable account floor (value of the GPA account and the variable
account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
90 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the GPA accounts and $20,000 allocated to the subaccounts; and
on the first contract anniversary, the GPA account value is $5,200 and the
subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the GPA account value is $5,300 and the
subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including withdrawal charge) partial withdrawal all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL WITHDRAWALS:
Total purchase payments: $25,000.00
minus adjusted partial withdrawals, calculated as:
$1,500 x $25,000
----------------
$24,300 = -1,543.21
c
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial withdrawals made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor the first contract anniversary calculated as:
1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial withdrawal from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the GPA value: +5,300.00
----------
5% variable account floor (value of the GPAs and the variable account
floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5%
VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 91
APPENDIX D: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Benefit rider works based on
hypothetical values. It is not intended to depict investment performance of the
contract.
The example assumes:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
The Accumulation Protector Benefit rider fee is 0.80%.
PARTIAL ACCUMULATION
END OF ASSUMED NET WITHDRAWAL ADJUSTED PROTECTOR
CONTRACT RATE OF (BEGINNING PARTIAL BENEFIT CONTRACT
YEAR RETURN OF YEAR) WITHDRAWAL MCAV AMOUNT VALUE
1 12% $ 0 $ 0 $100,000 $ 0 $111,104
2 15% 0 0 101,398 0 126,747
3 3% 0 0 103,604 0 129,505
4 -8% 0 0 103,604 0 118,192
5 -15% 0 0 103,604 0 99,634
6 20% 2,000 2,080 101,525 0 116,224
7 15% 0 0 106,071 0 132,588
8 -10% 0 0 106,071 0 118,375
9 -20% 5,000 4,480 101,590 0 89,851
10 -12% 0 0 101,590 23,334 78,256
--------------------------------------------------------------------------------
92 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: EXAMPLE -- SECURESOURCE RIDERS
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate investment option if you
are invested more aggressively than the Moderate investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 93
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
94 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target investment option under the contract is
the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate investment option if you are invested more
aggressively than the Moderate investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 95
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
96 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: SECURESOURCE(R) RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under a
SecureSource rider to satisfy the RMD rules under 401(a)(9) of the Code without
application of the excess withdrawal processing described in the rider. We
reserve the right to modify this administrative practice at any time upon 30
days' written notice to you.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code, the
amounts you withdraw each year from this contract to satisfy these rules are not
subject to excess withdrawal processing under the terms of the rider subject to
the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
rider.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based on your initial purchase payment and not the actual contract value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource rider is
attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your SecureSource
rider may not be sufficient to satisfy the requirements under the Code for these
types of distributions. In such a situation, amounts withdrawn to satisfy such
distribution requirements will exceed your available RBP or RALP amount and may
result in the reduction of your GBA, RBA, and/or ALP as described under the
excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 97
us as zero in all years. The life expectancy required minimum distribution
amount calculated by us will also equal zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing the SecureSource rider.
--------------------------------------------------------------------------------
98 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
You select the MAV Death Benefit and the 7-year withdrawal charge schedule.
During the first contract year the contract value grows to $105,000.
The death benefit under the MAV Death Benefit equals the contract
value, $105,000. You have not reached the first contract anniversary
so the Benefit Protector does not provide any additional benefit at
this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death
(MAV Death Benefit minus payments not previously withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial withdrawal of $50,000, including
the applicable 7% withdrawal charges. We will withdraw $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more
years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 99
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
withdrawn that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
100 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70. You select the MAV Death Benefit and the 7-year withdrawal
charge schedule.
During the first contract year the contract value grows to $105,000.
The death benefit equals MAV Death Benefit, which is the contract
value, or $105,000. You have not reached the first contract
anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so the
Benefit Protector Plus does not provide any additional benefit beyond
what is provided by the Benefit Protector at this time. The death
benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000
and you request a partial withdrawal of $50,000, including the
applicable 7% withdrawal charge. We will withdraw $10,500 from your
contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the withdrawal is subject to a 7%
withdrawal charge because your payment is in the third year of the
withdrawal charge schedule, so we will withdraw $39,500 ($36,735 +
$2,765 in withdrawal charges) from your contract value. Altogether,
we will withdraw $50,000 and pay you $47,235. We calculate purchase
payments not previously withdrawn as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial withdrawal is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial withdrawals): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000.
The death benefit equals the previous death benefit. The reduction in
contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously withdrawn that are one or more years
old. Because we are beyond the fourth contract anniversary the
Benefit Protector(R) Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 101
On the ninth contract anniversary you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect on
the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously withdrawn that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the tenth contract year the contract value remains $250,000
and the "new" purchase payment is one year old. The value of the
Benefit Protector Plus remains constant. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
withdrawn):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
102 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX I: PURCHASE PAYMENT CREDITS FOR ELIGIBLE CONTRACTS
The following contracts with a seven-year withdrawal charge schedule will
receive a purchase payment credit on any purchase payment made to the contract:
contracts with applications signed before May 1, 2006;
contracts with applications signed on or after May 1, 2006 in a state where
purchase payment credits are/were still available at the time of contract
purchase.
We apply a credit to your contract of 1% of your current purchase payment. We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account and the subaccounts in the same proportions as your purchase
payment.
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit payment under this contract; or (2) a
request for withdrawal charge waiver due to "Contingent events" (see
"Charges -- Contingent events"), we will assess a charge, similar to a
withdrawal charge, equal to the amount of the purchase payment credits. The
amount we pay to you under these circumstances will always equal or exceed your
withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available through revenue from higher withdrawal charges and
contract administrative charges than would otherwise be charged. In general, we
do not profit from the higher charges assessed to cover the cost of the purchase
payment credit. We use all the revenue from these higher charges to pay for the
cost of the credits. However, we could profit from the higher charges if market
appreciation is higher than expected or if contract owners hold their contracts
for longer than expected.
If you are uncertain whether purchase payment credits are available under your
contract, ask your investment professional or contract us by calling or writing
to us at the address shown on the first page of the prospectus.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 103
APPENDIX J: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent various asset classes. By spreading your contract value among
these various asset classes, you may be able to reduce the volatility in your
contract value, but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts, any GPAs and/or the one-year fixed
account that make up that model portfolio. By participating in the asset
allocation program, you authorize us to invest your contract value in the
subaccounts, any GPAs and/or the one-year fixed account according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account that make up the model portfolio you selected and the
allocation percentages to those subaccounts, any GPAs and/or the one-year fixed
account will not change unless we adjust the composition of the model portfolio
to reflect the liquidation, substitution or merger of an underlying fund, a
change of investment objective by an underlying fund or when an underlying fund
stops selling its shares to the variable account. We reserve the right to change
the terms and conditions of the asset allocation program upon written notice to
you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
104 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
contract application was signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the retirement date, you
have the right to withdraw some or all of your contract value, less applicable
administrative, withdrawal and rider charges imposed under the contract at the
time of the withdrawal (see "Making the Most of Your Contract --Withdrawals").
Because your contract value will fluctuate depending on the performance of the
underlying funds in which the subaccounts invest, the contract itself does not
guarantee that you will be able to take a certain withdrawal amount each year
before the annuity payouts begin, nor does it guarantee the length of time over
which such withdrawals can be made before the annuity payouts begin.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 105
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Withdrawal
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable withdrawal charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all
--------------------------------------------------------------------------------
106 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program.") You may
allocate purchase payments and any purchase payment credits to the DCA fixed
account, when available, and we will make monthly transfers into the PN
program investment option you have chosen. Subject to state restrictions, we
reserve the right to limit the number of investment options from which you can
select based on the dollar amount of purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or annuity payouts begin.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a withdrawal charge (see "Charges -- Withdrawal Charge").
The TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings, withdrawals of earnings before age 59 1/2 may incur a 10%
IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 107
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the Guarantor
Withdrawal Benefit for Life rider may be of limited value to you.
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE rider are
described below:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any withdrawal charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
--------------------------------------------------------------------------------
108 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above).
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 109
The guaranteed annual withdrawal amount during the waiting period is equal to
the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
--------------------------------------------------------------------------------
110 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 111
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life(R) rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
--------------------------------------------------------------------------------
112 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive: (a) the
remaining schedule of GBPs until the RBA equals zero; or (b) the ALP annually
until the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero. We will notify you of this option. If no election is made,
the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life(R) rider and the contract will
terminate under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 113
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life(R) rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
--------------------------------------------------------------------------------
114 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life(R) rider cannot be terminated either
by you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R)
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 115
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
116 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX L: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR WITHDRAWAL BENEFIT RIDER
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
your contract application was signed on or after April 30, 2005 in those
states where the SecureSource rider and/or the Guarantor Withdrawal Benefit
for Life rider are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a withdrawal
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable withdrawal charge (see "Charges -- Withdrawal Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Withdrawals").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuity payouts begin. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit(R) rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator investment option, the rider charge may change (see
"Charges").
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the PN
program if you purchase a contract on or after May 1, 2006 with this rider
(see "Making the Most of Your Contract -- Portfolio Navigator Asset Allocation
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
J: Asset Allocation Program for Contracts with Applications Signed Before May
1, 2006"), however, you may elect to participate in the PN program after May
1, 2006. The PN program and the asset allocation program limit your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. You may
allocate purchase payments and any purchase payment credits to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 117
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a withdrawal charge (see "Charges -- Withdrawal Charge"). The TFA may be
greater than GBP under this rider. Any amount you withdraw under the
contract's TFA provision that exceeds the GBP is subject to the excess
withdrawal processing for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or annuity
payouts begin.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals are taxable income
to the extent of earnings. Withdrawals of earnings before age 59 1/2 may incur
a 10% IRS early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules without applying excess
withdrawal processing under terms of the rider, subject to the following
rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed
--------------------------------------------------------------------------------
118 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). Therefore, the
Guarantor(R) Withdrawal Benefit rider may be of limited value to you. You
should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation;
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups:
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 119
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
Under the original rider, the GBP is equal to 7% of the GBA. Under the enhanced
rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA. Under both
the original and enhanced riders, if you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
--------------------------------------------------------------------------------
120 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
You may only step up if your contract value on the valuation date we receive
your written request to step up is greater than the RBA. The elective step up
will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 121
particular to the first three years of the contract as described in this
prospectus no longer applies. The GBA, RBA and GBP values remain unchanged. The
RBP is automatically reset to the GBP less all prior withdrawals made in the
current contract year, but not less than zero.
A surviving spouse may elect a spousal continuation step up by written request
within 30 days following the spouse's election to continue the contract. This
step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor(R) Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor(R)
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR(R) WITHDRAWAL BENEFIT
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
--------------------------------------------------------------------------------
122 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 123
APPENDIX M: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT(R) RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if you purchased your contract prior to May 1, 2007. These riders
are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer
Benefit(R). Your annuitization payout will never be less than that provided by
your contract value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits,
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER
BENEFIT(R):
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the retirement date must be between 50 to 86 years old; and
--------------------------------------------------------------------------------
124 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit(R) rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full withdrawal from the
contract, or annuitization begins, or on the date that a death benefit is
payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit(SM) rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 125
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT(R) RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT(R) - MAV
The guaranteed income benefit base for the Income Assurer Benefit(SM) - MAV is
the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial withdrawals.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial withdrawals. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, any credits, and partial
withdrawals occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit(R) - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer
Benefit(SM) 5% variable account floor is calculated differently and is not the
same value as the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial withdrawals and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and purchase payment
credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and any purchase payment credit and subtracting adjusted withdrawals and
adjusted transfers. On each subsequent contract anniversary after the first
anniversary of the effective date of this rider, prior to the earlier of your or
the annuitant's 81st birthday, we increase the variable account floor by adding
the amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
--------------------------------------------------------------------------------
126 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
The amount of purchase payment and any purchase payment credits withdrawn from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current withdrawal or transfer; and
(b) is the ratio of the amount of the transfer or withdrawal to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current withdrawal or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted withdrawals and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawals and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior withdrawals and transfers made from the protected
investment options in the current policy year exceeds the roll-up amount from
the prior contract anniversary we will calculate the adjusted withdrawal or
adjusted transfer for the variable account floor as the result of (a) plus [(b)
times (c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
withdrawal or transfer from the protected investment options less the
value from (a); and
(c) is the ratio of [the amount of the current withdrawal (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit(R) - Greater
of MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to
the contract minus proportionate adjustments for partial withdrawals;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments and any purchase payment credits, less excluded
payments, less proportionate adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 127
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some Portfolio Navigator investment
options include protected investment options and excluded investment options
(Columbia Variable Portfolio - Cash Management Fund, and if available under the
contract, GPAs and/or the one-year fixed account). Excluded investment options
are not included in calculating the 5% variable account floor under the Income
Assurer Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial withdrawals or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BASE - MAV(2)
-------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
-------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
128 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B -- Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
----------------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) OLD TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2)
-----------------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56 $ 774.30
11 141,000 641.55 642.96 174,000 791.70 793.44
12 148,000 691.16 692.64 174,000 812.58 814.32
13 208,000 996.32 998.40 208,000 996.32 998.40
14 198,000 974.16 976.14 208,000 1,023.36 1,025.44
15 203,000 1,025.15 1,027.18 208,000 1,050.40 1,052.48
-----------------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
--------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
--------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
----------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 129
EXAMPLE -- INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
----------------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) OLD TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2)
-----------------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56 $ 774.30
11 141,000 641.55 642.96 171,034 778.20 779.91
12 148,000 691.16 692.64 179,586 838.66 840.46
13 208,000 996.32 998.40 208,000 996.32 998.40
14 198,000 974.16 976.14 198,000 974.16 976.14
15 203,000 1,025.15 1,027.18 207,893 1,049.86 1,051.94
-----------------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
130 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 131
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
----------------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1) OLD TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2)
-----------------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56 $ 774.30
11 141,000 641.55 642.96 174,000 791.70 793.44
12 148,000 691.16 692.64 179,586 838.66 840.46
13 208,000 996.32 998.40 208,000 996.32 998.40
14 198,000 974.16 976.14 208,000 1,023.36 1,025.44
15 203,000 1,025.15 1,027.18 208,000 1,050.40 1,052.48
-----------------------------------------------------------------------------------------------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
--------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
--------------------------------------------------------------------------------------------------------------
IAB - MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
----------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
132 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX N: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit
value at beginning
of period $1.11 $1.01 $0.82 $1.00 -- --
Accumulation unit
value at end of
period $1.06 $1.11 $1.01 $0.82 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit
value at beginning
of period $1.07 $0.91 $0.60 $1.16 $1.00 --
Accumulation unit
value at end of
period $0.81 $1.07 $0.91 $0.60 $1.16 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 10 10 -- -- --
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit
value at beginning
of period $0.89 $0.80 $0.67 $1.15 $1.11 $1.00
Accumulation unit
value at end of
period $0.94 $0.89 $0.80 $0.67 $1.15 $1.11
Number of
accumulation units
outstanding at end
of period (000
omitted) 64 71 36 20 9 3
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (05/01/2006)
Accumulation unit
value at beginning
of period $0.74 $0.72 $0.54 $1.17 $1.12 $1.00
Accumulation unit
value at end of
period $0.59 $0.74 $0.72 $0.54 $1.17 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 190 193 14,182 15,838 6,819 2,227
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (05/01/2006)
Accumulation unit
value at beginning
of period $1.22 $1.17 $1.08 $1.10 $1.02 $1.00
Accumulation unit
value at end of
period $1.35 $1.22 $1.17 $1.08 $1.10 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 130 -- -- -- -- --
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $1.02 $0.86 $0.67 $0.90 $1.00 --
Accumulation unit
value at end of
period $1.00 $1.02 $0.86 $0.67 $0.90 --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (05/01/2006)
Accumulation unit
value at beginning
of period $1.02 $0.89 $0.67 $1.15 $0.97 $1.00
Accumulation unit
value at end of
period $1.02 $1.02 $0.89 $0.67 $1.15 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 8 8 11 11 22 4,219
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (05/01/2006)
Accumulation unit
value at beginning
of period $1.01 $0.90 $0.76 $1.05 $1.12 $1.00
Accumulation unit
value at end of
period $1.00 $1.01 $0.90 $0.76 $1.05 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 6 7 -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.05 $1.07 $1.07 $1.06 $1.02 $1.00
Accumulation unit
value at end of
period $1.04 $1.05 $1.07 $1.07 $1.06 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 204 344 6,729 1,399 321 67
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.22 $1.14 $1.01 $1.09 $1.04 $1.00
Accumulation unit
value at end of
period $1.29 $1.22 $1.14 $1.01 $1.09 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) 341 374 36,842 27,863 19,798 8,562
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $0.98 $0.84 $0.67 $1.14 $1.06 $1.00
Accumulation unit
value at end of
period $0.92 $0.98 $0.84 $0.67 $1.14 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 271 304 38,327 27,148 12,478 5,812
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $0.90 $0.77 $0.63 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $0.94 $0.90 $0.77 $0.63 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 30 30 28 -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 133
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.45 $1.22 $0.71 $1.55 $1.13 $1.00
Accumulation unit
value at end of
period $1.13 $1.45 $1.22 $0.71 $1.55 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 118 124 6,961 8,276 3,593 1,590
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.19 $1.15 $1.09 $1.10 $1.03 $1.00
Accumulation unit
value at end of
period $1.29 $1.19 $1.15 $1.09 $1.10 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 238 269 27,402 11,339 9,543 6,089
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (05/01/2006)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.80 $1.08 $1.07 $1.00
Accumulation unit
value at end of
period $1.33 $1.26 $1.14 $0.80 $1.08 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 42 43 35 18 27 1,524
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.36 $1.20 $0.79 $1.07 $1.06 $1.00
Accumulation unit
value at end of
period $1.42 $1.36 $1.20 $0.79 $1.07 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 7 477 490 517 761
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.35 $1.21 $0.86 $1.07 $1.05 $1.00
Accumulation unit
value at end of
period $1.42 $1.35 $1.21 $0.86 $1.07 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 154 173 20,105 10,342 7,039 2,214
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.00 $0.88 $0.70 $1.19 $1.07 $1.00
Accumulation unit
value at end of
period $0.86 $1.00 $0.88 $0.70 $1.19 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $0.93 $0.80 $0.59 $1.08 $1.05 $1.00
Accumulation unit
value at end of
period $0.89 $0.93 $0.80 $0.59 $1.08 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 9 24 1,417 997 --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $1.02 $0.85 $0.67 $1.13 $1.00 --
Accumulation unit
value at end of
period $0.98 $1.02 $0.85 $0.67 $1.13 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 281 307 34,403 19,916 9,765 --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.79 $0.58 $1.14 $1.00 --
Accumulation unit
value at end of
period $0.74 $0.89 $0.79 $0.58 $1.14 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 55 39 39 32 20 --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.19 $0.95 $0.59 $1.08 $0.96 $1.00
Accumulation unit
value at end of
period $1.00 $1.19 $0.95 $0.59 $1.08 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.92 $0.76 $0.54 $1.00 $1.00 --
Accumulation unit
value at end of
period $0.83 $0.92 $0.76 $0.54 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 7 7 -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $0.99 $0.88 $0.70 $1.13 $1.09 $1.00
Accumulation unit
value at end of
period $1.00 $0.99 $0.88 $0.70 $1.13 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 197 186 195 7 4 2
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.10 $1.08 $1.03 $1.07 $1.03 $1.00
Accumulation unit
value at end of
period $1.10 $1.10 $1.08 $1.03 $1.07 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 158 160 4,815 1,449 711 239
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (05/01/2006)
Accumulation unit
value at beginning
of period $1.10 $0.88 $0.71 $1.00 $1.04 $1.00
Accumulation unit
value at end of
period $1.02 $1.10 $0.88 $0.71 $1.00 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) 189 199 24,798 13,624 7,836 5
-----------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.86 $0.72 $1.10 $1.00 --
Accumulation unit
value at end of
period $0.85 $0.99 $0.86 $0.72 $1.10 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 22 18 4 -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
134 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.98 $0.78 $0.58 $0.99 $0.98 $1.00
Accumulation unit
value at end of
period $0.97 $0.98 $0.78 $0.58 $0.99 $0.98
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.13 $0.99 $0.82 $1.18 $1.12 $1.00
Accumulation unit
value at end of
period $1.22 $1.13 $0.99 $0.82 $1.18 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.84 $0.77 $0.62 $1.10 $1.00 --
Accumulation unit
value at end of
period $0.71 $0.84 $0.77 $0.62 $1.10 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 8 13 14 3 2 --
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.90 $0.88 $0.68 $1.10 $1.07 $1.00
Accumulation unit
value at end of
period $0.73 $0.90 $0.88 $0.68 $1.10 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 9 8 5 -- -- --
-----------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.10 $1.02 $0.71 $0.99 $1.00 --
Accumulation unit
value at end of
period $1.11 $1.10 $1.02 $0.71 $0.99 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 114 121 13,404 8,170 4,857 --
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.05 $0.91 $0.68 $1.20 $1.03 $1.00
Accumulation unit
value at end of
period $1.01 $1.05 $0.91 $0.68 $1.20 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 204 243 7,928 17,964 12,765 9,751
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.03 $0.84 $0.66 $1.27 $1.01 $1.00
Accumulation unit
value at end of
period $1.01 $1.03 $0.84 $0.66 $1.27 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 5 5 2 5 5
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.24 $1.17 $1.02 $1.07 $1.04 $1.00
Accumulation unit
value at end of
period $1.32 $1.24 $1.17 $1.02 $1.07 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) 222 238 16,651 11,995 8,725 859
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.19 $0.94 $0.68 $1.13 $0.99 $1.00
Accumulation unit
value at end of
period $1.05 $1.19 $0.94 $0.68 $1.13 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 103 135 9,053 11,273 4,921 1,866
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $0.94 $0.85 $0.68 $1.22 $1.05 $1.00
Accumulation unit
value at end of
period $0.77 $0.94 $0.85 $0.68 $1.22 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 30 906 1,281 1,053 434
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.19 $1.07 $0.79 $1.14 $1.11 $1.00
Accumulation unit
value at end of
period $1.21 $1.19 $1.07 $0.79 $1.14 $1.11
Number of
accumulation units
outstanding at end
of period (000
omitted) 276 240 181 120 132 6
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.03 $0.87 $0.75 $1.03 $1.07 $1.00
Accumulation unit
value at end of
period $1.09 $1.03 $0.87 $0.75 $1.03 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 27 27 27 27 1
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $0.88 $0.62 $1.09 $0.99 $1.00
Accumulation unit
value at end of
period $1.05 $1.12 $0.88 $0.62 $1.09 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 3 3 3 2
-----------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $0.96 $0.87 $0.70 $1.12 $1.09 $1.00
Accumulation unit
value at end of
period $0.94 $0.96 $0.87 $0.70 $1.12 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 39 63 66 66 83 2,313
-----------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $1.61 $1.42 $1.21 $1.15 $1.05 $1.00
Accumulation unit
value at end of
period $1.58 $1.61 $1.42 $1.21 $1.15 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 231 238 14,147 11,041 9,216 3,787
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 135
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit
value at beginning
of period $0.88 $0.83 $0.64 $1.12 $1.11 $1.00
Accumulation unit
value at end of
period $0.81 $0.88 $0.83 $0.64 $1.12 $1.11
Number of
accumulation units
outstanding at end
of period (000
omitted) 100 139 160 105 116 1
-----------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $0.90 $0.69 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.03 $1.12 $0.90 $0.69 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 117 110 7,647 7,744 5,921 3,150
-----------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.79 $0.70 $0.59 $0.94 $1.00 --
Accumulation unit
value at end of
period $0.81 $0.79 $0.70 $0.59 $0.94 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 31 15 16 3 2 --
-----------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit
value at beginning
of period $0.84 $0.74 $0.62 $1.09 $0.99 $1.00
Accumulation unit
value at end of
period $0.77 $0.84 $0.74 $0.62 $1.09 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 32 1,288 1,224 1,210 493
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into
Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition,
Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its name to Invesco Van
Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/01/2006)
Accumulation unit
value at beginning
of period $0.95 $0.81 $0.58 $1.11 $1.01 $1.00
Accumulation unit
value at end of
period $0.87 $0.95 $0.81 $0.58 $1.11 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 3 -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco
Van Kampen V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.95 $0.92 $0.73 $1.03 $1.00 --
Accumulation unit
value at end of
period $0.98 $0.95 $0.92 $0.73 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 5 8 -- -- --
-----------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.91 $0.82 $0.61 $1.05 $1.00 --
Accumulation unit
value at end of
period $0.84 $0.91 $0.82 $0.61 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 198 214 27,658 9,069 4,018 --
-----------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.15 $1.02 $0.80 $1.13 $1.04 $1.00
Accumulation unit
value at end of
period $1.07 $1.15 $1.02 $0.80 $1.13 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.98 $0.85 $0.67 $1.06 $1.09 $1.00
Accumulation unit
value at end of
period $0.95 $0.98 $0.85 $0.67 $1.06 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 107 126 11,689 12,787 7,163 5,339
-----------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.78 $0.74 $0.51 $1.06 $1.06 $1.00
Accumulation unit
value at end of
period $0.75 $0.78 $0.74 $0.51 $1.06 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.96 $0.85 $0.63 $1.06 $1.00 --
Accumulation unit
value at end of
period $0.90 $0.96 $0.85 $0.63 $1.06 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 240 267 29,424 20,536 11,694 --
-----------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.06 $0.86 $0.61 $1.03 $1.00 --
Accumulation unit
value at end of
period $1.07 $1.06 $0.86 $0.61 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4 9 20 -- -- --
-----------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit
value at beginning
of period $1.32 $0.98 $0.61 $1.02 $1.00 $1.00
Accumulation unit
value at end of
period $1.17 $1.32 $0.98 $0.61 $1.02 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 4 5 5 2 2 5
-----------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit
value at beginning
of period $1.07 $0.99 $0.85 $1.10 $1.07 $1.00
Accumulation unit
value at end of
period $1.07 $1.07 $0.99 $0.85 $1.10 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 11 15 32 -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
136 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/01/2006)
Accumulation unit
value at beginning
of period $1.40 $1.25 $0.95 $1.54 $1.22 $1.00
Accumulation unit
value at end of
period $1.48 $1.40 $1.25 $0.95 $1.54 $1.22
Number of
accumulation units
outstanding at end
of period (000
omitted) 15 15 15 10 9 2
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.79 $0.66 $0.47 $0.85 $1.00 --
Accumulation unit
value at end of
period $0.71 $0.79 $0.66 $0.47 $0.85 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 48 53 6,317 7,158 2,329 --
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.21 $0.92 $0.59 $1.13 $1.00 --
Accumulation unit
value at end of
period $1.11 $1.21 $0.92 $0.59 $1.13 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 30 31 30 12 12 --
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.01 $0.79 $0.62 $1.01 $1.23 $1.00
Accumulation unit
value at end of
period $1.05 $1.01 $0.79 $0.62 $1.01 $1.23
Number of
accumulation units
outstanding at end
of period (000
omitted) 69 72 75 75 71 46
-----------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.95 $0.88 $0.62 $1.15 $1.02 $1.00
Accumulation unit
value at end of
period $0.93 $0.95 $0.88 $0.62 $1.15 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 49 49 49 30 32 12
-----------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.66 $1.12 $1.07 $1.00
Accumulation unit
value at end of
period $0.94 $1.04 $0.91 $0.66 $1.12 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 39 33 36 22 10 1
-----------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.27 $1.12 $0.96 $1.13 $1.04 $1.00
Accumulation unit
value at end of
period $1.27 $1.27 $1.12 $0.96 $1.13 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) 249 266 27,967 18,542 13,059 3,108
-----------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.99 $0.81 $0.60 $0.98 $1.00 $1.00
Accumulation unit
value at end of
period $0.95 $0.99 $0.81 $0.60 $0.98 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 14 24 25 24 24 20
-----------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.16 $1.04 $0.86 $1.04 $1.00 --
Accumulation unit
value at end of
period $1.17 $1.16 $1.04 $0.86 $1.04 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 154 174 15,157 17,312 11,741 --
-----------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $1.05 $1.04 $0.83 $1.01 $1.03 $1.00
Accumulation unit
value at end of
period $1.03 $1.05 $1.04 $0.83 $1.01 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.87 $0.80 $0.65 $1.17 $1.09 $1.00
Accumulation unit
value at end of
period $0.72 $0.87 $0.80 $0.65 $1.17 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.13 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (05/01/2006)
Accumulation unit
value at beginning
of period $0.87 $0.70 $0.54 $0.90 $1.04 $1.00
Accumulation unit
value at end of
period $0.82 $0.87 $0.70 $0.54 $0.90 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 6 1,670
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.12 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 472 509 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.12 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 31,406 35,636 -- -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 137
VARIABLE ACCOUNT CHARGES OF 1.05% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.04 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 884 947 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.04 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28,351 22,295 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.87 $0.78 $0.60 $0.99 $1.00 --
Accumulation unit
value at end of
period $0.83 $0.87 $0.78 $0.60 $0.99 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 295 36,770 16,104 7,996 --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.13 $0.94 $0.69 $1.10 $1.05 $1.00
Accumulation unit
value at end of
period $1.04 $1.13 $0.94 $0.69 $1.10 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.09 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 6,568 7,272 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.09 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 229,158 241,303 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.11 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,069 3,301 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.11 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 113,447 126,812 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.07 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,521 2,064 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.07 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 33,464 37,757 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $0.91 $0.67 $0.99 $1.05 $1.00
Accumulation unit
value at end of
period $1.06 $1.12 $0.91 $0.67 $0.99 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 4 5 733 845 639 --
-----------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (05/01/2006)
Accumulation unit
value at beginning
of period $1.24 $1.01 $0.68 $1.26 $1.09 $1.00
Accumulation unit
value at end of
period $1.05 $1.24 $1.01 $0.68 $1.26 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 106 119 8,978 10,601 4,011 2,127
-----------------------------------------------------------------------------------------------
WANGER USA (05/01/2006)
Accumulation unit
value at beginning
of period $1.07 $0.88 $0.62 $1.05 $1.00 $1.00
Accumulation unit
value at end of
period $1.02 $1.07 $0.88 $0.62 $1.05 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 67 70 7,396 5,499 3,212 306
-----------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit
value at beginning
of period $1.08 $1.00 $0.82 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.03 $1.08 $1.00 $0.82 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
138 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit
value at beginning
of period $1.04 $0.89 $0.59 $1.15 $1.00 -- -- --
Accumulation unit
value at end of
period $0.78 $1.04 $0.89 $0.59 $1.15 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 28 28 -- -- -- -- --
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.03 $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 130 124 89 113 168 170 126 90
-----------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19 $1.00
Accumulation unit
value at end of
period $0.92 $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 6,871 7,882 19,909 27,146 17,556 13,071 8,418 3,162
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05 $1.00
Accumulation unit
value at end of
period $1.32 $1.21 $1.17 $1.08 $1.12 $1.04 $1.05 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,945 11,844 13,423 13,696 23,067 24,580 21,086 7,249
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.85 $0.66 $0.90 $1.00 -- -- --
Accumulation unit
value at end of
period $0.96 $0.99 $0.85 $0.66 $0.90 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 9 -- -- --
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06 $1.00
Accumulation unit
value at end of
period $1.01 $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,936 4,147 5,039 6,040 6,538 19,124 6,266 2,495
-----------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09 $1.00
Accumulation unit
value at end of
period $1.12 $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 87 16 16 19 24 29 15 26
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99 $1.00
Accumulation unit
value at end of
period $1.00 $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,045 2,910 11,536 5,320 3,584 1,771 839 136
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.25 $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,517 3,451 52,732 52,913 49,906 27,709 237 220
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15 $1.00
Accumulation unit
value at end of
period $1.25 $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,706 10,251 47,600 45,615 31,206 25,297 8,506 34
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit
value at end of
period $1.03 $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 5,131 7,801 9,323 10,215 10,759 11,734 14,054 9,019
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17 $1.00
Accumulation unit
value at end of
period $1.93 $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,042 2,330 8,001 12,125 7,826 7,742 4,979 2,159
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.14 $1.12 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit
value at end of
period $1.23 $1.14 $1.12 $1.06 $1.08 $1.02 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,527 2,123 39,552 22,934 24,803 19,914 -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.22 $1.11 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.27 $1.22 $1.11 $0.78 $1.06 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,238 1,849 2,437 3,077 4,084 8,585 -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.54 $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,037 1,429 3,043 3,808 4,514 5,751 3,150 830
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 139
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.52 $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 724 967 23,958 16,287 14,534 6,780 8 8
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14 $1.00
Accumulation unit
value at end of
period $1.20 $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 2 2 2 1 --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07 $1.00
Accumulation unit
value at end of
period $1.01 $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 361 910 3,801 2,883 38 38 --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.83 $0.66 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $0.94 $0.99 $0.83 $0.66 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,287 1,574 44,625 33,416 21,154 -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.86 $0.78 $0.57 $1.13 $1.00 -- -- --
Accumulation unit
value at end of
period $0.71 $0.86 $0.78 $0.57 $1.13 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 70 70 70 21 -- -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07 $1.00
Accumulation unit
value at end of
period $1.13 $1.35 $1.09 $0.68 $1.26 $1.13 $1.15 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 430 548 702 933 906 1,023 1,088 697
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.74 $0.54 $0.99 $1.00 -- -- --
Accumulation unit
value at end of
period $0.80 $0.89 $0.74 $0.54 $0.99 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 145 167 3 98 69 -- -- --
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.11 $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 198 211 155 94 147 142 132 48
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00 $1.00
Accumulation unit
value at end of
period $1.04 $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,924 2,722 10,350 5,772 5,294 3,802 1,781 218
-----------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17 $1.00
Accumulation unit
value at end of
period $1.33 $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 585 721 23,264 17,911 14,170 -- -- --
-----------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.96 $0.84 $0.71 $1.10 $1.00 -- -- --
Accumulation unit
value at end of
period $0.82 $0.96 $0.84 $0.71 $1.10 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 47 33 32 -- -- -- -- --
-----------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $0.98 $0.74 $1.27 $1.27 $1.21 $1.13 $1.00
Accumulation unit
value at end of
period $1.20 $1.23 $0.98 $0.74 $1.27 $1.27 $1.21 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02 $1.00
Accumulation unit
value at end of
period $1.25 $1.17 $1.03 $0.86 $1.25 $1.19 $1.05 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 48 48 48 100 112 67 71 72
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.81 $0.75 $0.62 $1.09 $1.00 -- -- --
Accumulation unit
value at end of
period $0.68 $0.81 $0.75 $0.62 $1.09 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 8 -- -- -- -- --
-----------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14 $1.00
Accumulation unit
value at end of
period $0.98 $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 24 21 19 38 24 24 26 7
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
140 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.06 $0.99 $0.70 $0.98 $1.00 -- -- --
Accumulation unit
value at end of
period $1.07 $1.06 $0.99 $0.70 $0.98 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 562 719 17,706 14,635 11,432 -- -- --
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11 $1.00
Accumulation unit
value at end of
period $1.30 $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11
Number of
accumulation units
outstanding at end
of period (000
omitted) 10,938 14,844 26,124 44,134 42,111 45,962 19,309 6,485
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.09 $0.90 $0.72 $1.38 $1.11 $1.06 $1.03 $1.00
Accumulation unit
value at end of
period $1.07 $1.09 $0.90 $0.72 $1.38 $1.11 $1.06 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 15 15 36 15 15 -- --
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.28 $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,767 5,353 28,571 28,234 30,874 10,450 8,474 3,024
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21 $1.00
Accumulation unit
value at end of
period $1.57 $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,681 2,112 10,749 15,569 9,998 6,670 2,154 194
-----------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10 $1.00
Accumulation unit
value at end of
period $1.04 $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,343 2,808 4,655 4,812 4,606 5,282 5,025 3,210
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12 $1.00
Accumulation unit
value at end of
period $1.35 $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,057 1,140 1,013 1,631 1,849 1,382 1,066 516
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.00 $0.87 $1.21 $1.27 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.23 $1.18 $1.00 $0.87 $1.21 $1.27 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 70 96 51 137 151 68 53 34
-----------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.28 $1.02 $0.73 $1.29 $1.18 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.20 $1.28 $1.02 $0.73 $1.29 $1.18 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 19 36 39 141 125 98 115 111
-----------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $1.06 $0.86 $1.39 $1.37 $1.18 $1.09 $1.00
Accumulation unit
value at end of
period $1.13 $1.16 $1.06 $0.86 $1.39 $1.37 $1.18 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 252 289 305 485 542 6,611 374 369
-----------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16 $1.00
Accumulation unit
value at end of
period $1.76 $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,114 4,186 21,774 22,313 26,747 18,800 7,744 2,656
-----------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12 $1.00
Accumulation unit
value at end of
period $1.00 $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 103 119 114 115 148 112 57 25
-----------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19 $1.00
Accumulation unit
value at end of
period $1.39 $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,562 4,764 13,524 16,698 17,019 14,517 6,833 2,746
-----------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.76 $0.69 $0.58 $0.94 $1.00 -- -- --
Accumulation unit
value at end of
period $0.78 $0.76 $0.69 $0.58 $0.94 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 27 -- -- -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 141
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06 $1.00
Accumulation unit
value at end of
period $0.88 $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 96 107 2,537 2,458 2,494 2,008 3 3
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into
Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition,
Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its name to Invesco Van
Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10 $1.00
Accumulation unit
value at end of
period $1.12 $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 9 9 17 70 73 19 19 12
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco
Van Kampen V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.92 $0.90 $0.72 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $0.94 $0.92 $0.90 $0.72 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 25 25 45 3 -- -- -- --
-----------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.80 $0.61 $1.04 $1.00 -- -- --
Accumulation unit
value at end of
period $0.81 $0.89 $0.80 $0.61 $1.04 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 940 984 35,468 16,452 9,747 -- -- --
-----------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.18 $0.92 $1.32 $1.23 $1.13 $1.07 $1.00
Accumulation unit
value at end of
period $1.21 $1.31 $1.18 $0.92 $1.32 $1.23 $1.13 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 401 569 679 796 1,038 1,204 1,379 900
-----------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13 $1.00
Accumulation unit
value at end of
period $1.09 $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 13,815 18,929 34,501 43,308 39,815 41,096 23,606 8,260
-----------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $0.88 $0.84 $0.58 $1.22 $1.23 $1.11 $1.07 $1.00
Accumulation unit
value at end of
period $0.83 $0.88 $0.84 $0.58 $1.22 $1.23 $1.11 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,083 2,907 3,241 4,292 3,865 4,263 5,023 3,225
-----------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.93 $0.83 $0.62 $1.05 $1.00 -- -- --
Accumulation unit
value at end of
period $0.86 $0.93 $0.83 $0.62 $1.05 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,082 1,257 38,185 34,319 25,309 -- -- --
-----------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.03 $0.84 $0.60 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.02 $1.03 $0.84 $0.60 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 54 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.51 $1.13 $0.71 $1.19 $1.19 $1.07 $1.04 $1.00
Accumulation unit
value at end of
period $1.33 $1.51 $1.13 $0.71 $1.19 $1.19 $1.07 $1.04
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 4 9 10 11 12
-----------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09 $1.00
Accumulation unit
value at end of
period $1.15 $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 65 69 69 94 102 106 69 53
-----------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24 $1.00
Accumulation unit
value at end of
period $2.11 $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24
Number of
accumulation units
outstanding at end
of period (000
omitted) 43 55 58 91 120 32 1 1
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- --
Accumulation unit
value at end of
period $0.68 $0.77 $0.64 $0.46 $0.85 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 249 265 8,046 11,790 4,909 -- -- --
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.17 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $1.07 $1.17 $0.90 $0.58 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
142 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37 $1.00
Accumulation unit
value at end of
period $1.74 $1.68 $1.32 $1.05 $1.72 $2.12 $1.57 $1.37
Number of
accumulation units
outstanding at end
of period (000
omitted) 257 328 604 694 728 573 619 292
-----------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06 $1.00
Accumulation unit
value at end of
period $1.00 $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,615 6,424 7,178 8,981 8,700 10,182 8,509 3,218
-----------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit
value at end of
period $1.26 $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 113 127 149 169 231 209 177 72
-----------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07 $1.00
Accumulation unit
value at end of
period $1.32 $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,711 6,319 41,343 38,121 38,909 20,731 11,203 4,674
-----------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit
value at end of
period $1.29 $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 89 24 25 61 71 75 59 31
-----------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.12 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.12 $1.12 $1.01 $0.85 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 718 853 20,192 30,027 26,289 -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03 $1.00
Accumulation unit
value at end of
period $1.10 $1.14 $1.13 $0.91 $1.12 $1.15 $1.14 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 44 56 84 144 142 109 57
-----------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.21 $1.13 $0.92 $1.67 $1.57 $1.26 $1.14 $1.00
Accumulation unit
value at end of
period $0.99 $1.21 $1.13 $0.92 $1.67 $1.57 $1.26 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 10 10 10 27 -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.13 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 9 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18 $1.00
Accumulation unit
value at end of
period $1.09 $1.16 $0.94 $0.73 $1.22 $1.43 $1.24 $1.18
Number of
accumulation units
outstanding at end
of period (000
omitted) 69 84 147 179 192 4,666 76 17
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 242 2,128 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 37,081 45,459 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,605 2,840 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 37,774 34,075 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.84 $0.77 $0.59 $0.99 $1.00 -- -- --
Accumulation unit
value at end of
period $0.79 $0.84 $0.77 $0.59 $0.99 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,246 1,481 47,054 29,241 19,856 -- -- --
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 143
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10 $1.00
Accumulation unit
value at end of
period $1.17 $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 8 8 -- 28 -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,056 2,407 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 206,439 248,214 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,555 774 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 118,725 154,365 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,095 1,480 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 34,697 43,744 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15 $1.00
Accumulation unit
value at end of
period $1.35 $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,585 6,248 9,697 11,631 12,674 11,121 10,647 4,456
-----------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20 $1.00
Accumulation unit
value at end of
period $1.77 $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,529 1,843 8,675 12,927 7,675 6,793 3,916 1,854
-----------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15 $1.00
Accumulation unit
value at end of
period $1.30 $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,605 3,655 12,068 12,713 11,339 6,970 5,234 2,030
-----------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
144 RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE ENDEAVOR SELECT VARIABLE ANNUITY -- PROSPECTUS 145
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
273417 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R) INNOVATIONS SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The information in this
prospectus applies to both contracts unless stated otherwise.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contracts and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contracts described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, surrender
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and surrendering money from the contracts we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contracts described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contracts and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contracts described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contracts and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACTS IN BRIEF...................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION............. 19
FINANCIAL STATEMENTS........................ 19
THE VARIABLE ACCOUNT AND THE FUNDS.......... 19
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 33
THE FIXED ACCOUNT........................... 35
BUYING YOUR CONTRACT........................ 38
CHARGES..................................... 42
VALUING YOUR INVESTMENT..................... 53
MAKING THE MOST OF YOUR CONTRACT............ 55
SURRENDERS.................................. 63
TSA -- SPECIAL PROVISIONS................... 64
CHANGING THE ANNUITANT...................... 64
CHANGING OWNERSHIP.......................... 65
BENEFITS IN CASE OF DEATH................... 66
OPTIONAL BENEFITS........................... 74
THE ANNUITY PAYOUT PERIOD................... 88
TAXES....................................... 90
VOTING RIGHTS............................... 94
SUBSTITUTION OF INVESTMENTS................. 95
ABOUT THE SERVICE PROVIDERS................. 95
ADDITIONAL INFORMATION...................... 97
APPENDICES TABLE OF CONTENTS
AND CROSS-REFERENCE TABLE................. 98
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 99
APPENDIX B: EXAMPLE -- SURRENDER CHARGES.... 101
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 110
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES
OF RIDERS................................. 116
APPENDIX E: SECURESOURCE SERIES OF RIDERS --
ADDITIONAL RMD DISCLOSURE................. 124
APPENDIX F: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 126
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 128
APPENDIX H: PURCHASE PAYMENT CREDITS FOR
ELIGIBLE CONTRACTS........................ 130
APPENDIX I: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED BEFORE
MAY 1, 2006............................... 131
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER DISCLOSURE..................... 132
APPENDIX K: GUARANTOR WITHDRAWAL
BENEFIT RIDER DISCLOSURE.................. 144
APPENDIX L: INCOME ASSURER BENEFIT RIDERS... 152
APPENDIX M: EXAMPLE -- ACCUMULATION
PROTECTOR BENEFIT RIDER................... 161
APPENDIX N: SECURESOURCE RIDER DISCLOSURE... 162
APPENDIX O: SECURESOURCE 20 RIDER
DISCLOSURE................................ 175
APPENDIX P: SECURESOURCE STAGES RIDER
DISCLOSURE................................ 189
APPENDIX Q: CONDENSED FINANCIAL
INFORMATION (UNAUDITED)................... 199
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 209
--------------------------------------------------------------------------------
2 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount prior to the
application of amounts to an annuity payment plan.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITIZATION START DATE: The date when annuity payments begin according to the
applicable annuity payment plan (referred to as "Retirement date" in the
Original Contract). Throughout this prospectus when we use the term
"Annuitization start date," it includes the term "Retirement date."
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
death (Current Contract), or owner's or annuitant's death (Original Contract)
while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT (CURRENT CONTRACT): The person who becomes the annuitant
when the current annuitant dies prior to the annuitization start date. In the
case of joint ownership, one owner must also be the contingent annuitant.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the regular fixed account and
the Special DCA fixed account (Current Contract) or the one-year fixed account
and the DCA fixed account (Original Contract). Amounts you allocate to the fixed
account earn interest rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates
for guarantee periods we declare when you allocate purchase payments and any
purchase payment credits or transfer contract value to a GPA. These guaranteed
rates and periods of time may vary by state. Unless an exception applies,
transfers or surrenders from a GPA done more than 30 days before the end of the
guarantee period will receive a market value adjustment, which may result in a
gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is surrendered or transferred more than 30
days before the end of its guarantee period.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 3
OWNER (YOU, YOUR): The person or persons identified in the contract as owners(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. The owner or
any joint owner may be a nonnatural person (e.g. irrevocable trust or
corporation) or a revocable trust. In this case, the annuitant will be deemed to
be the owner for contract provisions that are based on the age or life of the
owner. When the contract is owned by a revocable trust, the annuitant selected
should be the grantor of the trust to qualify for income tax deferral. Any
contract provisions that are based on the age of the owner will be based on the
age of the oldest owner. Any ownership change, including continuation of the
contract by your spouse under the spousal continuation provision of the
contract, redefines "owner", "you" and "your".
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Custodial and investment only plans under Section 401(a) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract (referred to as "Withdrawal value" in the Original
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract (referred to as "Surrender value" in the Current
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
--------------------------------------------------------------------------------
4 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACTS IN BRIEF
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The primary differences are
disclosed in the following sections: "Key Terms", "Expense Summary," "Buying
Your Contract", "Benefits in Case of Death", and "Optional Benefits."
PURPOSE: These contracts allow you to accumulate money for retirement or a
similar long-term goal. You do this by making one or more purchase payments. For
the Current Contract, you may allocate your purchase payments to the regular
fixed account, the Special DCA fixed account, GPAs and/or subaccounts of the
variable account under the contract. For the Original Contract, you may allocate
your purchase payments to the one-year fixed account, the DCA fixed account (if
part of your contract), the GPAs and/or subaccounts of the variable account
under the contract. When you invest in the subaccounts of the variable account,
you risk losing amounts you invest. These accounts, in turn, may earn returns
that increase the value of the contract. If the contract value goes to zero due
to underlying fund's performance or deduction of fees, the contract will no
longer be in force and the contract (including any death benefit riders) will
terminate. You may be able to purchase an optional benefit to reduce the
investment risk you assume under the contract. Beginning at a specified time in
the future called the annuitization start date, these contracts provide lifetime
or other forms of payout of your contract value (less any applicable premium tax
and/or other charges).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
FREE LOOK PERIOD: You may return your contract to your investment professional
or to our corporate office within the time stated on the first page of your
contract and receive a full refund of the contract value. We will not deduct any
contract charges or fees. However, you bear the investment risk from the time of
purchase until you return the contract and any positive or negative market value
adjustment will apply; the refund amount may be more or less than the payment
you made. (EXCEPTION: If the law requires, we will refund all of your purchase
payments.)
ACCOUNTS: Generally, you may allocate purchase payments among the:
subaccounts of the variable account, each of which invests in a fund with a
particular investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at the annuitization start date will equal or exceed the total
purchase payments you allocate to the subaccounts. (See "The Variable Account
and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
for the Current Contract:
- regular fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on transfers from this account and may
be restrictions on the amount you can allocate to this account (see "Buying
Your Contract", "Transfer policies" and "The Regular Fixed Account").
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 5
- Special DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain
in this account. (See "Special DCA Fixed Account").
for the Original Contract:
- one-year fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on the amount you can allocate to this
account as well as on transfers from this account (see "Buying Your
Contract", "Transfer policies" and "The One-Year Fixed Account").
- DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract
value can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until the
annuitization start date, and once per contract year among the subaccounts after
the annuitization start date. Transfers out of the GPAs done more than 30 days
before the end of the guarantee period will be subject to an MVA, unless an
exception applies. You may establish automated transfers among the accounts.
Transfers into the Special DCA fixed account (Current Contract) and DCA fixed
account (Original Contract) are not permitted. GPAs, the regular fixed account
(Current Contract) and the one-year fixed account (Original Contract) are
subject to special restrictions. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
SURRENDERS: You may surrender all or part of your contract value at any time
before the annuitization start date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and income taxes (including a
10% IRS penalty if you make surrenders prior to your reaching age 59 1/2) and
may have other tax consequences. If you have elected the SecureSource Stages
rider or the SecureSource 20 rider, please consider carefully when you take
withdrawals. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be reset based on your contract value at that time and you will no longer be
eligible to receive the 20% credit available under the SecureSource 20 rider or
any future rider credits under the SecureSource Stages. Certain other
restrictions may apply. (See "Surrenders").
BENEFITS IN CASE OF DEATH: For the Current Contract, if you die before the
annuitization start date, we will pay the beneficiary an amount based on the
applicable death benefit. For the Original Contract, if you or the annuitant die
before the annuitization start date, we will pay the beneficiary an amount based
on the applicable death benefit. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the annuitization start
date. You may choose from a variety of plans to make sure that payouts continue
as long as you like. If you buy a qualified annuity, the payout schedule must
meet IRS requirements. We can make payouts on a fixed or variable basis, or
both. During the annuity payout period, your choices for subaccounts may be
limited. The GPAs, the Special DCA fixed account (Current Contract) and the DCA
fixed accounts (Original Contract) are not available after the annuitization
start date. (See "The Annuity Payout Period").
--------------------------------------------------------------------------------
6 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A SURRENDER FROM THESE CONTRACTS. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAY PAY WHEN YOU MAKE A SURRENDER FROM ONE OF THESE CONTRACTS. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
TEN-YEAR SCHEDULE SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE
NUMBER OF SURRENDER CHARGE NUMBER OF SURRENDER CHARGE NUMBER OF SURRENDER CHARGE
COMPLETED YEARS PERCENTAGE APPLIED COMPLETED YEARS PERCENTAGE APPLIED COMPLETED YEARS PERCENTAGE APPLIED
FROM DATE OF EACH TO EACH FROM DATE OF EACH TO EACH FROM DATE OF EACH TO EACH
PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT
0 8% 0 8% 0 8%
1 8 1 8 1 7
2 8 2 7 2 6
3 7 3 7 3 4
4 6 4 6 4 2
5 5 5 5 5+ 0
6 4 6 3
7 3 7+ 0
8 2
9 1
10+ 0
Surrender charge under Annuity Payout Plan E -- Payouts for a specified period:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 7
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE MAXIMUM: $50 CURRENT: $40
ANNUAL CONTRACT ADMINISTRATIVE CHARGE IF YOUR CONTRACT VALUE MAXIMUM: $20 CURRENT: $0
EQUALS OR EXCEEDS $50,000
CONTRACT ADMINISTRATIVE CHARGE AT FULL SURRENDER MAXIMUM: $50 CURRENT: $40
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE AND THE LENGTH OF YOUR CONTRACT'S
SURRENDER CHARGE SCHEDULE. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY
AND EXPENSE RISK FEES YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE
TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION
TO THE MORTALITY AND EXPENSE RISK FEE.
TEN-YEAR SURRENDER CHARGE SCHEDULE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 0.85% 0.15% 1.00%
ROPP Death Benefit 0.85 0.15 1.00
MAV Death Benefit 1.10 0.15 1.25
5% Accumulation Death Benefit 1.25 0.15 1.40
Enhanced Death Benefit 1.30 0.15 1.45
SEVEN-YEAR SURRENDER CHARGE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.05% 0.15% 1.20%
ROPP Death Benefit 1.05 0.15 1.20
MAV Death Benefit 1.30 0.15 1.45
5% Accumulation Death Benefit 1.45 0.15 1.60
Enhanced Death Benefit 1.50 0.15 1.65
FIVE-YEAR SURRENDER CHARGE SCHEDULE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.40% 0.15% 1.55%
ROPP Death Benefit 1.40 0.15 1.55
MAV Death Benefit 1.65 0.15 1.80
5% Accumulation Death Benefit 1.80 0.15 1.95
Enhanced Death Benefit 1.85 0.15 2.00
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
--------------------------------------------------------------------------------
8 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROPP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. The optional living benefits require participation
in the PN program. The fees apply only if you have selected one of these
benefits.
SECURESOURCE STAGES 2(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
SECURESOURCE STAGES 2(SM) - JOINT LIFE RIDER FEE MAXIMUM: 2.25% CURRENT: 1.15%
(Charged annually on the contract anniversary as a percentage of contract value
or the total Benefit Base, whichever is greater.)
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 1.50%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed after July 18, 2010, but prior to Oct. 4,
2010, the current fee is 1.10%.
SECURESOURCE(R) STAGES - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) STAGES - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.35%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Benefit Base, whichever is greater.)
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
You select either a seven-year or five-year surrender charge schedule at the
time of application.
SEVEN-YEAR SCHEDULE FIVE-YEAR SCHEDULE*
NUMBER OF SURRENDER CHARGE NUMBER OF SURRENDER CHARGE
COMPLETED YEARS PERCENTAGE APPLIED COMPLETED YEARS PERCENTAGE APPLIED
FROM DATE OF EACH TO EACH FROM DATE OF EACH TO EACH
PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT PURCHASE PAYMENT
0 8% 0 8%
1 8 1 7
2 7 2 6
3 7 3 4
4 6 4 2
5 5 5+ 0
6 3
7+ 0
* The five-year surrender charge schedule may not be available in all states.
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
Under this annuity payout plan, you can choose to take a surrender. The amount
that you can surrender is the present value of any remaining variable payouts.
The discount rate we use in the calculation will be 5.17% if the assumed
investment rate is 3.5% and 6.67% if the assumed investment rate is 5%. The
surrender charge equals the present value of the remaining payouts using the
assumed investment rate minus the present value of the remaining payouts using
the discount rate. (See "Charges -- Surrender Charge" and "The Annuity Payout
Period -- Annuity Payout Plans.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 9
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE AND AT FULL SURRENDER $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full surrender.)
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE, A QUALIFIED OR NONQUALIFIED CONTRACT
AND THE LENGTH OF YOUR CONTRACT'S SURRENDER CHARGE SCHEDULE. THE COMBINATION YOU
CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEES YOU PAY. THE TABLE BELOW
SHOWS THE COMBINATIONS AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT
ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
SEVEN-YEAR SURRENDER CHARGE SCHEDULE FOR CONTRACTS WITH APPLICATIONS SIGNED ON
OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR STATE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP Death Benefit 0.90% 0.15% 1.05%
MAV Death Benefit 1.10 0.15 1.25
5% Accumulation Death Benefit 1.25 0.15 1.40
Enhanced Death Benefit 1.30 0.15 1.45
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.05 0.15 1.20
MAV Death Benefit 1.25 0.15 1.40
5% Accumulation Death Benefit 1.40 0.15 1.55
Enhanced Death Benefit 1.45 0.15 1.60
--------------------------------------------------------------------------------
10 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
SEVEN-YEAR SURRENDER CHARGE SCHEDULE FOR ALL OTHER CONTRACTS
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
QUALIFIED ANNUITIES
ROP Death Benefit 1.00% 0.15% 1.15%
MAV Death Benefit 1.20 0.15 1.35
5% Accumulation Death Benefit 1.35 0.15 1.50
Enhanced Death Benefit 1.40 0.15 1.55
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.15 0.15 1.30
MAV Death Benefit 1.35 0.15 1.50
5% Accumulation Death Benefit 1.50 0.15 1.65
Enhanced Death Benefit 1.55 0.15 1.70
FIVE-YEAR SURRENDER CHARGE SCHEDULE
QUALIFIED ANNUITIES
ROP Death Benefit 1.20% 0.15% 1.35%
MAV Death Benefit 1.40 0.15 1.55
5% Accumulation Death Benefit 1.55 0.15 1.70
Enhanced Death Benefit 1.60 0.15 1.75
NONQUALIFIED ANNUITIES
ROP Death Benefit 1.35 0.15 1.50
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fee apply only if you select one of these
benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charge annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits, if available in your state. The fees apply only if you elected one of
these benefits when you purchased your contract. Each optional living benefit
requires participation in the PN program.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed prior to Jan. 26, 2009 the current charge
is 0.55% and for contract applications signed between Jan. 26, 2009 and May
30, 2009, the current charge is 0.80%.
SECURESOURCE(R) 20 - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.25%
SECURESOURCE(R) 20 - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009, BUT PRIOR TO AUG. 10, 2009,
OR IN STATES WHERE THE CURRENT CONTRACT AND SECURESOURCE 20 ARE NOT AVAILABLE:
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 11
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO JAN. 26, 2009:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
12 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP International, Class II 1.31 0.25 0.02 -- 1.58
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 13
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50% 0.25% 0.31% --% 1.06%(4)
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75 0.25 0.11 -- 1.11
Service Shares
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
--------------------------------------------------------------------------------
14 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Small Cap Value Fund - Class IB Shares 0.63% 0.25% 0.15% 0.11% 1.14%
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3), 0.925% for Columbia Variable Portfolio - Select Large-Cap Value
Fund (Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value
Fund (Class 2).
(2) Other expenses have been restated to reflect contractual changes to certain
other fees.
(3) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4) Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5) The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 15
(9) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(11) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15) PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
16 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES,
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
SecureSource Stages 2 - Joint Life rider and the Benefit Protector Plus Death
Benefit(1),(3). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Ten-year
surrender charge
schedule $1,340 $2,561 $3,586 $6,077 $620 $1,840 $3,043 $5,986
Seven-year
surrender charge
schedule 1,360 2,529 3,679 6,148 640 1,897 3,135 6,148
Five-year
surrender charge
schedule 1,394 2,539 3,476 6,425 674 1,997 3,295 6,425
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROPP Death Benefit and do not select any
optional benefits.(2) Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Ten-year
surrender charge
schedule $938 $1,387 $1,617 $2,270 $194 $596 $1,017 $2,170
Seven-year
surrender charge
schedule 957 1,346 1,723 2,387 214 658 1,123 2,387
Five-year
surrender charge
schedule 990 1,350 1,505 2,757 250 766 1,305 2,757
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider or SecureSource 20 - Joint Life
rider and the Benefit Protector Plus Death Benefit.(2),(3) Although your actual
costs may be lower, based on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
surrender charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,370 $2,558 $3,726 $6,236 $650 $1,926 $3,183 $6,236
Five-year
surrender charge
schedule 1,400 2,554 3,501 6,473 680 2,012 3,319 6,473
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
surrender charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $1,355 $2,515 $3,657 $6,115 $635 $1,883 $3,114 $6,115
Five-year
surrender charge
schedule 1,385 2,511 3,432 6,355 665 1,969 3,251 6,355
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the ROP Death
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 17
Benefit and do not select any optional benefits(2). Although your actual costs
may be higher, based on these assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
NONQUALIFIED OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
surrender charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $957 $1,346 $1,723 $2,387 $214 $658 $1,123 $2,387
Five-year
surrender charge
schedule 985 1,335 1,479 2,705 245 751 1,279 2,705
QUALIFIED ANNUITY 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Seven-year
surrender charge
schedule for
contracts with
applications
signed on or
after May 1, 2006
and if available
in your state $943 $1,302 $1,644 $2,225 $199 $611 $1,044 $2,225
Five-year
surrender charge
schedule 971 1,291 1,401 2,547 230 704 1,201 2,547
(1) In these examples, the contract administrative charge is $50.
(2) In these examples, the contract administrative charge is $40.
(3) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
18 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix Q.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 19
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making withdrawal from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
20 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 21
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks capital growth. American Century Investment
International, Class Management, Inc.
II
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks long-term growth of Columbia Management
Portfolio - Select capital. Investment Advisers, LLC
Large-Cap Value Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks capital appreciation. The Dreyfus Corporation
Portfolios
Technology Growth
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 27
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Investors N Y Seeks capital appreciation. MFS(R) Investment Management
Growth Stock
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 29
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 31
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
32 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available for contracts in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. These
periods of time vary by state. The required minimum investment in each GPA is
$1,000. (Exception: if a PN program model portfolio includes one or more GPAs,
the required minimum investment does not apply.) These accounts are not offered
after the annuitization start date.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 33
having price durations tending to match the applicable guarantee periods. These
instruments include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or surrender out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window, you may choose to start a new guarantee period of the same length,
transfer the contract value from the specified GPA to a GPA of another length,
transfer the contract value from the specified GPA to any of the subaccounts,
the regular fixed account (Current Contract) or the one-year fixed account
(Original Contract), or surrender the value from the specified GPA (all subject
to applicable surrender and transfer provisions). If we do not receive any
instructions by the end of your guarantee period, our current practice is to
automatically transfer the contract value from the specified GPA into the
shortest GPA term offered in your state. If no GPAs are offered, we will
transfer the value to the regular fixed account (Current Contract) or the one-
year fixed account (Original Contract), if available. If the regular fixed
account (Current Contract) or the one-year fixed account (Original Contract) is
not available, we will transfer the value to the money market or cash management
variable subaccount we designate.
We guarantee the contract value allocated to the GPAs, including the interest
credited, if you do not make any transfers or surrenders from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you surrender or transfer contract value from a
GPA including surrenders under the SecureSource series of riders, the Guarantor
Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early surrenders." The application of an
MVA may result in either a gain or loss of principal.
For the Current Contract, the 30-day rule does not apply and no MVA will apply
to:
amounts surrendered under contract provisions that waive surrender charges for
Hospital or Nursing Home Confinement and Terminal Illness Disability
Diagnosis;
amounts transferred automatically under the PN program; and
amounts deducted for fees and charges.
Amounts we pay as death claims will not be reduced by any MVA.
For the Original Contract, the 30-day rule does not apply and no MVA will apply
to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts deducted for fees and charges; or
amounts we pay as death claims.
When you request an early surrender, we adjust the early surrender amount by an
MVA formula. The early surrender amount reflects the relationship between the
guaranteed interest rate you are earning in your current GPA and the interest
rate we are crediting on new GPAs that end at the same time as your current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the early surrender, the time remaining in your guarantee period
and your guaranteed interest rate. The MVA is negative, zero or positive
depending on how the guaranteed interest rate on your GPA
--------------------------------------------------------------------------------
34 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
compares to the interest rate of a new GPA for the same number of years as the
guarantee period remaining on your GPA. This is summarized in the following
table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT
Amounts allocated to the fixed account become part of our general account. For
the Current Contract, the fixed account includes the regular fixed account and
the Special DCA fixed account. For the Original Contract, the fixed account
includes the one-year fixed account and the DCA fixed account. We credit
interest on amounts you allocate to the fixed account at rates we determine from
time to time in our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns we earn on
our general account investments, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
on amounts invested in the fixed account may vary by state but will not be lower
than state law allows. We back the principal and interest guarantees relating to
the fixed account. These guarantees are based on the continued claims-paying
ability of RiverSource Life. You should be aware that our general account is
exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. You
should also be aware that we issue other types of insurance and financial
products as well, and we also pay our obligations under these products from
assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
THE REGULAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the regular fixed account. The value of the
regular fixed account increases as we credit interest to the regular fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the regular fixed
account is guaranteed for one year. Thereafter, we will change the rates from
time to time at our discretion, but your interest rate for each purchase payment
or transfer will never change more frequently than annually. There are
restrictions on transfers from this account and may be restrictions on the
amount you can allocate to this account (see "Making the Most of Your
Contract -- Transfer policies").
THE SPECIAL DCA FIXED ACCOUNT
You may allocate purchase payments to the Special DCA fixed account. You may not
transfer contract value to the Special DCA fixed account.
You may allocate your entire initial purchase payment to the Special DCA fixed
account for a term of six or twelve months. We reserve the right to offer
shorter or longer terms for the Special DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the Special DCA fixed account to the subaccounts or PN program investment
option you select monthly so that, at the end of the Special DCA fixed account
term, the balance of the Special DCA fixed account is zero. The first Special
DCA monthly transfer occurs one day after we receive your payment. You may not
use the regular fixed account or any GPA as a destination for the Special DCA
monthly transfer. (Exception: if a PN program is in effect, and the PN program
investment option you selected, if applicable, includes the regular fixed
account or any GPA, amounts will be transferred from the Special DCA fixed
account to the regular fixed account or GPA according to the allocation
percentage established for the PN program investment option you have selected.)
The value of the Special DCA fixed account increases when we credit interest to
the Special DCA fixed account, and decreases when we make monthly transfers from
the Special DCA fixed account. When you allocate a purchase payment to the
Special DCA fixed account, the interest rates applicable to that purchase
payment will be the rates in effect for the Special
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 35
DCA fixed account term you choose on the date we receive your purchase payment.
The applicable interest rate is guaranteed for the length of the term for the
Special DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the Special DCA fixed account; we do not credit interest on amounts
that have been transferred from the Special DCA fixed account. As a result, the
net effective interest rates we credit will be less than the declared annual
effective rates. Generally, we will credit the Special DCA fixed account with
interest at the same annual effective rate we apply to the regular fixed account
on the date we receive your purchase payment, regardless of the length of the
term you select. From time to time, we may credit interest to the Special DCA
fixed account at promotional rates that are higher than those we credit to the
regular fixed account. We reserve the right to declare different annual
effective rates:
for the Special DCA fixed account and the regular fixed account; and
for the Special DCA fixed accounts with terms of differing length.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the Special DCA fixed account for a six month term;
the Special DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the regular fixed account,
the GPAs and/or the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the regular account and the GPAs.
Once you establish a Special DCA fixed account, you cannot allocate additional
purchase payments to it. However, you may establish another Special DCA fixed
account and allocate new purchase payments to it.
If you participate in a PN program and you change to a different PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from the Special DCA fixed account to your newly-elected PN
program investment option.
If your contract permits, and you discontinue your participation in a PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from your Special DCA fixed account for the remainder of the
term to the subaccounts in accordance with your current Special DCA fixed
account allocation instructions. If your current Special DCA fixed account
allocation instructions include a fund to which allocations are restricted and
you do not provide new instructions, we will transfer prorated amounts to the
valid portion of your allocation instruction.
You may discontinue any Special DCA fixed account before the end of its term by
giving us notice. If you do so, we will transfer the remaining balance of the
Special DCA fixed account to the PN program investment option in effect, or if
no PN program investment option is in effect, in accordance with your investment
instructions to us to the regular fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the regular fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the Special DCA fixed account does not guarantee that
any subaccount will gain in value nor will it protect against a decline in value
if market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account. The value of the one-
year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Making the Most of
Your Contract -- Transfer policies").
DCA FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
--------------------------------------------------------------------------------
36 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The first DCA monthly transfer occurs one day after we receive your
payment.
The value of the DCA fixed account increases when we credit interest to the DCA
fixed account, and decreases when we make monthly transfers from the DCA fixed
account. When you allocate a purchase payment to the DCA fixed account, the
interest rates applicable to that purchase payment will be the rates in effect
for the DCA fixed account term you choose on the date we receive your purchase
payment. The applicable interest rate is guaranteed for the length of the term
for the DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the DCA fixed account; we do not credit interest on amounts that have
been transferred from the DCA fixed account. As a result, the net effective
interest rates we credit will be less than the declared annual effective rates.
Generally, we will credit the DCA fixed account with interest at the same annual
effective rate we apply to the one-year fixed account on the date we receive
your purchase payment, regardless of the length of the term you select. From
time to time, we may credit interest to the DCA fixed account at promotional
rates that are higher than those we credit to the one-year fixed account. We
reserve the right to declare different annual effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account that are transferred to the one-year
fixed account;
for amounts in the DCA fixed account that are transferred to the GPAs;
for amounts in the DCA fixed account that are transferred to the subaccounts.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
model portfolio or investment option while a DCA fixed account term is in
progress, we will allocate transfers from the DCA fixed account for the
remainder of the term in accordance with your investment instructions to us to
the one-year fixed account, the GPAs and the subaccounts, subject to investment
minimums and other restrictions we may impose on investments in the one-year
fixed account and the GPAs, including but not limited to, any limitations
described in this prospectus on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 37
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs, including but not limited to, any limitations described in this
prospectus on transfers (see "Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may select a
qualified or nonqualified annuity. You can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. For the Current Contract, you can buy a
contract if you are 85 or younger. For the Original Contract, you can buy a
contract if you and the annuitant are age 85 or younger. (The age limit may be
younger for qualified annuities in some states.)
When you applied, you could have selected:
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
GPAs, the regular fixed account, the Special DCA fixed account and/or
subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition you could have also selected one of the following optional living
benefits (all require the use of the PN program):
SecureSource Stages 2 riders;
SecureSource Stages riders; or
Accumulation Protector Benefit rider
The Current Contract provides for allocation of purchase payments to the GPAs,
the regular fixed account, the Special DCA fixed account and/or the subaccounts
of the variable account subject to the $1,000 required minimum investment for
the GPAs. We currently allow you to allocate the total amount of purchase
payment to the regular fixed account. We reserve the right to limit purchase
payment allocations to the regular fixed account at any time on a non-
discriminatory basis with notification, subject to state restrictions. You
cannot allocate purchase payments to the fixed account for six months following
a partial surrender from the fixed account, a lump sum transfer from the regular
fixed account, or termination of automated transfers from the Special DCA fixed
account prior to the end of the Special DCA fixed account term.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
GPAs, the one-year fixed account, the DCA fixed account if part of your
contract, and/or subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
--------------------------------------------------------------------------------
38 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available in your state, you could have also selected one of the
following optional living benefits (all require the use of the PN program):
SecureSource 20 riders;
SecureSource riders (only available if SecureSource 20 is not approved in your
state);
Accumulation Protector Benefit rider;
Guarantor Withdrawal Benefit for Life rider;
Guarantor Withdrawal Benefit rider;
Income Assurer Benefit - MAV rider;
Income Assurer Benefit - 5% Accumulation Benefit Base rider; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider.
(1) There is no additional charge for this feature.
(2) Not available with 5% Accumulation or Enhanced Death Benefit.
The Original Contract provides for allocation of purchase payments to the GPAs,
the one-year fixed account, the DCA fixed account (if part of your contract)
and/or to the subaccounts of the variable account in even 1% increments subject
to the $1,000 required minimum investment for the GPAs. The amount of any
purchase payment allocated to the one-year fixed account in total cannot exceed
30% of the purchase payment. More than 30% of a purchase payment may be so
allocated if you establish an automated dollar-cost averaging arrangement with
respect to the purchase payment according to procedures currently in effect. We
reserve the right to further limit purchase payment allocations to the one-year
fixed account if the interest rate we are then crediting on new purchase
payments allocated to the one-year fixed account is equal to the minimum
interest rate stated in the contract.
FOR BOTH THE CURRENT CONTRACT AND THE ORIGINAL CONTRACT:
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the annuitization start date.
THE ANNUITIZATION START DATE
CURRENT CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments. If
your contract is annuitized, the contract goes into payout and only the annuity
payout provisions continue. Unless annuity payout Plan E is selected, you will
no longer have access to your contract value. This means that the death benefit
and any optional benefits you have elected will end. When we process your
application, we will establish the annuitization start date to be the maximum
age (or contract anniversary if applicable). You also can change the
annuitization start date, provided you send us written instructions at least 30
days before annuity payouts begin.
The annuitization start date must be:
no earlier than the 30th day after the contract's effective date; and no later
than
the owner's 95th birthday or the tenth contract anniversary, if later,
or such other date as agreed to by us.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 39
Six months prior to your annuitization date, we will contact you with your
options including the option to postpone your annuitization start date to a
future date. You can also choose to delay the annuitization of your contract
beyond age 95 indefinitely, to the extent allowed by applicable tax laws.
If you do not make an election, annuity payouts using the contract's default
option of annuity payout Plan B - Life with 10 years certain will begin on the
annuitization start date and your monthly annuity payments will continue for as
long as the annuitant lives. If the annuitant does not survive 10 years,
beneficiaries will continue to receive payments until 10 years of payments have
been made. Some distributors require annuitization by age 95. In that case, the
option to continue to defer the annuitization start date after age 95 is not
available.
If you own a qualified annuity (for example, an IRA) and tax laws require that
you take distributions from your annuity prior to your new annuitization start
date, your contract will not be automatically annuitized. However, if you
choose, you can elect to request annuitization or take surrenders to meet your
required minimum distributions.
Please see "SecureSource Stages 2 -- Other Provisions" section regarding options
under this rider at the annuitization start date.
ORIGINAL CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments and you
will receive the first payment on the annuitization start date. The first
annuity payment will be made as provided by the annuity payment plan you select.
When we process your application, we will establish the annuitization start date
to be the maximum age (or contract anniversary if applicable). You also can
change the annuitization start date, provided you send us written instructions
at least 30 days before annuity payouts begin.
The annuitization start date must be:
the annuitant's 90th(1) birthday or the tenth contract anniversary, if
purchased after age 80(1),
or such other date as agreed upon by us.
Prior to your annuitization start date, we will contact you with your options.
If you do not make an election, your annuitization start date will be deferred.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
annuitization start date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select an annuitization start date
that is later than April 1 of the year following the calendar year when they
reach age 70 1/2).
If you satisfy your required minimum distributions in the form of partial
surrenders from this contract, annuity payouts can start:
As late as the annuitant's 90th(1) birthday or the tenth contract anniversary,
if later, or a date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, will delay the
annuitization start date for these contracts.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the annuitization start date must be
no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
while the contract is in force and before the annuitization start date. If there
is more than one beneficiary, we will pay each beneficiary's designated share
when we receive their completed claim. A beneficiary will bear the investment
risk of the variable account until we receive the beneficiary's completed claim.
If there is no named beneficiary, the default provisions of your contract will
apply. (See "Benefits in Case of Death" for more about beneficiaries.)
If you select one of the SecureSource series - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
--------------------------------------------------------------------------------
40 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
If we do not receive your initial purchase payment within 180 days from the
application signed date, we will consider your contract void from the start.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS (WITHOUT CORPORATE OFFICE APPROVAL)
- CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state
availability)
MAXIMUM TOTAL PURCHASE PAYMENTS* BASED ON YOUR AGE ON THE EFFECTIVE DATE OF
THE PAYMENT:
For the first year and
total:
through age 85 $1,000,000
age 86 or older $0
For each subsequent year:
through age 85 $100,000
age 86 or older $0
- ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Jan. 26, 2009, after initial purchase payments are received, limited
additional purchase payments allowed for contracts with the Guarantor Withdrawal
Benefit rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource
riders, subject to state restrictions. Initial purchase payments are: 1)
payments received with the application, and 2) Tax Free Exchanges, rollovers,
and transfers listed on the annuity application, paper work initiated within 30
days from the application signed date and received within 180 days from the
application signed date.
For contracts issued in all states except those listed below, the only
additional purchase payments that will be allowed on/after Jan. 26, 2009 are the
maximum annual contribution permitted by the Code for qualified annuities.
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract with the Guarantor Withdrawal Benefit
rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource riders will
be limited to $100,000 for the life of your contract. The limit does not apply
to initial purchase payments,
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Feb. 27, 2012, no additional purchase payments are allowed for
contracts with SecureSource Stages 2 riders, SecureSource Stages riders and
SecureSource 20 riders subject to certain exceptions listed below.
Certain exceptions apply and the following additional purchase payments will be
allowed on or after Feb. 27, 2012:
a. Current tax year contributions for TSAs and Custodial and investment only
plans under Section 401(a) of the Code, up to the annual limit set by the
IRS.
b. Prior and current tax year contributions up to the annual limit set up by the
IRS for any Qualified Accounts except TSAs and 401(a)s. This annual limit
applies to IRAs, Roth IRAs and SEP plans.
We reserve the right to change these current rules any time, subject to state
restrictions.
The riders also prohibit additional purchase payments while the rider is
effective, if (1) you decline a rider fee increase, or (2) the Annual Lifetime
Payment (ALP) is established and your contract value on an anniversary is less
than four times the ALP. (For the purpose of this calculation only, the ALP is
determined using percentage B, as described under "Optional Living
Benefits -- SecureSource Stages 2 Riders, SecureSource Stages Riders and
SecureSource 20 Riders.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 41
Additional purchase payment restrictions for the Accumulation Protector Benefit
rider
Additional purchase payments are prohibited during the waiting period after the
first 180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
For the Current Contract, additional purchase payments are also allowed within
180 days from the last contract anniversary if you exercise the elective step up
option.
Subject to state restrictions, we reserve the right to change the above purchase
payment limitations, including making further restrictions, upon written notice.
* These limits apply in total to all RiverSource Life annuities you own unless
a higher maximum applies to your contract. We reserve the right to waive or
increase the maximum limit. For qualified annuities, the Code's limits on
annual contributions also apply. Additional purchase payments for inherited
IRA contracts cannot be made unless the payment is IRA money inherited from
the same decedent.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
As of May 1, 2006, we no longer offer purchase payment credits in most states.
Purchase payment credits were available if you:
purchased a contract with the seven-year surrender charge schedule with an
application signed date before May 1, 2006; or
purchased a contract with the seven-year surrender charge schedule with an
application signed date on or after May 1, 2006 in a state where purchase
payment credits are/were still available at the time you purchased your
contract.
See Appendix H for a description of the purchase payment credits that apply to
your policy.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, surrenders or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully surrendered. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
that applies to the fixed account. For the Current Contract, we reserve the
right to increase this charge after the first contract anniversary to a maximum
of $50.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary. For the Current Contract, we reserve the right to
charge up to $20 after the first contract anniversary for contracts with
contract value of $50,000 or more.
If you take a full surrender from your contract, we will deduct the charge at
the time of surrender regardless of the contract value. We cannot increase the
annual contract administrative charge for the Original Contract. This charge
does not apply to amounts applied to an annuity payment plan or to the death
benefit (other than when deducted from the Full Surrender Value component of the
death benefit for the Current Contract).
--------------------------------------------------------------------------------
42 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
FOR THE CURRENT CONTRACT (APPLICATIONS SIGNED ON OR AFTER NOV. 30, 2009, SUBJECT
TO STATE AVAILABILITY), the mortality and expense risk fee you pay is based on
the death benefit guarantee in effect and the surrender charge schedule that
applies to your contract.
MORTALITY AND
TEN-YEAR SURRENDER CHARGE SCHEDULE EXPENSE RISK FEE
CV Death Benefit* 0.85%
ROPP Death Benefit 0.85
MAV Death Benefit 1.10
5% Accumulation Death Benefit 1.25
Enhanced Death Benefit 1.30
MORTALITY AND
SEVEN-YEAR SURRENDER CHARGE EXPENSE RISK FEE
CV Death Benefit* 1.05%
ROPP Death Benefit 1.05
MAV Death Benefit 1.30
5% Accumulation Death Benefit 1.45
Enhanced Death Benefit 1.50
MORTALITY AND
FIVE-YEAR SURRENDER CHARGE SCHEDULE EXPENSE RISK FEE
CV Death Benefit* 1.40%
ROPP Death Benefit 1.40
MAV Death Benefit 1.65
5% Accumulation Death Benefit 1.80
Enhanced Death Benefit 1.85
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
FOR THE ORIGINAL CONTRACT (APPLICATIONS SIGNED PRIOR TO NOV. 30, 2009 OR IN
STATES WHERE THE CURRENT CONTRACT WAS NOT AVAILABLE), the mortality and expense
risk fee you pay is based on the death benefit guarantee you select, whether the
contract is a qualified annuity or a nonqualified annuity and the surrender
charge schedule that applies to your contract.
SEVEN-YEAR SURRENDER CHARGE SCHEDULE FOR
CONTRACTS WITH APPLICATIONS SIGNED
ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR
STATE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
ROP Death Benefit 0.90% 1.05%
MAV Death Benefit 1.10 1.25
5% Accumulation Death Benefit 1.25 1.40
Enhanced Death Benefit 1.30 1.45
SEVEN-YEAR SURRENDER CHARGE SCHEDULE FOR ALL
OTHER CONTRACTS
ROP Death Benefit 1.00% 1.15%
MAV Death Benefit 1.20 1.35
5% Accumulation Death Benefit 1.35 1.50
Enhanced Death Benefit 1.40 1.55
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 43
SEVEN-YEAR SURRENDER CHARGE SCHEDULE FOR
CONTRACTS WITH APPLICATIONS SIGNED
ON OR AFTER MAY 1, 2006 AND IF AVAILABLE IN YOUR
STATE QUALIFIED ANNUITIES NONQUALIFIED ANNUITIES
FIVE-YEAR SURRENDER CHARGE SCHEDULE
ROP Death Benefit 1.20% 1.35%
MAV Death Benefit 1.40 1.55
5% Accumulation Death Benefit 1.55 1.70
Enhanced Death Benefit 1.60 1.75
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of annuitants live. If, as a group, owners or annuitants outlive
the life expectancy we assumed in our actuarial tables, then we must take money
from our general assets to meet our obligations. If, as a group, owners or
annuitants do not live as long as expected, we could profit from the mortality
risk fee. We deduct the mortality risk fee from the subaccounts during the
annuity payout period even if the annuity payout plan does not involve a life
contingency.
Expense risk arises because we cannot increase the contract administrative
charge for the Original Contract, we are limited on how much we can increase the
contract administrative charge for the Current Contract, and we cannot increase
the variable account administrative charge and these charges may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge will cover sales and distribution expenses.
SURRENDER CHARGE
If you surrender all or part of your contract value before the annuitization
start date, we may deduct a surrender charge. As described below, a surrender
charge applies to each purchase payment you make. For the Current Contract, the
surrender charge lasts for 10 years, 7 years or 5 years from our receipt of each
purchase payment, depending on which surrender charge schedule you select when
you purchase the contract (see "Expense Summary"). For the Original Contract,
the surrender charge lasts for 7 years or 5 years from our receipt of each
purchase payment, depending on which surrender charge schedule you select when
you purchase the contract (see "Expense Summary"). The surrender charge
percentages that apply to you are shown in your contract.
You may surrender an amount during any contract year without a surrender charge.
We call this amount the total free amount (FA for the Current Contract, TFA for
the Original Contract). Throughout this prospectus when we use the acronym FA,
it includes TFA. The FA varies depending on whether your contract includes one
of the SecureSource series of riders, the Guarantor Withdrawal Benefit for Life
rider or the Guarantor Withdrawal Benefit rider:
CURRENT CONTRACT WITHOUT SECURESOURCE STAGES RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year; or
current contract earnings.
During the first contract year, the FA is the greater of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITHOUT SECURESOURCE 20 RIDER, SECURESOURCE RIDER, GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year; or
current contract earnings.
--------------------------------------------------------------------------------
44 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT WITH SECURESOURCE STAGES RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Annual Lifetime Payment (this amount will be zero during the
waiting period).
During the first contract year, the FA is the greatest of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITH SECURESOURCE 20 RIDER, SECURESOURCE RIDER OR GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment (for the SecureSource 20 rider, Remaining Benefit Payment and the
Remaining Annual Lifetime Payment are zero during the waiting period).
ORIGINAL CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and any purchase payment credit to
be the prior contract anniversary's contract value during the first contract
year.
Amounts surrendered in excess of the FA may be subject to a surrender charge as
described below.
A surrender charge will apply if the amount you surrender includes any of your
prior purchase payments that are still within their surrender charge schedule.
To determine whether your surrender includes any of your prior purchase payments
that are still within their surrender charge schedule, we surrender amounts from
your contract in the following order:
1. First, we surrender the FA. Contract earnings are surrendered first, followed
by purchase payments. We do not assess a surrender charge on the FA. We
surrender payments that are considered part of the FA on a first-in, first-
out (FIFO) basis for the Current Contract, and last-in, first-out (LIFO)
basis for the Original Contract.
2. Next, we surrender purchase payments received that are beyond the surrender
charge period shown in your contract. We surrender these payments on a FIFO
basis. We do not assess a surrender charge on these payments.
3. Finally, we surrender any additional purchase payments received that are
still within the surrender charge period shown in your contract. We surrender
these payments on a FIFO basis. We do assess a surrender charge on these
payments.
The amount of purchase payments surrendered is calculated using a prorated
formula based on the percentage of contract value being surrendered. As a
result, the amount of purchase payments surrendered may be greater than the
amount of contract value surrendered.
We determine your surrender charge by multiplying each of your payments
surrendered which could be subject to a surrender charge by the applicable
surrender charge percentage (see "Expense Summary"), and then adding the total
surrender charges.
For a partial surrender, we will determine the amount of contract value that
needs to be surrendered, which after any surrender charge and any positive or
negative market value adjustment, will equal the amount you request.
EXAMPLE: Each time you make a purchase payment under the contract, a surrender
charge schedule attaches to that purchase payment. The surrender charge
percentage for each purchase payment declines according to the surrender charge
schedule shown in your contract. (THE SURRENDER CHARGE PERCENTAGES FOR THE 10-
YEAR, 7-YEAR AND 5-YEAR SURRENDER CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE
"EXPENSE SUMMARY".) For example, if you select the 7-Year surrender charge
schedule, during the first two years after a purchase payment is made, the
surrender charge percentage attached to that payment is 8%. The surrender charge
percentage for that payment during the seventh year after it is made is 3%. At
the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a surrender charge as to that payment.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 45
For an example, see Appendix B.
WAIVER OF SURRENDER CHARGES
We do not assess surrender charges for:
surrenders each year that represent the total free amount for that year;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which surrender charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force. Surrender charges for an inherited IRA are only waived for
lifetime RMD amounts, not for a 5 year distribution;
amounts applied to an annuity payment plan (EXCEPTION: As described below, if
you select annuity payout Plan E, and choose later to surrender the value of
your remaining annuity payments, we will assess a surrender charge.)
surrenders made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions). For the Current Contract, waiver of surrender
charges for Contingent events will not apply to Tax Free Exchanges, rollovers
and transfers to another annuity contract;
amounts we refund to you during the free look period;* and
death benefits.
* However, we will reverse certain purchase payment credits. (See "Appendix
H -- Purchase Payment Credits for Eligible Contracts.")
CURRENT CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you are confined to a hospital or nursing home and have
been for the prior 60 days or confinement began within 30 days following a 60
day confinement period. Such confinement must begin after the contract issue
date. Your contract will include this provision when you are under age 76 at
contract issue. You must provide us with a letter containing proof
satisfactory to us of the confinement as of the date you request the
surrender. We must receive your surrender request no later than 91 days after
your release from the hospital or nursing home. The amount surrendered must be
paid directly to you.
Surrenders you make if you are disabled with a medical condition and are
diagnosed in the second or later contract years with reasonable medical
certainty, that the disability will result in death within 12 months or less
from the date of the diagnosis. You must provide us with a licensed
physician's statement containing the terminal illness diagnosis, the expected
date of death and the date the terminal illness was initially diagnosed. The
amount surrendered must be paid directly to you.
ORIGINAL CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the surrender.
Surrenders you make if you or the annuitant are diagnosed in the second or
later contract years as disabled with a medical condition that with reasonable
medical certainty will result in death within 12 months or less from the date
of the diagnosis. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
BOTH CONTRACTS:
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
46 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax on the
annuitization start date, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full surrender
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
SECURESOURCE STAGES 2 RIDER CHARGE
We deduct an annual charge for this optional feature only if you select it as
follows:
SecureSource Stages 2 -- Single Life rider, 0.95%
SecureSource Stages 2 -- Joint Life rider, 1.15%
The charge is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages 2 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated or until the contract value reduces to zero. If the
contract or rider is terminated for any reason, we will deduct the charge,
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the SecureSource Stages 2 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each investment option. The SecureSource Stages 2 -- Single Life rider fee
will not exceed a maximum of 1.75%. The SecureSource Stages 2 -- Joint Life
rider fee will not exceed a maximum of 2.25%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iv) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(v) the ability to change your investment option to one that is more
aggressive than your current investment option. Any change to a less
aggressive investment option will further limit the investment
options available to the then current and less aggressive investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive investment option than your current investment option and if the
new investment option has a higher current annual rider fee. The annual rider
fees associated with the available investment option may change at our
discretion, however these changes will not apply to this rider unless you
change your current investment option to a more aggressive one. The new fee
will be in effect on the valuation date we receive your written request to
change your investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same investment option or move to a less
aggressive one. Also, this type of fee increase does not allow you to
terminate the rider.
If your rider fee increases, on the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different fees that were in effect that year, adjusted for the number of
calendar days each fee was in effect.
The fee does not apply after the annuitization start date.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 47
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 1.50%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. For contract applications signed on or after
May 3, 2010, we prorate this charge among all accounts and the subaccounts in
the same proportion as your interest in each bears to your total contract value.
For contract applications signed prior to June 1, 2009, the charge will be
prorated among the GPAs, the one-year fixed account and the subaccounts. We will
modify this prorated approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or on the annuitization start date,
we will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) For contract applications signed prior to Oct. 4 2010, the following charges
apply:
APPLICATION SIGNED DATE CURRENT CHARGE
Before Jan. 26, 2009 0.55%
Jan. 26, 2009 -- May 30, 2009 0.80%
May 3, 2010 -- July 18, 2010 0.95%
July 19, 2010 -- Oct. 3 2010 1.10%
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider fee will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
--------------------------------------------------------------------------------
48 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuitization start date.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
SECURESOURCE STAGES RIDER FEE
We deduct a charge for this optional feature only if you select it as follows:
SecureSource Stages - Single Life rider, 1.10%
SecureSource Stages - Joint Life rider, 1.35%
The fee is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge adjusted for
the number of calendar days coverage was in place since we last deducted the
charge.
Currently the SecureSource Stages rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource Stages - Single Life
rider fee will not exceed a maximum of 2.00%. The SecureSource Stages - Joint
Life rider fee will not exceed a maximum of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups, any ability to make additional purchase
payments,
(ii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iii) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current investment option. Any change to
a less aggressive PN program investment option will further limit the
PN program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment option and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 49
these changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive model. Also, this type of fee increase does not allow
you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
SECURESOURCE 20 RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource 20 - Single Life rider, 1.25%;
SecureSource 20 - Joint Life rider, 1.55%.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource 20 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee. If the RBA reduces to zero but the contract
value has not been depleted, you will continue to be charged.
Currently the SecureSource 20 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource 20 - Single Life rider
fee will not exceed a maximum charge of 2.00%. The SecureSource 20 - Joint Life
rider fee will not exceed a maximum charge of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any pending increase to the ALP due to the 20% credit on the later
of the third rider anniversary or the date the ALP is established,
and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current one. Any change to a less
aggressive PN program investment option will further limit the PN
program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee increase after any
increase is more than 0.25 percentage points higher than your fee before
the increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment options and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive PN program investment option. Also, this type of fee
increase does not allow you to terminate the rider.
--------------------------------------------------------------------------------
50 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, or the contract value reduces to zero. If the contract is terminated
for any reason or on the annuitization start date, we will deduct the charge
from the proceeds payable, adjusted for the number of calendar days coverage was
in place since we last deducted the fee. If the RBA goes to zero but the
contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each investment option. The Guarantor Withdrawal Benefit for
Life rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each investment option.
(1) See disclosure in Appendix J.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE APPENDIX K) UNLESS
OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or on the annuitization start date, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum charge of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 51
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) See disclosure in Appendix K.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or on
the annuitization start date, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix L.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each
--------------------------------------------------------------------------------
52 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year.
For the Original Contract, on the annuitization start date and if the contract
is terminated for any reason other than death, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
Current Contract: the sum of your purchase payments allocated to the regular
fixed account and the Special DCA fixed account, and transfer amounts to the
regular fixed account (including any positive or negative MVA on amounts
transferred from the GPAs);
Original Contract: the sum of your purchase payments allocated to the one-year
fixed account and the DCA fixed account (if included), and transfer amounts to
the one-year fixed account (including any positive or negative MVA on amounts
transferred from the GPAs);
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 53
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial surrender; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a surrender charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial surrenders;
surrender charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
54 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, for the
Original Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the one-year fixed account or one-year GPA to one or more subaccounts. Automated
transfers are not available for GPA terms of two or more years. You can also
obtain the benefits of dollar-cost averaging by setting up regular automatic SIP
payments or by establishing an interest sweep strategy. Interest sweeps are a
monthly transfer of the interest earned from the one-year fixed account or one-
year GPA into the subaccounts of your choice. If you participate in an interest
sweep strategy the interest you earn on the one-year fixed account or one-year
GPA will be less than the annual interest rate we apply because there will be no
compounding. For the Current Contract, you might transfer a set amount monthly
from a relatively conservative subaccount to a more aggressive one, or to
several others, or from the regular fixed account to one or more subaccounts.
You may not set up an automated transfer to or from the GPAs or set up an
automated transfer to the regular fixed account. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments.
The Current Contract does not allow an interest sweep strategy.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the Special DCA fixed account (Current Contract)
and the DCA fixed account (Original Contract). See the "Special DCA Fixed
Account", "DCA Fixed Account" and "Portfolio Navigator Program" sections in this
prospectus for details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 55
your contract value. You must allow 30 days for us to change any instructions
that currently are in place. For more information on asset rebalancing, contact
your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix I -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in a PN program, asset rebalancing is
available for use with the Special DCA fixed account (Current Contract) and the
DCA fixed account (Original Contract) (see "Special DCA Fixed Account" and "DCA
Fixed Account") only if your subaccount allocation for asset rebalancing is
exactly the same as your subaccount allocation for transfers from the Special
DCA fixed account and the DCA fixed account. If you change your subaccount
allocations under the asset rebalancing program or the Special DCA fixed account
and the DCA fixed account, we will automatically change the subaccount
allocations so they match. If you do not wish to have the subaccount allocation
be the same for the asset rebalancing program and the Special DCA fixed account
and the DCA fixed account, you must terminate the asset rebalancing program or
the Special DCA fixed account and the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information
--------------------------------------------------------------------------------
56 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
about the conflicts of interest to which Columbia Management Investment Advisers
and its affiliates are subject, see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the fund of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolios investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA fixed account
(Original Contract) or Special DCA fixed account (Current Contract), when
available (see "The Special DCA Fixed Account" and "DCA Fixed Account"), and you
are participating in the PN program, we will make monthly transfers in
accordance with your instructions from the DCA fixed account (Original Contract)
or Special DCA fixed account (Current Contract), into the investment option or
model portfolio you have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 57
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM;
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full surrender. Surrender charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDERS : The
SecureSource series or the Guarantor Withdrawal Benefit for Life riders
require that your contract value be invested in one of the PN program
investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the SecureSource series rider or the
Guarantor Withdrawal Benefit for Life rider once you have selected it, you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE
SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY
IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full surrender if you do not
want to invest in any of the PN program investment options. Surrender charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM
(AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE
CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
For the Current Contract, you may transfer contract value from any one
subaccount, GPAs, the regular fixed account and the Special DCA fixed account to
another subaccount before the annuitization start date. For the Original
Contract, you may transfer contract value from any one subaccount, GPAs, the
one-year fixed account, or the DCA fixed account to another subaccount before
the annuitization start date. Certain restrictions apply to transfers involving
the GPAs, the regular fixed account and the one-year fixed account. You may not
transfer contract value to the Special DCA fixed account or the DCA fixed
account. You may not transfer contract value from the Special DCA fixed account
or the DCA fixed account except as part of automated monthly transfers.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
--------------------------------------------------------------------------------
58 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period, unless an exception applies.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
CURRENT CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the regular fixed
account at any time. However, if you made a transfer from the regular fixed
account to the subaccounts or the GPAs, took a partial surrender from the
fixed account or terminated automated transfers from the Special DCA fixed
account, you may not make a transfer from any subaccount or GPA to the regular
fixed account for six months following that transfer, partial surrender or
termination.
You may transfer contract values from the regular fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the regular fixed account are not subject to an MVA. You may transfer the
entire contract value to the regular fixed account. Subject to state
restrictions, we reserve the right to limit transfers to the regular fixed
account at any time on a non-discriminatory basis with notification. Transfers
out of the regular fixed account, including automated transfers, are limited
to 30% of regular fixed account value at the beginning of the contract year(1)
or $10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the regular fixed
account. You should carefully consider whether the regular fixed account meets
your investment criteria before you invest. Subject to state restrictions, we
reserve the right to change the percentage allowed to be transferred from the
regular fixed account at any time on a non-discriminatory basis with
notification.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs or the
regular fixed account into the Special DCA fixed account. However, you may
transfer contract values as automated monthly transfers from the Special DCA
fixed account to the subaccounts or the PN program model portfolio or
investment option in effect. (See "Special DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and Special DCA fixed account.
(1) All purchase payments received into the regular fixed account prior to your
transfer request are considered your beginning of contract year value during
the first contract year.
ORIGINAL CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to further limit transfers to or from the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 59
or loss of contract value, unless an exception applies (see "The Guarantee
Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values as automated monthly transfers from the DCA fixed account to
any of the investment options available under your contract, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPA, as described above. (See "DCA Fixed
Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and DCA fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
--------------------------------------------------------------------------------
60 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or surrender to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 61
CURRENT CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire subaccount balance**
ORIGINAL CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $500 or entire account balance
ALL CONTRACTS
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of
the distribution.
** The contract value after a partial surrender must be at least $500.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
Your investment professional can help you set up automated transfers among your
subaccounts, regular fixed account (Current Contract), the one-year fixed
account (Original Contract) or GPAs or automated partial surrenders from the
GPAs, regular fixed account, one-year fixed account, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract) or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account (Original Contact only) to
any one of the subaccounts may not exceed an amount that, if continued, would
deplete the one-year fixed account within 12 months.
Automated transfers from the regular fixed account (Current Contract only) are
limited to 30% of the regular fixed account values at the beginning of the
contract year or $10,000, whichever is greater.
Automated surrenders may be restricted by applicable law under some contracts.
You may not make additional purchase payments if automated partial surrenders
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a Special DCA fixed account (Current
Contract) or DCA fixed account (Original Contract) (see "Special DCA Fixed
Account", "Fixed Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
If you have one of the SecureSource series of riders, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, you may set
up automated partial surrenders up to the benefit amount available for
withdrawal under the rider.
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $50
ORIGINAL CONTRACT:
Transfers or surrenders: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $250 or entire contract balance
ORIGINAL CONTRACT:
Transfers or surrenders: $500 or entire account balance
--------------------------------------------------------------------------------
62 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM AMOUNT
CURRENT CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $100,000
ORIGINAL CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone surrender within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and surrenders are automatically available. You may request
that telephone transfers and surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before the
annuitization start date by sending us a written request or calling us. If we
receive your surrender request in good order at our corporate office before the
close of business, we will process your surrender using the accumulation unit
value we calculate on the valuation date we received your surrender request. If
we receive your surrender request at our corporate office at or after the close
of business, we will process your surrender using the accumulation unit value we
calculate on the next valuation date after we received your surrender request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, surrender charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make surrenders after the
annuitization start date except under Variable Annuity Payout Plan E. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Any partial surrenders you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected one of the SecureSource
series of riders, the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider and your partial surrenders in any contract
year exceed the permitted surrender amount under the terms of the rider, your
benefits under the rider may be reduced (see "Optional Benefits"). The first
partial surrender request during the first contract year, for the SecureSource
Stages 2 rider and any partial surrender request that reverses previous step-ups
during the 3-year waiting period or exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement. This form shows the
projected effect of the surrender on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you.
In addition, surrenders you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
SURRENDER POLICIES
CURRENT CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
Special DCA fixed account and/or the regular fixed account in the same
proportion as your value in each account correlates to your total contract
value, unless requested otherwise(1). The minimum contract value after partial
surrender is $500.
ORIGINAL CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
DCA fixed account and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1)
After executing a partial surrender, the value in the one-year fixed account and
each GPA and subaccount must be either zero or at least $50.
(1) If you elected one of the SecureSource series of riders, you do not have the
option to request from which account to surrender.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 63
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING THE ANNUITANT
For the Current Contract, if you have a nonqualified annuity and are a natural
person (excluding a revocable trust), you may change the annuitant or contingent
annuitant if the request is made prior to the annuitization start date and while
the existing annuitant or contingent annuitant is living. The change will become
binding on us when we receive it. If you and the annuitant are not the same
person and the annuitant dies before the annuitization start date, the owner
becomes the annuitant unless a
--------------------------------------------------------------------------------
64 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
contingent annuitant has been previously selected. You may not change the
annuitant if you have a qualified annuity or there is non-natural or revocable
trust ownership.
For the Original Contract, annuitant changes are not allowed.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office. We
will honor any change of ownership request received in good order that we
believe is authentic and we will use reasonable procedures to confirm
authenticity. If we follow these procedures, we will not take any responsibility
for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders and
any owner was not an owner before the change, all owners (including any prior
owner who is still an owner after the ownership change) (along with the
annuitant for the Original Contract) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract.
If you have an Income Assurer Benefit rider and/or the Benefit Protector Plus
rider, the riders will terminate upon transfer of ownership of the annuity
contract.
For the Original Contract, our current administrative practice is that if you
have the Benefit Protector rider, the owner can choose to terminate the Benefit
Protector rider during the 30-day window following the effective date of the
ownership change.
For the Current Contract, if you have the Benefit Protector rider, if any owner
is older than age 75 immediately following the ownership change, the rider will
terminate upon change of ownership. If all owners are younger than age 76, the
rider continues unless the owner chooses to terminate it during the 30-day
window following the effective date of the ownership change. The Benefit
Protector death benefit values may be reset (see "Optional Death
Benefits - Benefit Protector Death Benefit Rider").
For the Current Contract, the death benefit may change due to a change of
ownership. If any owner is older than age 85 immediately following the ownership
change, the MAV Death Benefit, 5% Accumulation Death Benefit and EDB will
terminate, the ROPP Death Benefit will be unavailable, and the Contract Value
Death Benefit will apply. If any owner is older than age 79 but all owners are
younger than age 86, the MAV Death Benefit, the 5% Accumulation Death Benefit,
and the EDB will terminate and the ROPP Death Benefit will apply. If all owners
are age 79 or younger, the ROPP Death Benefit, MAV Death Benefit, 5%
Accumulation Death Benefit or EDB will continue. The ROPP Death Benefit, MAV
Death Benefit, 5% Accumulation Death Benefit and EDB values may be reset (see
"Benefits in the Case of Death"). If the death benefit that applies to your
contract changes due to an ownership change, the mortality and expense risk fee
may change as well (see "Charges - Mortality and Expense Risk Fee").
The SecureSource series - Joint Life rider, if selected, only allows transfer of
the ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force,
subject to state restrictions. For the SecureSource Stages 2 - Joint Life rider,
if ownership is transferred from a covered spouse to their revocable trust(s),
the annuitant must be one of the covered spouses. The Accumulation Protector
Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for
Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of
ownership of the annuity contract and the values may be reset. For SecureSource
rider and Guarantor Withdrawal Benefit for Life rider, any ownership change that
impacts the guarantees provided will not be considered in good order until we
receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the ownership change on the rider benefits or a verbal acknowledgement
that you understand and accept the impacts that have been explained to you. For
the Secure Source Stages 2 - Single Life riders, Secure Source 20 - Single Life
and SecureSource Stages - Single Life riders, an ownership change that results
in different covered person will terminate the rider, subject to state
restrictions. (See "Optional Benefits.")
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 65
BENEFITS IN CASE OF DEATH
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
We will pay the death benefit to your beneficiary upon your death if you die
before the annuitization start date while this contract is in force. If a
contract has more than one person as the owner, we will pay the benefits upon
the first to die of any owner. The basic death benefit available under your
contract at contract issue is the ROPP Death Benefit. In addition to the ROPP
Death Benefit, we also offer the following optional death benefits at contract
issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if you are age 79 or younger at contract
issue, you can elect any one of the above optional death benefits. If you are
age 80 or older at contract issue, the ROPP Death Benefit will apply.
Once you elect a death benefit, you cannot change it; however the death benefit
that applies to your contract may change due to an ownership change (see
"Changing Ownership") or continuation of the contract by the spouse under the
spousal continuation provision.
We show the death benefit that applies to your contract at issue on your
contract's data page. The death benefit determines the mortality and expense
risk fee that is assessed against the subaccounts. (See "Charges -- Mortality
and Expense Risk Fee.")
We will base the benefit paid on the death benefit coverage in effect on the
date of your death.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROPP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the
partial surrender.
DB = the applicable ROPP value or MAV on the date of (but prior to) the
partial surrender
CV = contract value on the date of (but prior to) the partial surrender.
COVERED LIFE CHANGE: is either continuation of the contract by a spouse under
the spousal continuation provision, or an ownership change where any owner after
the ownership change was not an owner prior to the change.
CONTRACT VALUE DEATH BENEFIT (CV DEATH BENEFIT): is the death benefit available
if any owner after an ownership change or spouse who continues the contract
under the spousal continuation provision is over age 85 and therefore cannot
qualify for the ROPP death benefit. Under this benefit, we will pay the
beneficiary the greater of:
- the Full Surrender Value, or
- the contract value after any rider charges have been deducted.
FULL SURRENDER VALUE: is the contract value immediately prior to the surrender
(immediately prior to payment of a death claim for death benefits) less:
any surrender charge,
pro rata rider charges,
the contract charge, and
plus:
any positive or negative market value adjustment.
RETURN OF PURCHASE PAYMENTS (ROPP) DEATH BENEFIT
The ROPP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for surrenders.
If you die before the annuitization start date and while this contract is in
force, the death benefit will be the greatest of:
1. the contract value after any rider charges have been deducted,
2. the ROPP Value, or
3. the Full Surrender Value.
--------------------------------------------------------------------------------
66 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
ROPP VALUE: is the total purchase payments on the contract issue date.
Additional purchase payments will be added to the ROPP value. Adjusted partial
surrenders will be subtracted from the ROPP value.
After a covered life change for a spouse who continues the contract and is age
85 or younger, we reset the ROPP value to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value). If the spouse who continues
the contract is age 86 or older, the ROPP Death Benefit will terminate and he or
she will be eligible for the CV death benefit.
After a covered life change other than for the spouse who continues the
contract, if the prior owner and all current owners are eligible for the ROPP
death benefit we reset the ROPP value on the valuation date we receive your
request for the ownership change to the contract value after any rider charges
have been deducted, if the contract value is less.
If the prior owner was not eligible for the ROPP but all current owners are
eligible, we reset the ROPP value to the contract value after any rider charges
have been deducted on the valuation date we receive your request for the
ownership change.
IF AVAILABLE IN YOUR STATE AND YOU ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU
MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE
YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE
THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR CERTAIN OLDER
ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 80. BE SURE TO
DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS
ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you die while the contract is in force
and before the annuitization start date, the death benefit will be the greatest
of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV; or
4. the Full Surrender Value as described above.
The MAV equals the ROPP value prior to the first contract anniversary. Every
contract anniversary prior to the earlier of your 81st birthday or your death,
we compare the MAV to the current contract value and we reset the MAV to the
higher amount. The MAV is increased by any additional purchase payments and
reduced by adjusted partial surrenders.
After a covered life change for a spouse who is age 79 or younger and continues
the contract, we reset the MAV to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value).
After a covered life change other than for a spouse who continues the contract,
if all owners are under age 80, we reset the MAV on the valuation date we
receive your request for the ownership change to the lesser of these two values:
(a) the contract value after any rider charges have been deducted, or
(b) the MAV on that date, but prior to the reset.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the MAV. If your spouse is
over age 79 but younger than age 86 when the contract was continued, he or she
will be eligible for the ROPP death benefit. If your spouse is age 86 or older
when the contract was continued, he or she will be eligible for the CV death
benefit.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you die while the contract is
in force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the 5% accumulation death benefit floor; or
4. the Full Surrender Value as described above.
The key terms and provisions of the 5% Accumulation Death Benefit are:
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 67
5% ACCUMULATION DEATH BENEFIT FLOOR: is equal to the sum of:
1. the contract value in the Excluded Accounts (currently, regular fixed account
and GPAs), if any, and
2. the variable account floor.
PROTECTED ACCOUNT BASE (PAB) AND EXCLUDED ACCOUNT BASE (EAB): Adjustments to
variable account floor require tracking amounts representing purchase payments,
not previously surrendered, that are allocated or transferred to the Protected
Accounts (currently, subaccounts and the Special DCA fixed account) and Excluded
Accounts.
- PAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Protected Accounts.
- EAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Excluded Accounts.
VARIABLE ACCOUNT FLOOR: Variable account floor is PAB increased on contract
anniversaries prior to the earlier of your 81st birthday or your death.
NET TRANSFER: If multiple transfers are made on the same valuation day, they are
combined to determine the net amount of contract value being transferred between
the Protected Accounts and Excluded Accounts. This net transfer amount is used
to adjust the EAB, PAB and variable account floor values.
ESTABLISHMENT OF VARIABLE ACCOUNT FLOOR, PAB AND EAB
On the contract date, 1) variable account floor and PAB are established as your
initial purchase payment allocated to the Protected Accounts; and 2) EAB is
established as your initial purchase payment allocated to the Excluded Accounts.
ADJUSTMENTS TO VARIABLE ACCOUNT FLOOR, PAB AND EAB
Variable account floor, PAB and EAB are adjusted by the following:
1. When an additional purchase payment is made;
(A) any payment you allocate to the Protected Accounts are added to PAB and to
variable account floor, and
(B) any payment you allocate to the excluded accounts are added to EAB.
2. When transfers are made to the Protected Accounts from the Excluded Accounts,
we increase PAB and variable account floor, and we reduce EAB.
The amount we deduct from EAB and add to PAB and to variable account floor is
calculated for each net transfer using the following formula:
A = the amount the contract value in the Excluded Accounts is reduced by the
net transfer
B = EAB on the date of (but prior to) the transfer
C = the contract value in the Excluded Accounts on the date of (but prior to)
the transfer.
3. When partial surrenders are made from the Excluded Accounts, we reduce EAB by
the same amount as calculated above for transfers from the Excluded Accounts,
using surrender amounts in place of transfer amounts. Partial surrenders from
Excluded Accounts do not increase PAB.
4. When transfers are made to the Excluded Accounts from the Protected Accounts,
we reduce PAB and variable account floor, and increase EAB.
The amounts we deduct from PAB and variable account floor are calculated for
each net transfer using the following formula:
A = the amount the contract value in the Protected Accounts is reduced by the
net transfer
B = the applicable PAB or variable account floor on the date of (but prior
to) the transfer
C = the contract value in the Protected Accounts on the date of (but prior
to) the transfer.
The amount we subtract from PAB is added to EAB.
--------------------------------------------------------------------------------
68 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
5. When partial surrenders are made from the Protected Accounts, we reduce PAB
and variable account floor by the same amount as calculated above for
transfers from the Protected Accounts, using surrender amounts in place of
transfer amounts. Partial surrenders from Protected Accounts do not increase
EAB.
6. After a covered life change for a spouse who continues the contract, variable
account floor and PAB are reset to the contract value in the Protected
Accounts on the date of continuation. EAB is reset to the contract value in
the Excluded Accounts on the date of continuation. The contract value is
after any rider charges have been deducted and after any increase to the
contract value due to the death benefit that would otherwise have been paid
(without regard to the Full Surrender Value).
7. After a covered life change other than for a spouse who continues the
contract, variable account floor, PAB and EAB are reset on the valuation date
we receive your written request for the covered life change if all owners are
eligible for the 5% Accumulation Death Benefit.
Variable account floor and PAB are reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Protected Accounts on that date, and
B = Variable account floor on that date (but prior to the reset).
EAB is reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Excluded Accounts on that date, and
B = EAB on that date (but prior to the reset).
8. On a contract anniversary when variable account floor is greater than zero:
(A) On the first contract anniversary, we increase variable account floor by
an amount equal to 5%, multiplied by variable account floor as of 60 days
after the contract date.
(B) On each subsequent contract anniversary prior to the earlier of your 81st
birthday or your death, we increase variable account floor by 5%,
multiplied by the prior contract anniversary's variable account floor.
(C) Any variable account floor increase on contract anniversaries does not
increase PAB or EAB.
For contracts issued in New Jersey and Washington state, the cap on the variable
account floor is 200% of PAB.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the 5% Accumulation Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you die while the contract is in
force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV as described above;
4. the 5% accumulation death benefit floor as described above; or
5. the Full Surrender Value as described above.
If your spouse chooses to continue the contract under spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the Enhanced Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
For an example of how each death benefit is calculated, see Appendix C.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 69
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
We will pay the death benefit, less any purchase payment credits subject to
reversal, to your beneficiary upon the earlier of your death or the annuitant's
death. If a contract has more than one person as the owner or annuitant, we will
pay the benefits upon the first to die of any owner or the annuitant. The basic
death benefit available under your contract at contract issue is the ROP Death
Benefit. In addition to the ROP Death Benefit, we also offer the following
optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
We will base the benefit paid on the death benefit coverage you chose when you
purchased the contract.
HERE ARE SOME TERMS USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the partial
surrender.
DB = the applicable ROP value or MAV on the date of (but prior to) the partial
surrender.
CV = contract value on the date of (but prior to) the partial surrender.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for surrenders. If you or the annuitant die before the
annuitization start date and while this contract is in force, the death benefit
will be the greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR CERTAIN OLDER ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE
LIMITED AFTER AGE 80. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL
WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract
anniversary. On the first contract anniversary, we set the MAV as the greater of
these two values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
--------------------------------------------------------------------------------
70 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial surrenders.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before the annuitization start date, the
death benefit will be the greatest of these three values, minus any applicable
rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the 5% variable account floor.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81 or after the earlier of your or the annuitant's
death.
PST X VAF
---------
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL SURRENDERS = SAV
PST = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial surrender or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
surrender.
SAV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer or partial surrender.
The amount of purchase payments and any purchase payment credits surrendered or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current surrender or
transfer; and
(b) is the ratio of the amount of contract value transferred or surrendered from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current surrender or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
surrendered or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders;
3. the MAV on the date of death as described above; or
4. the 5% variable account floor as described above.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 71
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE THE ANNUITIZATION START DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value). To do this your spouse must, on the date our death claim
requirements are fulfilled, give us written instructions to continue the
contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse will be subject to all limitations
and/or restrictions of those features or riders just as if they were purchasing
a new contract and the values may be reset. (see "Optional Benefits" and
"Benefits in the Case of Death"). If the death benefit applicable to the
contract changes due to spousal continuation, the mortality and expense risk fee
may change as well (see "Charges -- Mortality and Expense Risk Fee").
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
FOR THE ORIGINAL CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid. To do this your spouse
must, on the date our death claim requirements are fulfilled, give us written
instructions to continue the contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse and the new annuitant (if applicable)
will be subject to all limitations and/or restrictions of those features or
riders just as if they were purchasing a new contract and the values may be
reset. (See "Optional Benefits" and "Optional Death Benefits".)
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid (without
regard to the Full Surrender Value). To do this your spouse must, on the date
our death claim requirements are fulfilled, give us written instructions to
continue the contract as owner. There will be no surrender charges on the
contract from that point forward unless additional purchase payments are made.
If you elected any optional contract features or riders, your spouse will be
subject to all limitations and/or restrictions of those features or riders
just as
--------------------------------------------------------------------------------
72 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
if they were purchasing a new contract and the values may be reset (see
"Optional Benefits", "Optional Death Benefits" and "Benefits in the Case of
Death"). If the death benefit applicable to the contract changes due to
spousal continuation, the mortality and expense risk fee may change as well
(see "Charges -- Mortality and Expense Risk Fee"). If your spouse is the sole
beneficiary and elects to treat the contract his/her own as an inherited IRA,
the SecureSource Stages rider will terminate.
If you purchased this contract as an inherited IRA and your spouse is the sole
beneficiary, he or she can elect to continue this contract as an inherited
IRA.
If you purchased this contract as an inherited IRA and your spouse is not the
sole beneficiary, he or she can elect an alternative payment plan for their
share of the death benefit and all optional death benefits and living benefits
will terminate. Your spouse must follow the schedule of minimum surrenders
established based on your life expectancy.
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
FOR THE ORIGINAL CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid. To do
this your spouse must, on the date our death claim requirements are fulfilled,
give us written instructions to continue the contract as owner. There will be
no surrender charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to
all limitations and/or restrictions of those features or riders just as if
they were purchasing a new contract and the values may be reset. (See
"Optional Benefits" and "Optional Death Benefits".)
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 73
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
SECURESOURCE STAGES 2 RIDERS
The SecureSource Stages 2 rider is an optional benefit that you can add to your
contract for an additional charge. This benefit is intended to provide to you,
after the lifetime benefit is established, a specified withdrawal amount
annually for life, even if your contract value is zero, subject to the terms and
provisions described in this section. Additionally, this benefit offers a credit
feature to help in low or poor performing markets and a step up feature to lock
in contract anniversary gains.
The SecureSource Stages 2 rider may be appropriate for you if you intend to make
periodic withdrawals from your annuity contract after the waiting period and
wish to ensure that market performance will not adversely affect your ability to
withdraw income over your lifetime. This rider may not be appropriate for you if
you do not intend to limit withdrawals to the amount allowed in order to receive
the full benefits of the rider.
Your benefits under the rider can be reduced if any of the following occurs:
- If you take any withdrawals during the 1-year waiting period, the lifetime
benefit amount will be determined using percentage B for the appropriate age
band as long as rider benefits are payable;
- If you withdraw more than the allowed withdrawal amount in a contract year,
or you take withdrawals before the lifetime benefit is available;
- If you take a withdrawal and later choose to allocate your contract value to
a fund of funds that is more aggressive than the target fund;
- If the contract value is 20% or more below purchase payments increased by
any contract anniversary gains or rider credits and adjusted for withdrawals
(see withdrawal adjustment base described below).
The SecureSource Stages 2 rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year after the lifetime benefit is established. Your age at the time of
the first withdrawal will determine the age band for as long as benefits are
payable except as described in the lifetime payment percentage provision.
As long as your total withdrawals during the current year do not exceed the
lifetime benefit amount, you will not be assessed a surrender charge. If you
withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and benefits will be reduced in accordance with excess
withdrawal processing. At any time, you may withdraw any amount up to your
entire surrender value, subject to excess withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
--------------------------------------------------------------------------------
74 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
AVAILABILITY
There are two optional SecureSource Stages 2 riders available under your
contract:
- SecureSource Stages 2 -- Single Life
- SecureSource Stages 2 -- Joint Life
The information in this section applies to both SecureSource Stages 2 riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages 2 -- Single Life rider covers one person. The
SecureSource Stages 2 -- Joint Life Rider covers two spouses jointly who are
named at contract issue. You may elect only the SecureSource Stages 2 -- Single
Life rider or the SecureSource Stages 2 -- Joint Life rider, not both, and you
may not switch riders later. You must elect the rider when you purchase your
contract. The rider effective date will be the contract issue date.
The SecureSource Stages 2 rider is an optional benefit that you may select for
an additional annual charge if:
- SINGLE LIFE: you are 85 or younger on the date the contract is issued; or
- JOINT LIFE: you and your spouse are 85 or younger on the date the contract
is issued.
The SecureSource Stages 2 riders are not available under an inherited qualified
annuity.
The SecureSource Stages 2 rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
- SINGLE LIFE: death (see "At Death" heading below).
- JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages 2 rider are:
AGE BANDS: Each age band is associated with a two lifetime payment percentages.
The covered person (JOINT LIFE: the younger covered spouse) must be at least the
youngest age shown in the first age band for the annual lifetime payment to be
established. After the annual lifetime payment is established, in addition to
your age, other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: the younger covered spouse)
has reached the youngest age in the first age band. After the waiting period,
the annual withdrawal amount guaranteed by the rider can vary each contract
year.
ANNUAL STEP-UP: an increase in the benefit base and/or the principal back
guarantee and a possible increase in the lifetime payment percentage that is
available each rider anniversary if your contract value increases, subject to
certain conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken before the annual lifetime payment is
established, or (2) a withdrawal that is greater than the remaining annual
lifetime payment after the annual lifetime payment is established.
EXCESS WITHDRAWAL PROCESSING: a reduction in benefits if a withdrawal is taken
before the annual lifetime payment is established or if a withdrawal exceeds the
remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band. The
difference between percentage A and percentage B is referred to as the income
bonus. Percentage B is referred to as the minimum lifetime payment percentage.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you take withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. After the annual lifetime payment is
established, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 75
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten contract anniversaries based on a rider credit percentage of 8% for
the first anniversary and 6% thereafter, as long as no withdrawals have been
taken since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and excess withdrawals may reduce or eliminate
the benefit of any rider credits. Rider credits may result in higher rider
charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
limiting benefits under the rider. If you take any withdrawals during the
waiting period, the lifetime benefit amount will be determined using percentage
B, the minimum lifetime payment percentage, for the appropriate age band and
percentage A, and therefore the income bonus, will not be available as long as
rider benefits are payable. The waiting period starts on the rider effective
date and ends on the day prior to the first anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage after the waiting period. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES 2 RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages 2 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 1-year waiting period, the
lifetime benefit amount will be determined using percentage B for the
appropriate age band and percentage A, and therefore the income bonus, will
not be available as long as rider benefits are payable. Any withdrawals in the
first 10 years will terminate any remaining rider credits. Also, if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider will be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must elect one of the
investment options under the PN program. This requirement limits your choice
of investment options. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option classification as shown in your contract if your
current investment option is more aggressive than the target investment option
classification. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option is currently the Moderate investment option. We reserve the
right to change the target investment option to an investment option
classification that is more aggressive than the Moderate investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset, you are in a
withdrawal phase. During withdrawal phases you may request to change your
investment option to the target investment option or any investment option
that is more conservative than the target investment option without a benefit
reset as described below. If you are in a withdrawal phase
--------------------------------------------------------------------------------
76 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, you will be in the
accumulation phase again and your rider benefit will be reset as follows:
1. the BB, PBG and WAB will be reset to the contract value, if less than
their current amount; and
2. the ALP and RALP, if available, will be recalculated. You may request to
change your investment option by written request on an authorized form or
by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource Stages 2 rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
charge will continue to be deducted until the contract or rider is terminated
or the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages 2 -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages 2 -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of nonnatural
or revocable trust ownership). The rider will terminate at the death of the
contract owner because the original covered spouse will be unable to elect the
spousal continuation provision of the contract (see "Joint Life only: Covered
Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of the
trust must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource Stages 2 -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period the lifetime benefit amount will be determined using
percentage B for as long as rider benefits are payable. While the rider
permits certain excess withdrawals to be taken for the purpose of satisfying
RMD requirements for your contract alone without reducing future benefits
guaranteed under the rider, there can be no guarantee that changes in the
federal income tax law after the effective date of the rider will not require
a larger RMD to be taken, in which case, future guaranteed withdrawals under
the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 77
beneficiaries. In some circumstances, these required distributions could
substantially reduce or eliminate the value of the rider. See
"Taxes -- Other -- Spousal status."
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person or a revocable trust, the covered spouses are the annuitant
and the legally married spouse of the annuitant. The covered spouses lives are
used to determine when the annual lifetime payment is established, and the
duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading
below). The covered spouses are established on the rider effective date and
cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: younger covered spouses) has
reached age 50. When the ALP is established and at all times thereafter, the ALP
is equal to the BB multiplied by the lifetime payment percentage. Anytime the
lifetime payment percentage or BB changes as described below, the ALP will be
recalculated. After the waiting period and when the ALP is established, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the annual lifetime payment guaranteed
for withdrawal for the remainder of the contract year. The RALP is established
at the same time as the ALP. The RALP equals the ALP less all withdrawals in the
current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band used to calculate the initial ALP is
the percentage for the covered person's attained age (JOINT LIFE: younger
covered spouse's attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouse's subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouse's attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any rider
fee increase or if a withdrawal has been taken since the ALP was established,
then the lifetime payment percentage will not change on subsequent birthdays.)
Upon annual step-ups (see "Annual Step ups" below).
--------------------------------------------------------------------------------
78 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was established and no rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether percentage A or percentage B is used for each
applicable age band:
During the waiting period, percentage B will be used. If you take a withdrawal
in the waiting period, percentage B will be used and the income bonus will not
be available for as long as rider benefits are payable.
If no withdrawal is taken during the waiting period, after the waiting period a
comparison of your contract value and the withdrawal adjustment base (WAB)
determines whether percentage A or percentage B is used to calculate the ALP
unless the percentage is fixed as described below. Market volatility, a
prolonged flat, low or down market, rider credits, and the deduction of charges
all impact whether you are eligible for percentage A or percentage B. On each
valuation date, if the benefit determining percentage is less than the 20%
adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (a/b) where:
a = Contract value at the end of the prior valuation period
b = WAB at the end of the prior valuation period
After the ALP is established and after the waiting period, the first withdrawal
taken in each contract year will set and fix the lifetime payment percentage for
the remainder of the contract year. Beginning on the next rider anniversary, the
lifetime payment percentage can change on each valuation day as described above
until a withdrawal is taken in that contract year.
However, at the earliest of (1), (2) or (3) below Percentage A and Percentage B
will be set and remain fixed as long as the benefit is payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values
(benefit base (BB), credit base (CB) and withdrawal adjustment base (WAB)) and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: If the WAB and CB are greater
than zero, the WAB and CB will be increased by the amount of each additional
purchase payment. The BB and PBG will be increased by the amount of each
additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits.
When a withdrawal is taken:
(a) If the first withdrawal is taken during the waiting period, the WAB will
be permanently reset to zero. If the first withdrawal is taken after the
waiting period, the WAB will be reduced by the "adjustment for
withdrawal," as defined below.
(b) If the ALP is established and the withdrawal is less than or equal to the
RALP, the BB does not change and the PBG is reduced by the amount of the
withdrawal, but it will not be less than zero.
(c) If the ALP is not established, excess withdrawal processing will occur as
follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 79
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not be less
than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the withdrawal and
further reduced by an amount calculated as follows, but it will not be
less than zero:
a = the amount of the withdrawal minus the RALP
b = the PBG minus the RALP on the date of (but prior to) the withdrawal
c = the contract value on the date of (but prior to) the withdrawal minus
the RALP
The BB will be reduced by an amount as calculated below:
d = the amount of the withdrawal minus the RALP
e = the BB on the date of (but prior to) the withdrawal
f = the contract value on the date of (but prior to) the withdrawal minus
the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is reduced by a
withdrawal in the same proportion as the contract value is reduced, the
proportional amount deducted is the "adjustment for withdrawal." The "adjustment
for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PBG (as applicable) on the date of (but prior to) the
withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
THE WAB ON RIDER ANNIVERSARIES: Unless the WAB is permanently reset to zero or
you decline any rider fee increase, the WAB (after any rider credit is added)
will be increased to the contract value, if the contract value is greater.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
rider fee increase, rider credits are available for the first ten contract
anniversaries. On the first anniversary, the rider credit equals the credit
base (CB) 180 days following the rider effective date multiplied by 8%. On any
subsequent anniversaries, the rider credit equals the CB as of the prior rider
anniversary multiplied by 6%. On the first anniversary the BB and WAB will be
set to the greater of the current BB, or the BB 180 days following the
contract date increased by the rider credit and any additional purchase
payments since 180 days following the rider effective date. On any subsequent
rider credit dates the BB and WAB will be set to the greater of the current
BB, or the BB on the prior anniversary increased by the rider credit and any
additional purchase payments since the prior anniversary. If the CB is greater
than zero, the CB will be permanently reset to zero on the 10th rider
anniversary after any adjustment to the WAB and BB, and there will be no
additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you decline any rider fee increase, future annual step-
ups will no longer be available.
The annual step-up will be executed on any rider anniversary where the
contract value is greater than the PBG or the BB after any rider credit is
added. If an annual step-up is executed, the PBG, BB and lifetime payment
percentage will be adjusted as follows: The PBG will be increased to the
contract value, if the contract value is greater. The BB (after any rider
credit is added) will be increased to the contract value, if the contract
value is greater. If the covered person's attained age (Joint Life: younger
covered spouses attained age) on the rider anniversary is in a higher age band
and (1) there is an increase to BB due to a step-up or (2) the BB is at the
maximum of $10,000,000 so there was no step-up of the BB, then the higher age
band will be used to determine the appropriate lifetime payment percentage,
regardless of any prior withdrawals.
--------------------------------------------------------------------------------
80 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of your RMD that exceeds the benefit amount will not be subject to
excess withdrawal processing provided that the following conditions are met:
- The annual lifetime payment is established;
- The RMD is for your contract alone;
- The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
- The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on
the contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. If any withdrawal is taken in the
waiting period, including RMDs, Percentage B for the applicable age band will be
used as long as rider benefits are payable. Any withdrawals taken before the
annual lifetime payment is established or withdrawing amounts greater than the
remaining annual lifetime payment that do not meet these conditions will result
in excess withdrawal processing. The amount in excess of the RALP that is not
subject to excess withdrawal processing will be recalculated if the ALP changes
due to lifetime payment percentage changes. See Appendix E for additional
information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages 2 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource Stages
2 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
Unless you decline a rider fee increase, at the time of spousal continuation, a
step-up may be available. All annual step-up rules (see "Rider Anniversary
Processing -- Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that the RALP will be reduced for any prior
withdrawals in that contract year. The WAB, if greater than zero, will be
increased to the contract value if the contract value is greater. The spousal
continuation step-up is processed on the valuation date spousal continuation is
effective.
RULES FOR SURRENDER: Minimum contract values following surrender no longer apply
to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that contract year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 81
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
- elect to take the death benefit under the terms of the contract, or
- elect to take the principal back guarantee available under this rider, or
- continue the contract and the SecureSource Stages 2 -- Joint Life rider
under the spousal continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
1. If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are
equal to the PBG on the date of death.
2. If the PBG is greater than zero and the ALP is not established, the BB on
the date of death multiplied by the lifetime payment percentage used for
the youngest age of the covered spouses in the first age band will be paid
annually until total payments to the beneficiary are equal to the PBG on
the date of death.
In either of the above cases:
- After the date of death, there will be no additional rider credits or annual
step-ups.
- The lifetime payment percentage used will be set as of the date of death.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
3. On the date of death (JOINT LIFE: remaining covered spouse's date of
death), if the CB is greater than zero, the CB will be permanently reset to
zero, and there will be no additional rider credits.
4. If the PBG equals zero, the benefit terminates. No further payments are
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: If your annuitization start date is the maximum
annuitization start date, you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the SecureSource Stages 2 rider. Under the rider's payout option, the minimum
amount payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages 2 rider cannot be terminated either by you or us except
as follows:
- SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
- SINGLE LIFE: after the death benefit is payable, the rider will terminate.
- SINGLE LIFE: spousal continuation will terminate the rider.
--------------------------------------------------------------------------------
82 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
- JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a
beneficiary of a participant in an employer sponsored retirement plan, the
rider will terminate.
- On the annuitization start date, the rider will terminate.
- You may terminate the rider if your annual rider fee after any increase is
more than 0.25 percentage points higher than your fee before the increase.
(see "Charges -- SecureSource Stages 2 rider charge").
- When the contract value is zero and either the annual lifetime payment is
not established or a withdrawal in excess of the remaining annual lifetime
payment is taken, the rider will terminate.
- Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit, available for
contract applications signed on or after May 3, 2010, that you may select for
an additional charge. We have offered a different version of the Accumulation
Protector Benefit rider for the Original Contract with applications signed prior
to June 1, 2009. The description of the Accumulation Protector Benefit rider in
this section applies to both Original and Current contracts unless noted
otherwise. The Accumulation Protector Benefit rider specifies a waiting period
that ends on the benefit date. The Accumulation Protector Benefit rider provides
a one-time adjustment to your contract value on the benefit date if your
contract value is less than the Minimum Contract Accumulation Value (defined
below) on that benefit date. On the benefit date, if the contract value is equal
to or greater than the Minimum Contract Accumulation Value, as determined under
the Accumulation Protector Benefit rider, the Accumulation Protector Benefit
rider ends without value and no benefit is payable.
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: if you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
For the Current Contract, if you are (or if the owner is a non-natural person,
then the annuitant is) age 80 or younger at contract issue and this rider is
available in your state, you may elect the Accumulation Protector Benefit rider
at the time you purchase your contract and the rider effective date will be the
contract issue date. For the Original Contract, you may have elected the
Accumulation Protector Benefit rider at the time you purchased your contract and
the rider effective date was the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further charges for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial surrenders or make a full surrender; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource Stages 2 rider.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the regular fixed account that are available under
the contract to other contract owners who do not elect this rider. You may
allocate qualifying purchase payments to the Special DCA fixed account, when
available (see "The Special DCA Fixed Account"), and we will make monthly
transfers into the PN program investment option you have chosen. (See "Making
the Most of Your Contract -- Portfolio Navigator Program");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider. Some exceptions apply (see
"Additional Purchase Payments with Elective Step Up" below). In addition, we
reserve the right to change these additional purchase payment limitations,
including making further restrictions, upon written notice;
if you purchase this contract as a qualified annuity, for example, an IRA, you
may need to take partial surrenders from your contract to satisfy the RMDs
under the Code. Partial surrenders, including those used to satisfy RMDs, will
reduce any potential benefit that the Accumulation Protector Benefit rider
provides. You should consult your tax advisor if you have any questions about
the use of this rider in your tax situation;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 83
if you think you may surrender all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step-up option (described below) or your
surviving spouse exercises the spousal continuation elective step-up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your investment option to one that causes
the Accumulation Protector Benefit rider charge to increase (see "Charges").
Be sure to discuss with your investment professional whether an Accumulation
Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL SURRENDERS: The adjustment made for each partial
surrender from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial surrender to the contract value on the date of (but
immediately prior to) the partial surrender; and
(b) is the MCAV on the date of (but immediately prior to) the partial surrender.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your investment option after we have exercised our
rights to increase the rider fee.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credits. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by any adjustments for partial
surrenders made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option or provide any benefit that can be surrendered or paid
upon death. Rather the elective step up is an interim calculation used to arrive
at the final MCAV, which is used to determine whether a benefit will be paid
under the rider on the benefit date.
--------------------------------------------------------------------------------
84 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
The elective step up option is not available for inherited IRAs or if the
benefit date would be after the annuitization start date.
ADDITIONAL PURCHASE PAYMENTS WITH ANNUAL ELECTIVE STEP UPS -- CURRENT CONTRACT
ONLY
If your MCAV is increased as a result of elective step up, you have 180 days
from the latest contract anniversary to make additional purchase payments, if
allowed under the base contract. The MCAV will include the amount of any
additional purchase payments and purchase payment credits received during this
period. We reserve the right to change these additional purchase payment
limitations.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up for the entire contract year. In addition, the waiting period will
restart as of the most recent contract anniversary.
CHANGE OF OWNERSHIP OR ASSIGNMENT
Subject to state limitations, a change of ownership or assignment is subject to
our approval.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full surrender;
- annuitization begins;
- the contract terminates as a result of the death benefit being paid; or
- when a beneficiary elects an alternative payment plan which is an inherited
IRA.
The rider will terminate on the benefit date.
For an example, see Appendix L.
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE JULY 19, 2010)
If you bought a contract before July 19, 2010 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
--------------------------------------------------------------------------------------------------
AND YOU SELECTED ONE OF THE
IF YOU PURCHASED FOLLOWING OPTIONAL LIVING DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
--------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit Appendix K
("Rider B")
--------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit Appendix K
2006 ("Rider A")
--------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit Appendix J
for Life
--------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix L
--------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 Accumulation Protector Appendix M
--------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 SecureSource Rider Appendix N
--------------------------------------------------------------------------------------------------
Before Nov. 30, 2009 SecureSource 20 Rider Appendix O
--------------------------------------------------------------------------------------------------
Before July 19, 2010 SecureSource Stages Rider Appendix P
--------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 85
OPTIONAL ADDITIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you (Current Contract) or you or the annuitant (Original Contract)
are 70 or older at the rider effective date, The Benefit Protector does not
provide any additional benefit before the first rider anniversary.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector to your contract. You must elect the
Benefit Protector at the time you purchase your contract and your rider
effective date will be the contract issue date. You may not select this rider if
you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you (Current Contract) or you or the
annuitant (Original Contract) die after the first rider anniversary, but before
the annuitization start date, and while this contract is in force, we will pay
the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you (Current Contract) or you and the
annuitant (Original Contract) were under age 70 on the rider effective date;
or
- 15% of your earnings at death if you (Current Contract) or you or the
annuitant (Original Contract) were 70 or older on the rider effective date.
For the Current Contract, if this rider is effective after the contract date or
if there has been a covered life change, remaining purchase payment is
established or set as the contract value on the rider effective date or, if
later, the date of the most recent covered life change. Thereafter, remaining
purchase payments is increased by the amount of each additional purchase payment
and adjusted for each partial surrender.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
remaining purchase payments (also referred to as purchase payments not
previously surrendered under the Original Contract). Partial surrenders will
come from any earnings before reducing purchase payments in the contract. The
earnings at death may not be less than zero and may not be more than 250% of the
purchase payments not previously surrendered that are one or more years old.
Note: Purchase payments not previously surrendered is calculated differently and
is not the same value as purchase payments not previously surrendered used in
the surrender charge calculation.
TERMINATING THE BENEFIT PROTECTOR
CURRENT CONTRACT:
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider within 30 days after any rider anniversary
beginning with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
Your spouse may terminate the rider within 30 days following the effective
date of the spousal continuation if your spouse is age 75 or younger.
A new owner may terminate the rider within 30 days following the effective
date of an ownership change if the new owner is age 75 or younger.
The rider will terminate for a spousal continuation or ownership change if the
spouse or new owner is age 76 or older at the time of the change.
The rider will terminate after the death benefit is payable, unless the spouse
continues the contract under spousal continuation provision.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
ORIGINAL CONTRACT:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
--------------------------------------------------------------------------------
86 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
Our current administrative practice allows a new owner or your spouse to
terminate the rider within 30 days following the effective date of the
ownership change or spousal continuation.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the annuitization
start date, your spouse may keep the contract as owner. For Current Contract,
your spouse will be subject to all the limitations and restrictions of the rider
just as if they were purchasing a new contract and the age of the new spouse at
the time of the change will be used to determine the earnings at death
percentage going forward. If your spouse does not qualify for the rider on the
basis of age we will terminate the rider. If they do qualify for the rider on
the basis of age we will set the contract value equal to the death benefit that
would otherwise have been paid (without regard to the Full Surrender Value) and
we will substitute this new contract value on the date of death for "remaining
purchase payments" used in calculating earnings at death.
For Current Contract, after a covered life change other than a spouse that
continues the contract, the new owner will be subject to all the limitations and
restrictions of the rider just as if they were purchasing a new contract and the
age of the new owner at the time of the change will be used to determine the
earnings at death percentage going forward. If the new owner does not qualify
for the rider on the basis of age we will terminate the rider. If they do
qualify for the rider on the basis of age we will substitute the contract value
on the date of the ownership changes for remaining purchase payments used in
calculating earnings at death.
For an example, see Appendix F.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you (Current Contract), or you or the annuitant (Original
Contract) are 70 or older at the rider effective date. It does not provide any
additional benefit before the first rider anniversary and it does not provide
any benefit beyond what is offered under the Benefit Protector rider during the
second rider year. Be sure to discuss with your investment professional whether
or not the Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector Plus to your contract. You must elect
the Benefit Protector Plus at the time you purchase your contract and your rider
effective date will be the contract issue date. This rider is only available for
transfers, exchanges or rollovers. If this is a non-qualified annuity,
transfers, exchanges or rollovers must be from another annuity or life insurance
policy. You may not select this rider if you select the Benefit Protector Rider,
5% Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you (Current Contract), or you or
the annuitant (Original Contract) die after the first rider anniversary, but
before the annuitization start date, and while this contract is in force, we
will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously surrendered as follows:
PERCENTAGE IF YOU (CURRENT CONTRACT) PERCENTAGE IF YOU (CURRENT CONTRACT)
RIDER YEAR WHEN DEATH OR YOU AND THE ANNUITANT (ORIGINAL CONTRACT) ARE OR YOU OR THE ANNUITANT (ORIGINAL CONTRACT) ARE
OCCURS; UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 87
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU (CURRENT CONTACT) OR YOU AND THE
ANNUITANT (ORIGINAL CONTRACT) ARE UNDER
RIDER YEAR WHEN DEATH OCCURS; AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase
payment*)
Five or more 40% x (earnings at death + 50% of initial purchase
payment*)
IF YOU (CURRENT CONTRACT) OR YOU OR THE
ANNUITANT (ORIGINAL CONTRACT) ARE AGE 70
RIDER YEAR WHEN DEATH OCCURS; OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase
payment*)
Five or more 15% x (earnings at death + 50% of initial purchase
payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously surrendered.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract, on
the annuitization start date, or when the death benefit is payable.
The rider will terminate if there is an ownership change.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value for the Current Contract). We will then terminate the
Benefit Protector Plus (see "Benefits in Case of Death").
For an example, see Appendix G.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting on the annuitization start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements. We do not deduct any surrender charges under the
payout plans listed below, except under annuity payout Plan E. (See
"Charges -- Surrender charge under Annuity Payout Plan E").
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your annuitization
start date after any rider charges have been deducted, plus any positive or
negative MVA (less any applicable premium tax). Additionally, we currently allow
you to use part of the amount available to purchase payouts, leaving any
remaining contract value to accumulate on a tax-deferred basis. If you select a
variable annuity payout, we reserve the right to limit the number of subaccounts
in which you may invest. The GPAs and the Special DCA fixed account (Current
Contract) and the DCA fixed account (Original Contract) are not available during
this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate.
For information with respect to transfers between accounts after annuity payouts
begin, (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts.
--------------------------------------------------------------------------------
88 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
If you ask us at least 30 days before the annuitization start date, we will
substitute an annuity table based on an assumed 3.5% investment rate for the 5%
Table A in the contract. The assumed investment rate affects both the amount of
the first payout and the extent to which subsequent payouts increase or
decrease. For example, annuity payouts will increase if the investment return is
above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before the annuitization start date. Generally, you may select one of
the Plans A through E below or another plan agreed to by us. Some of the annuity
payout plans may not be available if you have selected the Income Assurer
Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
annuitization start date. If the annuitant outlives the elected guaranteed
payout period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Surrender charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your surrender to the full discounted value. A 10% IRS penalty
tax could apply if you take a surrender. (See "Taxes.")
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix J: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix K: Guarantor
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 89
Withdrawal Benefit Rider"). The amount paid in the current contract year will
be reduced for any prior withdrawals in that year. These annualized amounts
will be paid in the frequency that you elect. The frequencies will be among
those offered by us at the time but will be no less frequent than annually.
If, at the death of the owner, total payouts have been made for less than the
RBA, the remaining payouts will be paid to the beneficiary.
REMAINING BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH
THE SECURESOURCE 20 RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource 20 Riders"). The amount paid in the current contract
year will be reduced for any prior withdrawals in that year. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequent
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you have the responsibility for electing a payout plan under
your contract that complies with applicable law. Your contract describes your
payout plan options. The options will meet certain IRS regulations governing
RMDs if the payout plan meets the incidental distribution benefit requirements,
if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
For qualified and nonqualified contracts with the SecureSource Stages rider, on
the annuitization start date you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the rider. Under the rider's payout option, the minimum amount payable shown in
Table B will not apply, and you will receive the ALP provided by this rider
until the later of the death of covered person (JOINT LIFE: both covered
spouses) or depletion of the PBG. If you choose to receive the ALP, the amount
payable each year will be equal to the ALP on the annuitization start date. The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually. If You choose to
receive the ALP rather than a payout option available under the contract, all
other contract features, rider features and charges terminate after the
annuitization start date except for the principal back guarantee. You must
select a payout plan as of the annuitization start date set forth in your
contract.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitization start date. If you do
not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time amounts are applied to an annuity payout plan. If
the calculations show that monthly payouts would be less than $20, we have the
right to pay the amount that would otherwise have been applied to a plan to the
owner in a lump sum or to change the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you (Current Contract), or you or the
annuitant (Original Contract) die after annuity payouts begin, we will pay any
amount payable to the beneficiary as provided in the annuity payout plan in
effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike surrenders described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a
--------------------------------------------------------------------------------
90 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
return of part of your investment in the contract and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund,
where the annuitant dies before your investment in the contract is fully
recovered, the remaining portion of the unrecovered investment may be available
as a federal income tax deduction to the owner for the last taxable year. Under
all other annuity payout plans, where the annuity payouts end before your
investment in the contract is fully recovered, the remaining portion of the
unrecovered investment may be available as a federal income tax deduction to the
taxpayer for the tax year in which the payouts end. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
SURRENDERS: Generally, if you surrender all or part of your nonqualified annuity
before the annuitization start date, including surrenders under any optional
withdrawal benefit rider, your surrender will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for surrenders of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
surrender, including surrenders under any optional withdrawal benefit rider, we
may deduct federal, and in some cases state withholding against the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Annuitization Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 91
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a surrender for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity or qualified long-term care insurance contract, or for an endowment
contract under which payments will begin no later than payments would have begun
under the contract exchanged, (3) the exchange of an annuity contract for
another annuity or for a qualified long-term care insurance contract, and (4)
the exchange of a qualified long-term care insurance contract for a qualified
long-term care insurance contract. However, if the life insurance policy has an
outstanding loan, there may be tax consequences. Depending on the issue date of
your original policy or contract, there may be tax or other benefits that are
given up to gain the benefits of the new policy or contract. Consider whether
the features and benefits of the new policy or contract outweigh any tax or
other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
SURRENDERS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire surrender will generally be includable as ordinary income and
is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
SURRENDERS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
--------------------------------------------------------------------------------
92 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required surrenders called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a surrender, including surrenders
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Annuitization Start Date").
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 93
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when surrendered or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
surrenders from your contract. However, the IRS may determine that these charges
should be treated as partial surrenders subject to taxation to the extent of any
gain as well as the 10% tax penalty for surrenders before the age of 59 1/2, if
applicable.
We reserve the right to report charges for these riders as partial surrenders if
we, as a withholding and reporting agent, believe that we are required to report
them. In addition, we will report any benefits attributable to these riders on
your death (Current Contract), or your or the annuitant's death (Original
Contract) as an annuity death benefit distribution, not as proceeds from life
insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
--------------------------------------------------------------------------------
94 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 7.5% each time a purchase
payment is made. We may also pay ongoing trail commissions of up to 1.25% of
the contract value. We do not pay or withhold payment of trail commissions
based on which investment options you select.
We may pay selling firms an additional sales commission of up to 1% of
purchase payments for a period of time we select. For example, we may offer to
pay an additional sales commission to get selling firms to market a new or
enhanced contract or to increase sales during the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 95
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
--------------------------------------------------------------------------------
96 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 99 p. 33
Appendix B: Example -- Surrender Charges p. 101 Charges -- Surrender Charges p. 44
Appendix C: Example -- Death Benefits p. 110 Benefits in Case of Death p. 66
Appendix D: Example -- SecureSource Optional Benefits -- Optional Living
Series of Riders p. 116 Benefits p. 74
Appendix E: SecureSource Series of Optional Benefits -- Optional Living
Riders -- Additional RMD Disclosure p. 124 Benefits p. 74
Appendix F: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 126 Death Benefit Rider p. 86
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 128 Plus Death Benefit Rider p. 87
Appendix H: Purchase Payment Credits for
Eligible Contracts Buying Your Contract -- Purchase Payment
p. 130 Credits p. 42
Appendix I: Asset Allocation Program for N/A
Contracts With Applications Signed
Before May 1, 2006 p. 131
Appendix J: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 132
Appendix K: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 144
Appendix L: Income Assurer Benefit N/A
Riders p. 152
Appendix M: Example -- Accumulation Optional Benefits -- Optional Living
Protector Benefit Rider p. 161 Benefits P. 74
Appendix N: SecureSource Rider
Disclosure p. 162
Appendix O: SecureSource 20 Rider N/A
Disclosure p. 175
Appendix P: SecureSource Stages Rider
Disclosure p. 189
Appendix Q: Condensed Financial
Information (Unaudited) Condensed Financial Information
p. 199 (Unaudited) p. 19
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, Special DCA fixed account,
(Current Contract), DCA fixed account, (Original Contract), regular fixed
account (Current Contract), and one-year fixed account (Original Contract) and
the fees and charges that apply to your contract.
The examples of death benefits and optional riders in appendices include a
partial surrender to illustrate the effect of a partial surrender on the
particular benefit. These examples are intended to show how the optional riders
operate, and do not take into account whether the rider is part of a qualified
contract. Qualified contracts are subject to required minimum distributions at
certain ages which may require you to take partial surrenders from the contract
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you
are considering the addition of certain death benefits and/or optional riders to
a qualified contract, you should consult your tax advisor prior to making a
purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
98 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early surrenders."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a surrender from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
surrender new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY SURRENDER AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or surrendered.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 surrender from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 3.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 2.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 99
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your surrender charge percentage is 7%, if you elected the
seven-year or ten-year surrender charge schedules and 4% if you elected a five-
year surrender charge schedule. (See "Charges -- Surrender Charge.") We do not
apply MVAs to the amounts we deduct for surrender charges, so we would deduct
the surrender charge from your early surrender after we applied the MVA. Also
note that when you request an early surrender, we surrender an amount from your
GPA that will give you the net amount you requested after we apply the MVA and
any applicable surrender charge, unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
100 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: EXAMPLE -- SURRENDER CHARGES
EXAMPLE -- SURRENDER CHARGES
We determine your surrender charge by multiplying the amount of each purchase
payment surrendered which could be subject to a surrender charge by the
applicable surrender charge percentage, and then totaling the surrender charges.
We calculate the amount of purchase payments surrendered (PPS) as:
Current Contract:
PPS = PPSC + PPF
PPSC = purchase payments surrendered that could be subject to a surrender charge
= (PS - FA) / (CV - FA) x (PP - PPF)
PPF = purchase payments surrendered that are not subject to a surrender charge
= FA - contract earnings, but not less than zero
PP = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
PS = amount the contract value is reduced by the surrender
FA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
CV = contract value prior to the surrender
Original Contract:
PPS = XSF + (ACV - XSF) / (CV - TFA) x (PPNPS - XSF)
XSF = 10% of prior anniversary's contract value - contract earnings, but not less
than zero
ACV = amount the contract value is reduced by the surrender - contract earnings,
but not less than zero
TFA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
PPNPS = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
CV = contract value prior to the surrender
When determining the surrender charge, contract earnings are defined as the
contract value, including any positive or negative MVA on amounts being
surrendered, less purchase payments not previously surrendered. We determine
current contract earnings by looking at the entire contract value, not the
earnings of any particular subaccount, GPA, the regular fixed account (Current
Contract), the one-year fixed account (Original Contract), the Special DCA fixed
account (Current Contract) or the DCA fixed account (Original Contract). If the
contract value is less than purchase payments received and not previously
surrendered, then contract earnings are zero.
The examples below show how the surrender charge for a full and partial
surrender is calculated for a contract with a seven-year surrender charge
schedule. Each example illustrates the amount of the surrender charge for both a
contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 101
CURRENT CONTRACT: FULL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS: 60,000.00 40,000.00
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC = PPF+ (PS - FA) / (CV - FA) * (PP
- PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 60,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
102 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $56,460.00 $36,754.00
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 103
CURRENT CONTRACT: PARTIAL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PP): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS (determined by iterative process described
above): 15,376.34 16,062.31
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC = PPF + (PS - FA) / (CV - FA) *
(PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 15,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,376.34 19,375.80
--------------------------------------------------------------------------------
104 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,376.34 19,375.80
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 5,376.34 15,175.80
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,376.34 16,062.31
SURRENDER CHARGE: (376.34) (1,062.31)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 105
ORIGINAL CONTRACT: FULL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered
(PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) /(CV - TFA) * (PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
106 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $56,460.00 $36,754.00
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 107
ORIGINAL CONTRACT: PARTIAL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings
Contract value surrendered: 15,376.34 16,062.31
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,376.34 16,062.31
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) *
(PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,376.34 19,375.80
--------------------------------------------------------------------------------
108 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,376.34 19,375.80
less XSF: 0.00 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 5,376.34 15,175.80
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,376.34 16,062.31
SURRENDER CHARGE: (376.34) (1,062.31)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 109
APPENDIX C: EXAMPLE -- DEATH BENEFITS
CURRENT CONTRACT:
EXAMPLE -- ROPP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including surrender charge) partial surrender; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROPP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial surrenders:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROPP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
110 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the regular fixed account account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS
THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 111
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5%
ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
112 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including surrender charge) partial surrender; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial surrenders:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 113
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account, the one-
year fixed account and the variable account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
114 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- =
$24,300 -1,543.21
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- =
$24,300 -1,543.21
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- =
$19,000 -1,657.89
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 115
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES OF RIDERS
SECURESOURCE STAGES 2 RIDERS -- EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate investment option at issue.
LIFET-
IME
HYPOTHETICAL PAYME-
CONTRACT ASSUMED BENEFIT NT
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PERCE-
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP NT
At
Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $4,000 $4,000(1) 4%
1 0 0 98,000 108,000 108,000 9.3% 108,000 5,400 5,400(2) 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 5,700 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 125,134(5) 117,000 23.1% 118,877(5) 6,257(5) 0 5%
8 0 0 80,000 125,134 117,000 31.6% 118,877 6,257 6,257 5%
9 0 0 95,000 125,134 117,000 18.8% 188,877 7,508(4) 7,508(4) 6%(4)
(1) The ALP and RALP are based on percentage B until the end of the 1-year
waiting period.
(2) Since no withdrawal was taken, at the end of the 1-year waiting period, the
ALP and RALP are recalculated based on percentage A.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The Lifetime Payment Percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Lifetime Benefit Description - Determination of
Adjustment of Benefit Values".
--------------------------------------------------------------------------------
116 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE STAGES
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual Step-ups
are indicated in BOLD.
You elect the PN program Moderate investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT LIFETIME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $5,000 $ 0(1) 5%
1 0 0 98,000 108,000 108,000 9.3% 100,000 5,400 0 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 0 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000(2) 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3)7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4)6,500(4) 5%(40
7.5 0 10,000 90,000 117,000(5) 117,000 23.1% 108,000(5)5,850(5) 0 5%
8 0 0 80,000 117,000 117,000 31.6% 108,000 5,850 5,850 5%
9 0 0 95,000 117,000 117,000 18.8% 108,000 7,020(4)7,020(4) 6%(4)
(1) The RALP is zero until the end of the 3-Year waiting period.
(2) At the end of the 3-Year waiting period, the RALP is set equal to the ALP.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the lifetime payment percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Determination of Adjustment of Benefit Values" in
the "Lifetime Benefit Description".
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 117
EXAMPLE: SECURESOURCE 20
EXAMPLE #1: LIFETIME BENEFIT NOT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER
ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS SURRENDERS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 NA NA
1 0 0 98,000 100,000 2.0% 100,000 100,000 6,000 0 NA NA
2 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 NA NA
3 0 0 125,000 125,000 0.0% 125,000 125,000 7,500 7,500 NA NA
3.5 0 6,000 111,000 118,590 6.4% 125,000 119,000 7,500 1,500 NA NA
4 0 0 104,000 118,590 12.3% 125,000 119,000 7,500 7,500 7,140(1) 7,140(1)
5 0 0 90,000 118,590 24.1% 125,000 119,000 6,250(2) 6,250(2) 5,950(2) 5,950(2)
6 0 0 95,000 118,590 19.9% 125,000 119,000 7,500 7,500 7,140 7,140
6.5 0 7,500 87,500 87,500(3) 0.0% 125,000 111,500 7,500 0 5,250(3) 0
7 0 0 90,000 90,000 0.0% 125,000 111,500 7,500 7,500 5,400 5,400
7.5 0 10,000 70,000 70,000(4) 0.0% 70,000(4) 70,000(4) 4,200(4) 0 4,200(4) 0
8 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
(1) The ALP and RALP are established on the contract anniversary following the
date the covered person (younger Covered Spouse for Joint) reaches age 65 as
the greater of the ELB or the RBA, times the ALP percentage.
(2) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(3) The $7,500 surrender is greater than the $7,140 RALP allowed under the
lifetime benefit and therefore excess surrender processing is applied to the
ALP, resetting the ALP to the lesser of the prior ALP or the ALP percentage
times the contract value following the surrender. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. The BDP at the
time of surrender is less than 20%, so the ALP percentage and GBP percentage
are set at 6% for the remainder of the contract year.
(4) The $10,000 surrender is greater than both the $7,500 RBP allowed under the
basic benefit and the $5,400 RALP allowed under the lifetime benefit and
therefore excess surrender processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
surrender. The RBA is reset to the lesser of the prior RBA less the
surrender or the contract value following the surrender. The ALP is reset to
the lesser of the prior ALP or the ALP percentage times the contract value
following the surrender. The WAB is reset to the ALP after the reset divided
by the current ALP Percentage. The BDP at the time of surrender is less than
20%, so the ALP Percentage and GBP percentage are set at 6% for the
remainder of the contract year.
--------------------------------------------------------------------------------
118 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: LIFETIME BENEFIT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 65.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
Percentage is greater than the ALP. Applied Annual Step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue. On the 7th
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS SURRENDERS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 $6,000 $ 0
1 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 6,300 0
2 0 0 110,000 110,000 0.0% 110,000 110,000 6,600 0 6,600 0
3 0 0 110,000 120,000 8.3% 110,000 110,000 6,600 6,600(1) 7,200 7,200(1)
3.5 0 6,000 104,000 113,455 8.3% 110,000 104,000 6,600 600 7,200 1,200
4 0 0 100,000 113,455 11.9% 110,000 104,000 6,600 6,600 7,200 7,200
4.5 0 7,000 90,000 105,267 14.5% 90,000 90,000 5,400(2) 5,400(2) 7,200 200
5 0 0 80,000 105,267 24.0% 90,000 90,000 4,500(3) 4,500(3) 6,000(3) 6,000(3)
5.5 0 10,000 70,000 70,000(4) 0.0% 70,000 70,000 3,500(4) 3,500(4) 3,500(4) 3,500(4)
6 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
7 0 0 70,000 70,000(5) 0.0% 70,000(5) 70,000(5) 4,200(5) 4,200(5) 4,200(5) 4,200(5)
(1) At the end of the 3-Year waiting period, the RBP and RALP are set equal to
the GBP and ALP, respectively. The 20% rider credit is applied to the
lifetime benefit.
(2) The $7,000 surrender is greater than the $6,600 RBP allowed under the basic
benefit and therefore excess surrender processing is applied to the basic
benefit. The GBA is reset to the lesser of the prior GBA or the contract
value following the surrender. The RBA is reset to the lesser of the prior
RBA less the surrender or the contract value following the surrender. The
BDP at the time of surrender is less than 20%, so the ALP Percentage and GBP
Percentage are set at 6% for the remainder of the contract year.
(3) The ALP Percentage and GBP Percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(4) The $10,000 surrender is greater than both the $4,500 RBP allowed under the
basic benefit and the $6,000 RALP allowed under the lifetime benefit and
therefore excess surrender processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
surrender. The RBA is reset to the lesser of the prior RBA less the
surrender or the contract value following the surrender. The ALP is reset to
the lesser of the prior ALP or the ALP percentage times the contract value
following the surrender. The WAB is reset to the ALP after the reset divided
by the current ALP Percentage. The BDP at the time of surrender is greater
than or equal to 20%, so the ALP Percentage and GBP Percentage are set at 5%
for the remainder of the contract year.
(5) Allocation to the Moderately Aggressive PN program investment option during
a surrender phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or the ALP percentage times the contract value. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. Any future
surrenders will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 119
EXAMPLE: SECURESOURCE
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate PN program investment
option if you are invested more aggressively than the Moderate PN program
investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
120 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 121
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate PN program investment option if you are
invested more aggressively than the Moderate PN program investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
122 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 123
APPENDIX E: SECURESOURCE SERIES OF RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
SecureSource series of riders to satisfy the RMD rules under 401(a)(9) of the
Code without application of the excess withdrawal processing described in the
rider. We reserve the right to modify this administrative practice at any time
upon 30 days' written notice to you.
For SecureSource Stages and SecureSource 20 riders, owners subject to annual RMD
rules under Section 401(a)(9) of the Code, withdrawing from this contract during
the waiting period to satisfy these rules will set your benefits to zero and you
will not receive any future rider credit.
Amounts you withdraw from this contract (for SecureSource Stages and
SecureSource 20 riders, amounts you withdraw from this contract after the
waiting period) to satisfy these rules are not subject to excess withdrawal
processing under the terms of the rider subject to the following rules and our
current administrative practice:
For SecureSource and SecureSource 20 riders:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year*,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource series of riders.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current contract year,*
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year*.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
series of riders.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
For SecureSource Stages and SecureSource Stages 2 riders:
(1) Each calendar year, if your ALERMDA is greater than the ALP,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the ALP.
- The LABA will be reduced by the total of the amount that each withdrawal
in the current calendar year exceeds the RALP at the time of each
withdrawal, but shall not be reduced to less than zero.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
--------------------------------------------------------------------------------
124 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
Stages and SecureSource Stages 2.
* For SecureSource 20 riders, adjusted for any subsequent changes between 5%
and 6% as described under "GBP Percentage and ALP Percentage".
The ALERMDA is:
(1) determined by us each calendar year (for SecureSource Stages and
SecureSource 20 riders, starting with the calendar year in which the waiting
period ends);
(2) based on your initial purchase payment and not the entire interest value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource Series
rider is attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your rider within the
SecureSource series of riders may not be sufficient to satisfy the requirements
under the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your available
RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP
as described under the excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing one of the SecureSource series of riders.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 125
APPENDIX F: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
You select the MAV Death Benefit and the 7-year surrender charge schedule.
During the first contract year the contract value grows to $105,000. The death
benefit under the MAV Death Benefit equals the contract value, $105,000. You have
not reached the first contract anniversary so the Benefit Protector does not
provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. The death
benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death
(MAV Death Benefit minus remaining purchase payments for the Current Contract or
MAV Death Benefit minus payments not previously surrendered for the Original
Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial surrender of $50,000, including the applicable 7% surrender
charges. We will surrender $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the surrender is subject
to a 7% surrender charge because your payment is in the third year of the surrender
charge schedule, so we will withdraw $39,500 ($36,735 + $2,765 in surrender
charges) from your contract value. Altogether, we will surrender $50,000 and pay
you $47,235. We calculate purchase payments not previously surrendered as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial surrender is
contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously surrendered that are one or more years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously surrendered that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector value. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously surrendered that are one or more years
old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
126 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes.
The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up to a maximum of
100% of purchase payments not previously surrendered that are one or more years
old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 127
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70. You
select the MAV Death Benefit and the 7-year surrender charge schedule.
During the first contract year the contract value grows to $105,000. The death
benefit equals MAV Death Benefit, which is the contract value, or $105,000. You
have not reached the first contract anniversary so the Benefit Protector Plus does
not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to $110,000. You have
not reached the second contract anniversary so the Benefit Protector Plus does not
provide any additional benefit beyond what is provided by the Benefit Protector at
this time. The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV Death Benefit minus remaining purchase payments for the Current Contract or
MAV rider minus payments not previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial surrender of $50,000, including the applicable 7% surrender
charge. We will surrender $10,500 from your contract value free of charge (10% of
your prior anniversary's contract value). The remainder of the surrender is subject
to a 7% surrender charge because your payment is in the third year of the surrender
charge schedule, so we will surrender $39,500 ($36,735 + $2,765 in surrender
charges) from your contract value. Altogether, we will surrender $50,000 and pay
you $47,235. We calculate purchase payments not previously surrendered as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial surrender is
contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously surrendered that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum of
20%. The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously surrendered that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
128 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector Plus value. The death
benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously surrendered that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains
constant. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV rider minus payments not previously surrendered):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 129
APPENDIX H: PURCHASE PAYMENT CREDITS FOR ELIGIBLE CONTRACTS
The following contracts with a seven-year withdrawal charge schedule will
receive a purchase payment credit on any purchase payment made to the contract:
contracts with applications signed before May 1, 2006;
contracts with applications signed on or after May 1, 2006 in a state where
purchase payment credits are/were still available at the time of contract
purchase.
We apply a credit to your contract of 1% of your current purchase payment. We
apply this credit immediately. We allocate the credit to the GPAs, the one-year
fixed account and the subaccounts in the same proportions as your purchase
payment.
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit or withdrawal payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit payment under this contract; or (2) a
request for withdrawal charge waiver due to "Contingent events" (see
"Charges -- Contingent events"), we will assess a charge, similar to a
withdrawal charge, equal to the amount of the purchase payment credits. The
amount we pay to you under these circumstances will always equal or exceed your
withdrawal value.
Because of higher charges, there may be circumstances where you may be worse off
for having received the credit than in other contracts. All things being equal
(such as guarantee availability or fund performance and availability), this may
occur if you hold your contract for 15 years or more. This also may occur if you
make a full withdrawal in the first seven years. You should consider these
higher charges and other relevant factors before you buy this contract or before
you exchange a contract you currently own for this contract.
This credit is made available through revenue from higher withdrawal charges and
contract administrative charges than would otherwise be charged. In general, we
do not profit from the higher charges assessed to cover the cost of the purchase
payment credit. We use all the revenue from these higher charges to pay for the
cost of the credits. However, we could profit from the higher charges if market
appreciation is higher than expected or if contract owners hold their contracts
for longer than expected.
If you are uncertain whether purchase payment credits are available under your
contract, ask your investment professional or contract us by calling or writing
to us at the address shown on the first page of the prospectus.
--------------------------------------------------------------------------------
130 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX I: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs and/or
the one-year fixed account (if available under the asset allocation program),
which represent various asset classes. By spreading your contract value among
these various asset classes, you may be able to reduce the volatility in your
contract value, but there is no guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts, any GPAs and/or the one-year fixed
account that make up that model portfolio. By participating in the asset
allocation program, you authorize us to invest your contract value in the
subaccounts, any GPAs and/or the one-year fixed account according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs and/or the one-
year fixed account that make up the model portfolio you selected and the
allocation percentages to those subaccounts, any GPAs and/or the one-year fixed
account will not change unless we adjust the composition of the model portfolio
to reflect the liquidation, substitution or merger of an underlying fund, a
change of investment objective by an underlying fund or when an underlying fund
stops selling its shares to the variable account. We reserve the right to change
the terms and conditions of the asset allocation program upon written notice to
you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 131
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER DISCLOSURE
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
your contract was an application signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the retirement date (see
"Buying Your Contract -- The Retirement Date"). Before the annuitization start
date, you have the right to withdraw some or all of your contract value, less
applicable administrative, withdrawal and rider charges imposed under the
contract at the time of the withdrawal (see "Making the Most of Your
Contract -- Surrenders"). Because your contract value will fluctuate depending
on the performance of the underlying funds in which the subaccounts invest, the
contract itself does not guarantee that you will be able to take a certain
withdrawal amount each year before the annuitization start date, nor does it
guarantee the length of time over which such withdrawals can be made before the
annuitization start date.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdrawal your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdrawal an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
132 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdrawal less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable withdrawal charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any partial withdrawals
you take under the contract will reduce the value of the death benefits (see
"Benefits in Case of Death"). Upon full withdrawal of the contract, you will
receive the remaining contract value less any applicable charges (see "Making
the Most of Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant (see "At Death" heading below). Therefore, if there are
multiple contract owners or the annuitant is not an owner, the rider may
terminate or the lifetime withdrawal benefit may be reduced. This
possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program model portfolios or investment options of the PN
program. This requirement limits your choice of investments. This means you
will not be
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 133
able to allocate contract value to all of the subaccounts, GPAs or the one-
year fixed account that are available under the contract to contract owners
who do not elect this rider. (See "Making the Most of Your
Contract -- Portfolio Navigator Program.") You may allocate purchase payments
and any purchase payment credits to the DCA fixed account, when available, and
we will make monthly transfers into the model portfolio or investment option
you have chosen. Subject to state restrictions, we reserve the right to limit
the number of model portfolios or investment options from which you can select
based on the dollar amount of purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or after the annuitization start date.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals before age 59 1/2 may also incur a 10% IRS
early withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
134 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE rider are
described below:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any surrender charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 135
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
--------------------------------------------------------------------------------
136 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount may be less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 137
benefits guaranteed by the rider, based on the life of the new covered person,
which may reduce the amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. Please note that if the partial withdrawal is made
during the waiting period, the excess withdrawal processing are applied
AFTER any previously applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS
--------------------------------------------------------------------------------
138 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial
withdrawals for the remainder of the contract's life may be reduced by more
than the amount of withdrawal. When determining if a withdrawal will result in
excess withdrawal processing, the applicable RALP will not yet reflect the
amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life(R) rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 139
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will not be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero. We will notify you of this option. If
no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
--------------------------------------------------------------------------------
140 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 141
annualized amounts will be paid in the frequency that you elect. The frequencies
will be among those offered by us at that time but will be no less frequent than
annually. If, at the death of the owner, total payouts have been made for less
than the RBA, the remaining payouts will be paid to the beneficiary (see "The
Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
3. When a beneficiary elects an alternative payment plan which is an inherited
IRA.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
142 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 143
APPENDIX K: GUARANTOR WITHDRAWAL BENEFIT RIDER DISCLOSURE
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
RIDER A
your contract application is signed on or after April 30, 2005 in those states
where the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life
rider are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
your contract application is signed prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a surrender
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
surrender charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a surrender charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable surrender charge (see "Charges -- Surrender Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Surrenders").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuitization start date. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
144 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program for contracts with applications signed on or after
May 1, 2006 with this rider (see "Making the Most of Your
Contract -- Portfolio Navigator Asset Allocation Program"). If you selected
this Guarantor Withdrawal Benefit rider before May 1, 2006, you must
participate in the asset allocation program (see "Appendix I: Asset Allocation
Program for Contracts With Applications Signed Before May 1, 2006"), however,
you may elect to participate in the Portfolio Navigator program after May 1,
2006. The Portfolio Navigator program and the asset allocation program limit
your choice of subaccounts, one-year fixed account and GPAs (if available) to
the PN program investment options or those that are in the model portfolio you
have selected. This means you will not be able to allocate contract value to
all of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. You may
allocate purchase payments and any purchase payment credits to the DCA fixed
account, when available, and we will make monthly transfers into the model
portfolio or investment option you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is
the amount you are allowed to withdraw in each contract year without incurring
a surrender charge (see "Charges -- Surrender Charge"). The TFA may be greater
than GBP under this rider. Any amount you withdraw under the contract's TFA
provision that exceeds the GBP is subject to the excess withdrawal processing
for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or after the
annuitization start date.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2
may incur a 10% IRS early withdrawal penalty and may be considered taxable
income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules without applying excess
withdrawal processing under terms of the rider, subject to the following
rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 145
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). You should consult your
tax advisor before you select this optional rider if you have any questions
about the use of this rider in your tax situation;
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups:
--------------------------------------------------------------------------------
146 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 147
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or
--------------------------------------------------------------------------------
148 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP and RBP, and may extend the
payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 149
been paid; the GBA will be reset to the greater of the GBA on the valuation date
we receive the spouse's written request to continue the contract and the death
benefit that would otherwise have been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
--------------------------------------------------------------------------------
150 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 151
APPENDIX L: INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if you your contract application is signed prior to May 1, 2007.
These riders are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio -- Cash Management Fund and, if available under your contract, the
GPAs and/or the one-year fixed account. Excluded investment options are not used
in the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits,
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
surrender charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your model portfolio to one that causes the rider charge to
increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the annuitization start date must be between 50 to 86 years
old; and
--------------------------------------------------------------------------------
152 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full surrender from the
contract, or the annuitization start date, or on the date that a death benefit
is payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
when a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 153
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial surrenders. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus any purchase payment credits, less excluded
payments, less proportionate adjustments for partial surrenders; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, any credits, and partial
surrenders occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR -- is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial withdrawals and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and purchase payment
credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and any purchase payment credit and subtracting adjusted surrenders and
adjusted transfers. On each subsequent contract anniversary after the first
anniversary of the effective date of this rider, prior to the earlier of your or
the annuitant's 81st birthday, we increase the variable account floor by adding
the amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
--------------------------------------------------------------------------------
154 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
The amount of purchase payment and any purchase payment credits withdrawn from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current surrender or transfer; and
(b) is the ratio of the amount of the transfer or surrender to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current surrender or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted surrenders and adjusted transfers for the variable account floor are
equal to the amount of the surrender or transfer from the protected investment
options as long as the sum of the surrenders and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current surrender or transfer from the protected investment options plus
the sum of all prior surrenders and transfers made from the protected investment
options in the current policy year exceeds the roll-up amount from the prior
contract anniversary we will calculate the adjusted surrender or adjusted
transfer for the variable account floor as the result of (a) plus [(b) times
(c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any surrenders and transfers made from the protected investment options in
the current policy year but prior to the current surrender or transfer.
However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
surrender or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current surrender (including any
surrender charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current surrender or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to
the contract minus proportionate adjustments for partial surrenders;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders;
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 155
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these following examples is to illustrate the operation of the
Income Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to choose a PN program model portfolio or
investment option. The riders are intended to offer protection against market
volatility in the subaccounts (protected investment options). Some PN program
model portfolios or investment options include protected investment options and
excluded investment options (RiverSource Variable Portfolio -- Cash Management
Fund, and if available under the contract, GPAs and/or the one-year fixed
account). Excluded investment options are not included in calculating the 5%
variable account floor under the Income Assurer Benefit - 5% Accumulation
Benefit Base rider and the Income Assurer Benefit - Greater of MAV or 5%
Accumulation Benefit Base riders. Because the examples which follow are based on
hypothetical contract values, they do not factor in differences in PN program
model portfolios or investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial surrenders or changes in PN
program model portfolio or investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BASE - MAV(2)
-------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
-------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
156 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 157
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
158 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 159
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB -- MAX PROVISIONS
-----------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
--------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
--------------------------------------------------------------------------------------------------------------------
IAB -- MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
160 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX M: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
The example assumes:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
HYPOTHETICAL
END OF PARTIAL SURRENDER MCAV ASSUMED
CONTRACT (BEGINNING OF ADJUSTMENT FOR ACCUMULATION CONTRACT
YEAR YEAR) PARTIAL SURRENDER MCAV BENEFIT AMOUNT VALUE
1 $ 0 $ 0 $100,000 $ 0 $112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 161
APPENDIX N: SECURESOURCE RIDER DISCLOSURE
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
--------------------------------------------------------------------------------
162 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any withdrawals you take
under the contract will reduce the value of the death benefits (see "Benefits in
Case of Death"). Upon full withdrawal of the contract, you will receive the
remaining contract value less any applicable charges (see "Making the Most of
Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 163
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate purchase payments to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen. You may make two elective investment option
changes per contract year; we reserve the right to limit elective investment
option changes if required to comply with the written instructions of a fund
(see "Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model changes per contract year and
will not cause your rider fee to increase.
The target investment option is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment
option that is more aggressive than the current target investment option after
30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, your rider benefit will be
reset as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered spouse who is the owner of the contract (or
annuitant in the case of nonnatural ownership). The rider will terminate at
the
--------------------------------------------------------------------------------
164 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
death of the contract owner (or annuitant in the case of nonnatural ownership)
because the original spouse will be unable to elect the spousal continuation
provision of the contract (see "Joint Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Withdrawals in any contract year that exceed the guaranteed amount available
for withdrawal may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix E for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 165
interim value used to calculate the amount available for withdrawals each year
under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At
any time, the total GBA is the sum of the individual GBAs associated with each
purchase payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment plus any purchase payment credit).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credit. The step up reversal
will only happen once during the waiting period, when the first withdrawal is
made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
--------------------------------------------------------------------------------
166 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount plus any purchase
payment credit.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment plus any purchase payment credit. Each
payment's GBP will be reset to 7% of that purchase payment plus any purchase
payment credit. The step up reversal will only happen once during the waiting
period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the
lesser of that payment's RBA or 7% of that payment's GBA value, based on
the RBA and GBA after the withdrawal. If the withdrawal is made during
the waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment plus any purchase payment credit multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 167
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first withdrawal is made.
--------------------------------------------------------------------------------
168 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups may increase
your ALP, they may reduce or eliminate any benefit of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 169
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix F for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
--------------------------------------------------------------------------------
170 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 171
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
--------------------------------------------------------------------------------
172 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments plus any purchase
payment credits multiplied by 6%. If the anniversary date occurs at any other
time, the RALP will be set equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments plus any
purchase payment credits multiplied by 6%. If the ownership change date occurs
at any other time, the RALP will be set to the ALP less all prior withdrawals
made in the current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments plus
any purchase payment credits multiplied by 6%. If the time period ends at any
other time, the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments plus any purchase payment credits
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be reset to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 173
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
174 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX O: SECURESOURCE 20 RIDER DISCLOSURE
SECURESOURCE 20 RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary values. The SecureSource 20
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw your principal over time. This benefit
is intended for assets you plan to hold and let accumulate for at least three
years. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be re-established based on your contract value at that time and you will not
receive 20% credit offered under this rider.
There are two optional SecureSource 20 riders available under your contract:
SecureSource 20 -- Single Life; or
SecureSource 20 -- Joint Life.
The information in this section applies to both Secure Source 20 riders, unless
otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource 20 -- Single Life rider covers one person. The SecureSource
20 -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource 20 -- Single Life rider or the
SecureSource 20 -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource 20 rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if:
your contract application is signed on or after Aug. 10, 2009, but prior to
Nov. 30, 2009; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource 20 riders are not available under an inherited qualified
annuity.
The SecureSource 20 rider guarantees that after the waiting period, regardless
of the investment performance of your contract, you will be able to withdraw up
to a certain amount each year from the contract before the annuity payouts begin
until:
SINGLE LIFE: until death (see "At Death" heading below) or until the depletion
of the basic benefit.
JOINT LIFE: until the death of the last surviving covered spouse (see "Joint
Life only: Covered Spouses" and "At Death" headings below) or until the
depletion of the basic benefit.
KEY TERMS
The key terms associated with the SecureSource 20 rider are:
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and until your death (JOINT LIFE: the
death of both covered spouses). After the waiting period, the annual withdrawal
amount guaranteed by the rider can vary each contract year. The maximum ALP is
$300,000.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): the age at which the lifetime
benefit is established.
ENHANCED LIFETIME BASE (ELB): used in the calculation of the ALP on the later of
the ELB date or the establishment of the ALP. The ELB cannot be withdrawn or
annuitized and is not payable as a death benefit.
GUARANTEED BENEFIT AMOUNT (GBA): the total cumulative withdrawals guaranteed by
the rider under the basic benefit. The maximum GBA is $5,000,000. The GBA cannot
be withdrawn or annuitized and is not payable as a death benefit. It is an
interim value used to calculate the amount available for withdrawals each year
after the waiting period under the basic benefit (see "Guaranteed Benefit
Payment" below). At any time, the total GBA is the sum of the individual GBAs
associated with each purchase payment.
GUARANTEED BENEFIT PAYMENT (GBP): the basic benefit amount available each
contract year after the waiting period until the RBA is reduced to zero. After
the waiting period the annual withdrawal amount guaranteed by the rider can vary
each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 175
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. The RALP is the lifetime benefit amount
that can be withdrawn during the remainder of the current contract year.
REMAINING BENEFIT AMOUNT (RBA): each withdrawal you make reduces the amount that
is guaranteed by the rider for future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
REMAINING BENEFIT PAYMENT (RBP): as you make withdrawals during a contract year,
the remaining amount that the rider guarantees will be available for withdrawal
that year is reduced. The RBP is the basic benefit amount that can be withdrawn
during the remainder of the current contract year.
WAITING PERIOD: The period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
GBP Percentage and ALP Percentage. The WAB cannot be withdrawn or annuitized and
is not payable as a death benefit.
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
DESCRIPTION OF THE SECURESOURCE 20 RIDER
Before the lifetime benefit is established, the annual withdrawal amount
guaranteed by the riders after the waiting period is the basic benefit amount.
After the lifetime benefit is established and after the waiting period, the
riders guarantee that you have the option each contract year to cumulatively
withdraw an amount up to the lifetime benefit amount or the basic benefit
amount, but the riders do not guarantee withdrawal of both in a contract year.
The lifetime withdrawal benefit is established automatically:
SINGLE LIFE: on the rider anniversary date after the covered person reaches
age 65, or on the rider effective date if the covered person is age 65 or
older on the rider effective date (see "Annual Lifetime Payment Attained Age
(ALPAA)" heading below);
JOINT LIFE: on the rider anniversary date after the younger covered spouse
reaches age 65, or on the rider effective date if the younger covered spouse
is age 65 or older on the rider effective date (see "Annual Lifetime Payment
Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below).
The basic benefit amount and the lifetime benefit amount can vary based on the
relationship of your contract value to the Withdrawal Adjustment Base (WAB).
When the first withdrawal is taken each contract year after the waiting period,
the percentages used to determine the benefit amounts are set and fixed for the
remainder of that year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next year.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic benefit and lifetime benefit each has its own definition
of the allowed annual withdrawal amount. Therefore a withdrawal may be
considered an excess withdrawal for purposes of the lifetime benefit only, the
basic benefit only, or both.
At any time after the waiting period, as long as your withdrawal does not exceed
the greater of the basic benefit amount or the lifetime benefit amount, if
established, you will not be assessed a surrender charge or any market value
adjustment. If your withdrawals exceed the greater of the RBP or the RALP,
surrender charges under the terms of the contract may apply (see
"Charges -- Surrender Charges"). The amount we actually deduct from your
contract value will be the amount you request plus any applicable surrender
charge. Market value adjustments, if applicable, will also be made (see
"Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the
amount you request. Any withdrawals you take under the contract will reduce the
value of the death benefits (see "Benefits in Case of Death"). Upon full
withdrawal, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
Subject to conditions and limitations, an annual step-up can increase the basic
benefit amount and the lifetime benefit amount, if your contract value has
increased on a rider anniversary.
--------------------------------------------------------------------------------
176 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
Subject to conditions and limitations, if no withdrawals are taken prior to the
third rider anniversary, the 20% rider credit may increase the lifetime benefit
(if already established) or the Enhanced Lifetime Base (ELB) may increase the
lifetime benefit (when established).
The values associated with the basic benefit are GBA, RBA, GBP and RBP. The
values associated with the lifetime benefit are ALP, RALP and ELB. ALP and GBP
are similar in that they are the annual withdrawal amount for each benefit after
the waiting period. RALP and RBP are similar in that they are the remaining
amount that can be withdrawn during the current contract year for each benefit.
IMPORTANT SECURESOURCE 20 RIDER CONSIDERATIONS
You should consider whether a SecureSource 20 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the first death of any owner or
annuitant even if the covered person is still living (see "At Death"
heading below). Therefore, the rider will terminate when a death benefit
becomes payable. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the lifetime benefit terminates even though other contract
owners are still living; or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the lifetime benefit terminates even
though the owner is still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the death of the last surviving covered
spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If both the ALP and the
contract value are zero, the lifetime benefit will terminate.
(c) If the lifetime benefit is first established prior to the third rider
anniversary, the initial ALP is based on the basic benefit's RBA at that
time (see "Annual Lifetime Payment (ALP)" heading below). If the lifetime
benefit is first established on/after the third rider anniversary, the
initial ALP is based on the greater of the basic benefit's RBA and the ELB
at that time. Any withdrawal you take before the ALP is established
reduces the RBA and ELB and therefore may result in a lower amount of
lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be re-established based on your contract value at that time and you will
not receive 20% credit offered under this rider. Any withdrawal request within
the 3-year waiting period must be submitted in writing. Also, after the
waiting period if you withdraw more than the allowed withdrawal amount in a
contract year ("excess withdrawal"), the guaranteed amounts under the rider
may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of subaccounts, one-year fixed account and GPAs
(if available) to the PN program investment options (if applicable) you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect the rider. (See "Making the
Most of Your Contract -- Portfolio Navigator Program.") You may allocate
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the investment option you have chosen. You may make two
elective investment option changes per contract year; we reserve the right to
limit elective investment option changes if required to comply with the
written instructions of a fund (see "Market Timing").
You can allocate your contract value to any available investment options during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior to
any subsequent withdrawal. During these accumulation phases, you may request to
change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 177
portfolio, this reallocation will be made to the applicable fund of funds
investment option. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option classification is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment option
that is more aggressive than the current target investment option after 30 days
written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase and
you choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, you will be in the accumulation
phase again. If this is done after the waiting period, your rider benefit will
be reset as follows:
(a) the total GBA will be reset to the contract value, if your contract value
is less; and
(b) the total RBA will be reset to the contract value, if your contract value
is less; and
(c) the ALP, if established, will be reset to your current ALP Percentage
(either 6% or 5% as described under "GBP Percentage and ALP Percentage"
heading below) times the contract value, if this amount is less than the
current ALP; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(g) the WAB will be reset as follows:
- if the ALP has not been established, the WAB will be equal to the reset
GBA.
if the ALP has been established, the WAB will be equal to the reset ALP,
divided by the current ALP Percentage; and
(h) the ELB, if greater than zero, will be reset to the contract value, if
your contract value is less.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource 20 rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource 20 - Joint Life
rider and will not reduce the fee we charge for this rider. The benefit under
the SecureSource 20 - Joint Life rider continues for the covered spouse who is
the owner of the contract (or annuitant in the case of nonnatural ownership).
The rider will terminate at the death of the contract owner (or annuitant in
the case of nonnatural ownership) because the original covered spouse will be
unable to elect the spousal continuation provision of the contract (see "Joint
Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary. The
annuitant must also be an owner. For non-natural ownership arrangements that
allow for spousal continuation one covered spouse should be the annuitant and
the other covered spouse should be the sole primary beneficiary. For revocable
trust ownerships, the grantor of the trust must be the annuitant and the
beneficiary must either be the annuitant's spouse or a trust that names the
annuitant's spouse as the sole primary beneficiary. You are responsible for
establishing ownership arrangements that will allow for spousal continuation.
If you select the SecureSource 20 - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse can not
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds
--------------------------------------------------------------------------------
178 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
the RBP or RALP is subject to the excess withdrawal processing described below
for the GBA, RBA and ALP. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix F for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
BASIC BENEFIT DESCRIPTION
THE GBA AND RBA ARE DETERMINED AT THE FOLLOWING TIMES, SUBJECT TO THE MAXIMUM
AMOUNT OF $5,000,000, CALCULATED AS DESCRIBED:
At contract issue -- the GBA and RBA are equal to the initial purchase
payment.
When you make additional purchase payments -- If a withdrawal is taken during
the waiting period, the GBA and RBA will not change when a subsequent purchase
payment is made during the waiting period. Prior to any withdrawal during the
waiting period and after the waiting period, each additional purchase payment
will have its own GBA and RBA established equal to the amount of the purchase
payment.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you take a withdrawal during the waiting period -- the total GBA and
total RBA will be set equal to zero until the end of the waiting period.
When you take a withdrawal after the waiting period and the amount withdrawn
is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal and the GBA remains unchanged. If there have been
multiple purchase payments, both the total GBA and each payment's GBA
remain unchanged, and each payment's RBA is reduced in proportion to its
RBP.
(b) greater than the total RBP -- EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE GBA AND RBA.
On the rider anniversary at the end of the waiting period -- If the first
withdrawal is taken during the waiting period and you did not decline a rider
fee increase, the total GBA and the total RBA will be reset to the contract
value.
If the first withdrawal is taken during the waiting period and you decline a
rider fee increase, the total GBA and the total RBA will be reset to the
lesser of (1) the GBA at the time of the first withdrawal, plus any additional
purchase payments since the time of the first withdrawal, minus all
withdrawals, or (2) the contract value.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 179
Upon certain changes to your PN program investment options under the PN
program as described under "Use of Portfolio Navigator Program Required,"
above.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GBP PERCENTAGE AND ALP PERCENTAGE: We use two percentages (6% and 5%) to
calculate your GBP and ALP. The percentage used can vary as described below:
During the waiting period, 6% will be used to determine the amount payable to
beneficiaries under the RBA Payout Option described below. After the waiting
period, a comparison of your contract value and the WAB determines your GBP
Percentage and ALP Percentage, unless the percentage is fixed as described
below. On each valuation date, if the benefit determining percentage is less
than the 20% adjustment threshold, then 6% is used in calculating your GBP and
ALP; otherwise, 5% is used. Market volatility and returns, the deduction of fees
and the 20% credit could impact your benefit determining percentage. The benefit
determining percentage is calculated as follows but will not be less than zero:
1 - (A/B)
A = contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
When the first withdrawal in a contract year is taken, the GBP Percentage and
ALP Percentage will be set and fixed for the remainder of that contract year.
Beginning on the next rider anniversary, the GBP Percentage and ALP Percentage
can change on each valuation date as described above until a withdrawal is taken
in that contract year.
Under certain limited situations, your GBP Percentage and ALP Percentage will
not vary each contract year. They will be set at the earliest of (1), (2) or (3)
below and remain fixed for as long as the benefit is payable:
(1) when the RBA Payout Option is elected, or
(2) if the ALP is established, when your contract value on a rider anniversary
is less than two times the ALP (for the purpose of this calculation only,
the ALP is determined using 5%; the ALP Percentage used to determine your
ALP going forward will be either 6% or 5%), or
(3) when the contract value reduces to zero.
For certain periods of time at our discretion and on a non-discriminatory basis,
your GBP Percentage and ALP Percentage may be set by us to 6% if more favorable
to you.
WITHDRAWAL ADJUSTMENT BASE (WAB): One of the components used to determine GBP
Percentage and ALP Percentage. The maximum WAB is $5,000,000. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit,
THE WAB IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At Rider Effective Date -- the WAB is set equal to the initial purchase
payment.
When a subsequent purchase payment is made -- before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB will be
increased by the amount of each additional purchase payment.
--------------------------------------------------------------------------------
180 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
When a withdrawal is taken -- if the first withdrawal is taken during the
waiting period, the WAB will be set equal to zero until the end of the waiting
period.
Whenever a withdrawal is taken after the waiting period, the WAB will be reduced
by the amount in (A) unless the withdrawal is an excess withdrawal for the
lifetime benefit (or the basic benefit if the ALP is not established) when it
will be set equal to the amount in (B).
(A) The WAB is reduced by an amount as calculated below:
A X B
----- where:
C
A = the amount the contract value is reduced by the withdrawal
B = WAB on the date of (but prior to) the withdrawal
C = the contract value on the date of (but prior to) the withdrawal.
(B) If the ALP is not established and the current withdrawal exceeds the RBP,
the WAB will be reset to the GBA immediately following excess withdrawal
processing.
If the ALP is established and the current withdrawal exceeds the RALP, the WAB
will be reset to the ALP divided by the current ALP Percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above). In this
calculation, we use the ALP immediately following excess withdrawal processing.
On rider anniversaries -- unless you decline a rider fee increase, the WAB
will be increased to the contract value on each rider anniversary, if the
contract value is greater, except as follows:
(A) If a withdrawal is taken during the waiting period, the WAB will be
increased to the contract value on each rider anniversary beginning at the
end of the waiting period, if the contract value is greater.
(B) If you decline a rider fee increase and a withdrawal is taken during the
waiting period, the WAB will be reset to the lesser of (1) the GBA at the
time of the first withdrawal, plus any additional purchase payments since
the time of the first withdrawal, minus all withdrawals, or (2) the
contract value.
Upon certain changes to your PN program investment option as described under
"Use of Portfolio Navigator Program Required," above.
On the later of the third rider anniversary or the rider anniversary when the
ALP is established -- unless you decline a rider fee increase, if the ELB is
greater than zero, the WAB will be increased by an amount as calculated below,
but not less than zero.
(A) The ELB, minus
(B) the greater of:
i) your contract value, or
ii) the ALP before the ELB is applied, divided by the ALP Percentage (if
the ALP is established) or the total RBA (if the ALP is established
on the third rider anniversary).
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic benefit. After the waiting period the annual
withdrawal amount guaranteed under the rider can vary each contract year. At any
point in time, each payment's GBP is the lesser of (a) and (b) where (a) is the
GBA for that payment multiplied by the current GBP percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above) and (b) is
the RBA for that payment. The total GBP is the sum of the GBPs for each purchase
payment.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic benefit. At any point in time,
the total RBP is the sum of the RBPs for each purchase payment.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
During the waiting period -- the RBP will be zero.
At the beginning of any contract year after the waiting period and when the
GBP Percentage changes -- the RBP for each purchase payment is set equal to
that purchase payment's GBP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment has its own RBP equal to the purchase payment,
multiplied by the GBP Percentage.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 181
When you make any withdrawal after the waiting period -- the total RBP is
reset to equal the total RBP immediately prior to the withdrawal less the
amount of the withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in the excess withdrawal processing, the applicable RBP will not yet
reflect the amount of the current withdrawal.
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): The ALP is the lifetime benefit amount available
for withdrawals in each contract year after the waiting period until the later
of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
benefit is not in effect and the ALP is zero.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the covered person has already reached age 65.
(b) the rider anniversary following the date the covered person reaches age
65,
- if during the waiting period and no prior withdrawal has been taken; or
- if after the waiting period.
(c) the rider anniversary following the end of the waiting period if the
covered person is age 65 before the end of the waiting period and a prior
withdrawal had been taken.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
JOINT LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
--------------------------------------------------------------------------------
182 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
For (b), (c) and (d) above, if the date described occurs during the waiting
period and a prior withdrawal had been taken, we use the rider anniversary
following the end of the waiting period to establish the ALP.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
Whenever the ALP Percentage changes --
(a) If the ALP Percentage is changing from 6% to 5%, the ALP is reset to the
ALP multiplied by 5%, divided by 6%.
(b) If the ALP Percentage is changing from 5% to 6%, the ALP is reset to the
ALP multiplied by 6%, divided by 5%.
When you make an additional purchase payment -- Before a withdrawal is taken
in the waiting period and at any time after the waiting period, each
additional purchase payment increases the ALP by the amount of the purchase
payment, multiplied by the ALP Percentage.
When you make a withdrawal:
(a) During the waiting period, the ALP, if established, will be set equal to
zero until the end of the waiting period.
(b) After the waiting period, if the amount withdrawn is:
(i) less than or equal to the RALP, the ALP is unchanged.
(ii) greater than the RALP, ALP EXCESS WITHDRAWAL PROCESSING will occur.
If you withdraw less than the ALP in a contract year, there is no carry over
to the next contract year.
On the rider anniversary at the end of the waiting period -- If you took a
withdrawal during the waiting period, the ALP is set equal to the contract
value multiplied by the ALP Percentage if the covered person (JOINT LIFE:
younger covered spouse) has reached age 65.
At step ups -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
Upon certain changes to your PN program investment option under the PN program
as described under "Use of Portfolio Navigator Program Required," above.
20% RIDER CREDIT
If you do not make a withdrawal during the first three rider years and you don't
decline a rider fee increase, then a 20% rider credit may increase your ALP.
This credit is 20% of purchase payments received in the first 180 days that the
rider is in effect and is used to establish the enhanced lifetime base. The
enhanced lifetime base is an amount that may be used to increase the ALP. The
20% rider credit does not increase the basic benefit or the contract value.
Because step ups may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (ELB)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not decline a rider fee increase and you do not make a
withdrawal during the first three rider years, then the enhanced lifetime base
will be the sum of all purchase payments received during the first three rider
years plus the 20% rider credit. If you make a withdrawal during the first three
rider years or decline a rider fee increase, then the 20% rider credit does not
apply and the enhanced lifetime base will be established as zero and will always
be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the contract value (if your contract value is less), if you choose
an asset allocation model that is more aggressive than the target model while
you are in the withdrawal phase.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 183
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You decline a rider fee increase.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn, annuitized or payable as a death benefit.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE
If the ALP is already established, on the third rider anniversary, the ALP will
be increased to equal the enhanced lifetime base multiplied by the ALP
Percentage (either 5% or 6% as described under "GBP Percentage and ALP
Percentage" heading above), if this amount is greater than the current ALP.
Thereafter, the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or the ALP Percentage (either 5% or 6% as described under "GBP Percentage and
ALP Percentage" heading above) multiplied by the contract value immediately
following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime benefit. Prior to
establishment of the ALP, the lifetime benefit is not in effect and the RALP is
zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period -- the RALP will be zero.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals taken in the contract year but not less than zero.
At the beginning of each contract year after the waiting period and when the
ALP Percentage changes -- the RALP is set equal to the ALP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment increases the RALP by the purchase payment, if
applicable multiplied by the ALP Percentage (either 5% or 6% as described
under "GBP Percentage and ALP Percentage" heading above).
At step ups -- (see "Annual Step Up" headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When you make any withdrawal after the waiting period -- the RALP equals the
RALP immediately prior to the withdrawal less the amount of the withdrawal but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available
for future withdrawals. When determining if a withdrawal will result in excess
withdrawal processing, the applicable RALP will not yet reflect the amount of
the current withdrawal.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the benefit amount will not be subject to excess withdrawal processing
provided that the following conditions are met:
The withdrawal is after the waiting period;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. Any withdrawal during the waiting
period will reset the basic benefit and lifetime benefit at the end of the
waiting period. After the waiting period, withdrawal amounts greater than the
RALP or RBP that do not meet the conditions above will result in excess
withdrawal processing. The amount in excess of the RBP and/or RALP that is not
subject to excess withdrawal processing will be recalculated if the RALP and RBP
change due to GBP Percentage and ALP Percentage changes. See Appendix E for
additional information.
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the benefit values may be available. A step up does not create contract value,
guarantee the performance of any investment option, or provide a benefit that
can be withdrawn
--------------------------------------------------------------------------------
184 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
in a lump sum or paid upon death. Rather, a step up determines the current
values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment
period or increase the allowable payment. If there have been multiple payments
and the GBA increases due to the step up, the individual GBAs, RBAs, GBPs, and
RBPs will be combined.
The annual step up may be available as described below, subject to the maximum
GBA, RBA and ALP and subject to the following rules:
You have not declined a rider fee increase.
If you take any withdrawals during the waiting period the annual step up will
not be available until the rider anniversary following the end of the waiting
period.
On any rider anniversary where your contract value is greater than the RBA or,
your contract value multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above) is greater
than the ALP, if established, the annual step up will be applied to your
contract on the rider anniversary.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period, the RBP will not be affected by the step up.
(b) After the waiting period, the RBP will be reset to the increased GBP.
The ALP will be increased to the contract value on the rider anniversary
multiplied by the ALP Percentage (either 5% or 6% as described under "GBP
Percentage and ALP Percentage" heading above), if greater than the current
ALP.
The RALP will be reset as follows:
(a) During the waiting period, the RALP will not be affected by the step up.
(b) After the waiting period, the RALP will be reset to the increased ALP.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource 20 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
20 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that a) the RBP will be calculated as the GBP after
the step-up less all prior withdrawals taken during the current contract year,
but not less than zero, and b) the RALP will be calculated as the ALP after the
step-up less all prior withdrawals taken during the current contract year, but
not less than zero. The spousal continuation step-up is processed on the
valuation date spousal continuation is effective.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be taken from the variable subaccounts, guarantee period
accounts (where available), the one-year fixed account (if applicable) and the
DCA fixed account in the same proportion as your interest in each bears to the
contract value. You cannot specify from which accounts the withdrawal is to be
taken.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero, you
will be paid in the following scenarios:
1) The ALP has not yet been established, the total RBA is greater than zero and
the contract value is reduced to zero as a result of fees or charges or a
withdrawal that is less than or equal to the RBP. In this scenario, you can
choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 185
JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established, the total RBA is greater than zero and the
contract value reduces to zero as a result of fees or charges, or a
withdrawal that is less than or equal to both the RBP and the RALP. In this
scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero.
JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in monthly installments. If the
monthly payment is less than $100, we have the right to change the frequency
but no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate;
In determining the remaining schedule of GBPs, the current GBP is fixed for as
long as payments are made.
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero; and
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource 20 rider and the contract will terminate under either of the
following two scenarios:
If the ALP is established and the RBA is zero, and if the contract value falls
to zero as a result of a withdrawal that is greater than the RALP. This is
full withdrawal of the contract value.
If the ALP is not established and the RBA is zero, and if the contract value
falls to zero as a result of fees, charges or a withdrawal.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the RBA payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract which terminates the rider.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
--------------------------------------------------------------------------------
186 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the RBA payout option available under this rider, or 3)
continue the contract under the spousal continuation provision of the contract.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
REMAINING BENEFIT AMOUNT (RBA) PAYOUT OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource 20 rider after
the waiting period.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid will not exceed the current total
RBA at the time you begin this fixed annuity payout option. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequently
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary (see
"The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary when the death
benefit is payable. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource 20 rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
2. SINGLE LIFE: After the death benefit is payable, continuation of the contract
will terminate the rider.
3. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
4. Annuity payouts under an annuity payout plan will terminate the rider.
5. You may terminate the rider if your annual rider fee after any fee increase
is more than 0.25 percentage points higher than your fee before the increase
(See "Charges -- SecureSource 20 rider fee").
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 187
6. When the RBA and contract value is reduced to zero and either the withdrawal
is taken when the ALP is not established or an excess withdrawal of the RALP
is taken, the rider will terminate.
7. Termination of the contract for any reason will terminate the rider.
8. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
For an example, see Appendix D.
--------------------------------------------------------------------------------
188 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX P: SECURESOURCE STAGES RIDER DISCLOSURE
SECURESOURCE STAGES RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary gains. The SecureSource Stages
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw income over your lifetime.
This benefit is intended for assets you plan to hold and let accumulate for at
least three years. Your benefits under the rider can be reduced if any of the
following occurs:
If you take any withdrawals during the 3-year waiting period, your benefits
will be set to zero until the end of the waiting period when they will be re-
established based on your contract value at that time;
If you take a withdrawal after the waiting period and if you withdraw more
than the allowed withdrawal amount in a contract year, or you take withdrawals
before the lifetime benefit is available;
If you take a withdrawal and later choose to allocate your contract value to
an investment option that is more aggressive than the target investment
option.
If the contract value is 20% or more below purchase payments increased by any
step ups or rider credits and adjusted for withdrawals (see withdrawal
adjustment base described below).
The SecureSource Stages rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year that the lifetime benefit is available. The lifetime benefit
amount can vary based on your attained age and based on the relationship of your
contract value to the withdrawal adjustment base. Each contract year after the
waiting period, the percentage used to determine the benefit amount is set when
the first withdrawal is taken and fixed for the remainder of that year.
At any time after the waiting period, as long as your total withdrawals during
the current year do not exceed the lifetime benefit amount, you will not be
assessed a surrender charge and no market value adjustment will be applied. If
you withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and any applicable market value adjustment. At any time, you
may withdraw any amount up to your entire surrender value, subject to excess
withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages riders available under your contract:
SecureSource Stages - Single Life
SecureSource Stages - Joint Life
The information in this section applies to both SecureSource Stages riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages -- Single Life rider covers one person. The SecureSource
Stages -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource Stages -- Single Life rider or the
SecureSource Stages -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource Stages rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if you purchase your
contract on or after Nov. 30, 2009; and
SINGLE LIFE: you are 80 or younger on the date the contract is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource Stages riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 189
The SecureSource Stages rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
SINGLE LIFE: death (see "At Death" heading below).
JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages rider are:
AGE BANDS: Each age band is associated with a set of lifetime payment
percentages. The covered person (JOINT LIFE: the younger covered spouse) must be
at least the youngest age shown in the first age band for the annual lifetime
payment to be established. After the annual lifetime payment is established,
other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
the younger covered spouse) has reached the youngest age in the first age band.
When the ALP is available, the annual withdrawal amount guaranteed by the rider
can vary each contract year.
ANNUAL STEP-UP: an increase in the benefit base or the principal back guarantee
and a possible increase in the lifetime payment percentage that is available
each rider anniversary if your contract value increases, subject to certain
conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken after the waiting period and before
the annual lifetime payment is established, or (2) a withdrawal that is greater
than the remaining annual lifetime payment when the annual lifetime payment is
available.
EXCESS WITHDRAWAL PROCESSING: after the waiting period, a reduction in benefits
if a withdrawal is taken before the annual lifetime payment is established or if
a withdrawal exceeds the remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. Whenever the annual lifetime payment is
available, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten rider anniversaries, based on a rider credit percentage of 8% in year
one and 6% for years two through ten, as long as no withdrawals have been taken
since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and withdrawals in the waiting period may
reduce or eliminate the benefit of any rider credits. Rider credits may result
in higher rider charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage. The WAB cannot be withdrawn or annuitized and is
not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
--------------------------------------------------------------------------------
190 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be reestablished based on your contract value at that time. Although your
benefits will be set to zero until the end of waiting period, we will deduct
rider fees, based on the anniversary contract value for the remainder of the
waiting period. Any withdrawal request within the 3-year waiting period must
be submitted in writing. In addition, any withdrawals in the first 10 years
will terminate the rider credits. Also, after the waiting period if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model portfolio changes per contract
year. The target investment option is currently the Moderate investment
option. We reserve the right to change the target investment option to an
investment option that is more aggressive than the target investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target or investment option, you will be in the
accumulation phase again. If this is done after the waiting period, your rider
benefit will be reset as follows: the BB, PBG and WAB will be reset to the
contract value, if less than their current amount; and the ALP and RALP, if
available, will be recalculated. You may request to change your investment
option by written request on an authorized form or by another method agreed to
by us.
NON-CANCELABLE: Once elected, the SecureSource Stages rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
fee will continue to be deducted until the contract or rider is terminated or
the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of
nonnatural or revocable trust ownership). The rider will terminate at the
death of the contract owner because the original covered spouse will be unable
to elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of
the trust must be the annuitant and the beneficiary must either be the
annuitant's spouse or a trust that names the annuitant's spouse
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 191
as the sole primary beneficiary. You are responsible for establishing
ownership arrangements that will allow for spousal continuation.
If you select the SecureSource Stages -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawal of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person (e.g., an irrevocable trust or corporation) or a revocable
trust, the covered spouses are the annuitant and the legally married spouse of
the annuitant. The covered spouses lives are used to determine when the annual
lifetime payment is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
younger covered spouses) has reached age 50. When the ALP is established and at
all times thereafter, the ALP is equal to the BB multiplied by the lifetime
payment percentage. Anytime the lifetime payment percentage or BB changes as
described below, the ALP will be recalculated. When the ALP is available, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
--------------------------------------------------------------------------------
192 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50. The ALP will be available on later of the rider anniversary
after the waiting period, or the date the covered person's attained age equals
age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
The ALP will be available on later of the rider anniversary after the waiting
period, or the date the ALP is established.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the remaining annual lifetime payment
guaranteed for withdrawal after any withdrawals are made. The RALP is
established at the same time as the ALP. The RALP will be zero during the
waiting period. After the waiting period, the RALP equals the ALP less all
withdrawals in the current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band for the lifetime payment percentage
used to calculate the initial ALP is the percentage for the covered person's
attained age (JOINT LIFE: younger covered spouses attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouses subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouses attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any annual
rider fee increase or if a withdrawal has been taken since the ALP was made
available, then the lifetime payment percentage will not change on subsequent
birthdays.)
Upon annual step-ups (see "Annual step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was available and no annual rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether Percentage A or Percentage B is used for each
applicable age band:
During the waiting period, percentage A will be used to determine the amount
payable to beneficiaries under the principal back guarantee (PBG).
After the waiting period, a comparison of your contract value and the withdrawal
adjustment base (WAB) determines whether percentage A or percentage B is used to
calculate the ALP unless the percentage is fixed as described below.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 193
On each valuation date, if the benefit determining percentage is less than the
20% adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (A/B) where:
A = Contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
After the ALP is available, the first withdrawal taken in each contract year
will set and fix the lifetime payment percentage for the remainder of the
contract year. Beginning on the next rider anniversary, the lifetime payment
percentage can change on each valuation day as described above until a
withdrawal is taken in that contract year.
Under certain limited situations, your Lifetime Payment Percentage will not vary
each contract year. Percentage A or percentage B will be determined at the
earliest of (1), (2) or (3) below and remain fixed for as long as the benefit is
payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum benefit base (BB), credit base (CB), withdrawal adjustment
base (WAB) and PBG amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: Before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB, CB
(unless it has been permanently set to zero), BB and PBG will be increased by
the amount of each additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits. If the first withdrawal is taken during the
waiting period, the WAB, BB and PBG will be set equal to zero until the end of
the waiting period.
Whenever a withdrawal is taken after the waiting period:
(a) the WAB will be reduced by the "adjustment for withdrawal," as defined
below.
(b) if the ALP is established and the withdrawal is less than or equal to
the RALP, the BB does not change and the PBG is reduced by the amount of
the withdrawal, but it will not be less than zero.
(c) if the ALP is not established, excess withdrawal processing will occur
as follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not
be less than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the
withdrawal and further reduced by an amount calculated as follows, but it
will not be less than zero:
A = the amount of the withdrawal minus the RALP
B = the PBG minus the RALP on the date of (but prior to) the
withdrawal
C = the contract value on the date of (but prior to) the withdrawal
minus the RALP
--------------------------------------------------------------------------------
194 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
The BB will be reduced by an amount as calculated below:
D = the amount of the withdrawal minus the RALP
E = the BB on the date of (but prior to) the withdrawal
F = the contract value on the date of (but prior to) the withdrawal
minus the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is
reduced by a withdrawal in the same proportion as the contract value
is reduced, the proportional amount deducted is the "adjustment for
withdrawal." The "adjustment for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PGB (as applicable) on the date of (but prior to)
the withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
On the rider anniversary following the waiting period: If a withdrawal was
taken during the waiting period and you did not decline any annual rider fee
increase as described in the rider charges provision, the BB, WAB and PBG are
reset to the contract value. If a withdrawal was taken during the waiting
period and you declined any annual rider fee increase, the BB and PBG are
reset to the lesser of (1) the BB or PBG (as applicable) at the time of the
first withdrawal, plus any additional purchase payments since the time of the
first withdrawal, minus all withdrawals, or (2) the contract value. The WAB
will be reset to the BB.
The WAB on rider anniversaries: Unless you decline any annual rider fee
increase or take a withdrawal during the waiting period, the WAB (after any
rider credit is added) will be increased to the contract value, if the
contract value is greater. If a withdrawal was taken during the waiting
period, the WAB will be increased to the contract value, if the contract value
is greater, starting on the rider anniversary following the waiting period.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
annual rider fee increase, a rider credit may be available for the first ten
rider anniversaries. On the first rider anniversary, the rider credit equals the
credit base (CB) 180 days following the rider effective date multiplied by 8%.
On any subsequent rider credit anniversaries, the rider credit equals the CB as
of the prior rider anniversary multiplied by 6%. On the first rider anniversary
the BB and WAB will be set to the greater of the current BB, or the BB 180 days
following the contract date increased by the rider credit and any additional
purchase payments since 180 days following the rider effective date. On any
subsequent rider credit anniversaries the BB and WAB will be set to the greater
of the current BB, or the BB on the prior rider anniversary increased by the
rider credit and any additional purchase payments since the prior rider
anniversary. If the CB is greater than zero, the CB will be permanently reset to
zero on the 10(th) rider anniversary after any adjustment to the WAB and BB, and
there will be no additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you take any withdrawals during the waiting period, the
annual step-up will not be available until the 3(rd) rider anniversary. If you
decline any annual rider fee increase, future annual step-ups will no longer be
available.
The annual step-up will be executed on any rider anniversary where the contract
value is greater than the PBG or the BB after any rider credit is added. If an
annual step-up is executed, the PBG, BB and lifetime payment percentage will be
adjusted as follows: The PBG will be increased to the contract value, if the
contract value is greater. The BB (after any rider credit is added) will be
increased to the contract value, if the contract value is greater. If the
covered person's attained age (Joint Life: younger covered spouses attained age)
on the rider anniversary is in a higher age band and (1) there is an increase to
BB due to a step-up or (2) the BB is at the maximum of $10,000,000 so there was
no step-up of the BB, then the higher age band will be used to determine the
appropriate lifetime payment percentage, regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 195
your RMD that exceeds the benefit amount will not be subject to excess
withdrawal processing provided that the following conditions are met:
The withdrawal is after the waiting period;
The annual lifetime payment is available;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. A withdrawal during the waiting period
will reset the benefit base, the withdrawal adjustment base and the principal
back guarantee to the contract value at the end of the waiting period. After the
waiting period, a withdrawal taken before the annual lifetime payment is
established or withdrawing amounts greater than the remaining annual lifetime
payment that do not meet these conditions will result in excess withdrawal
processing. The amount in excess of the RALP that is not subject to excess
withdrawal processing will be recalculated if the ALP changes due to lifetime
payment percentage changes. See Appendix E for additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
Stages -- Joint Life rider also continues. The surviving covered spouse can name
a new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Rider Anniversary Processing -- Annual Step-Up" heading above)
also apply to the spousal continuation step-up. The WAB will be increased to the
contract value if the contract value is greater. The spousal continuation step-
up is processed on the valuation date spousal continuation is effective.
RULES FOR SURRENDER: Minimum account values following a surrender no longer
apply to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
--------------------------------------------------------------------------------
196 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
elect to take the death benefit under the terms of the contract, or
elect to take the principal back guarantee available under this rider, or
continue the contract and the SecureSource Stages rider under the spousal
continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are equal
to the PBG on the date of death.
If the PBG is greater than zero and the ALP is not established, the BB on the
date of death multiplied by the lifetime payment percentage used for the
youngest age of the covered spouses in the first age band shown on the
contract data page will be paid annually until total payments to the
beneficiary are equal to the PBG on the date of death.
In either of the above cases:
After the date of death, there will be no additional rider credits or annual
step-ups.
The lifetime payment percentage used will be set as of the date of death.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
On the date of death (JOINT LIFE: remaining covered spouse's date of death), if
the CB is greater than zero, the CB will be permanently reset to zero, and there
will be no additional rider credits.
If the PBG equals zero, the benefit terminates. No further payments are made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: You can choose one of the payout options available under the
contract or an alternative fixed annuity payout option available under the
SecureSource Stages rider. Under the rider's payout option, the minimum amount
payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages rider cannot be terminated either by you or us except as
follows:
SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
SINGLE LIFE: after the death benefit is payable, the rider will terminate.
SINGLE LIFE: spousal continuation will terminate the rider.
JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a beneficiary
of a participant in an employer sponsored retirement plan, the rider will
terminate.
On the annuitization start date, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 197
- You may terminate the rider if your annual rider fee would increase more
than 0.25 percentage points (See "Charges -- SecureSource Stages rider fee")
When the contract value is reduced to zero and either the withdrawal taken
when the annual lifetime payment is not established or a withdrawal in excess
of the remaining annual lifetime payment is taken, the rider will terminate.
Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
--------------------------------------------------------------------------------
198 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX Q: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30 $0.51
Accumulation unit value at end of period $0.40 $0.53 $0.45 $0.30 $0.57 $0.48 $0.45 $0.44 $0.42 $0.30
Number of accumulation units outstanding at end
of period (000 omitted) 89 80 126 156 276 482 552 588 655 372
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (05/30/2000)
Accumulation unit value at beginning of period $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74 $0.97
Accumulation unit value at end of period $1.09 $1.04 $0.93 $0.78 $1.33 $1.28 $1.11 $1.07 $0.97 $0.74
Number of accumulation units outstanding at end
of period (000 omitted) 295 416 688 1,006 1,348 1,482 1,471 1,573 1,510 1,341
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (11/30/2009)
Accumulation unit value at beginning of period $1.04 $1.01 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $0.83 $1.04 $1.01 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 4 18 7 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.24 $1.05 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.22 $1.24 $1.05 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.19 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.18 $1.19 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.15 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.15 $1.15 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06 $1.06
Accumulation unit value at end of period $1.13 $1.14 $1.15 $1.16 $1.15 $1.10 $1.07 $1.05 $1.05 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 341 576 492 720 1,135 646 695 691 813 697
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04 $1.00
Accumulation unit value at end of period $1.44 $1.37 $1.27 $1.12 $1.21 $1.16 $1.13 $1.11 $1.08 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 317 645 713 743 1,355 1,120 1,133 1,115 572 63
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78 $1.00
Accumulation unit value at end of period $1.48 $1.57 $1.36 $1.08 $1.83 $1.71 $1.44 $1.28 $1.10 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 130 223 356 367 455 367 326 294 140 26
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/17/2006)
Accumulation unit value at beginning of period $0.90 $0.78 $0.63 $1.10 $1.08 $1.00 -- -- -- --
Accumulation unit value at end of period $0.94 $0.90 $0.78 $0.63 $1.10 $1.08 -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 126 203 307 325 354 377 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.24 $1.04 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $0.97 $1.24 $1.04 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 12 5 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.01 $0.98 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.10 $1.01 $0.98 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 54 46 17 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 199
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.19 $1.13 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.16 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.21 $1.16 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.20 $1.14 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 24 37 15 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.15 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.00 $1.15 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81 $1.00
Accumulation unit value at end of period $1.05 $1.10 $0.95 $0.70 $1.27 $1.24 $1.13 $1.05 $0.98 $0.81
Number of accumulation units outstanding at end
of period (000 omitted) 6 6 7 24 30 33 24 28 24 --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (11/30/2009)
Accumulation unit value at beginning of period $1.22 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.18 $1.22 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 9 45 20 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.01 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $0.94 $1.13 $1.01 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.28 $1.05 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.16 $1.28 $1.05 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61 $0.80
Accumulation unit value at end of period $0.93 $0.92 $0.81 $0.65 $1.04 $1.00 $0.88 $0.85 $0.78 $0.61
Number of accumulation units outstanding at end
of period (000 omitted) 291 404 521 683 746 811 799 771 748 360
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (05/30/2000)
Accumulation unit value at beginning of period $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17 $1.11
Accumulation unit value at end of period $1.30 $1.29 $1.27 $1.22 $1.26 $1.21 $1.18 $1.17 $1.17 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 158 313 373 561 759 861 873 916 849 645
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.33 $1.06 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.24 $1.33 $1.06 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 6 30 14 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (11/30/2009)
Accumulation unit value at beginning of period $1.19 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.03 $1.19 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.11 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $0.93 $1.11 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.05 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $0.84 $1.05 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (11/30/2009)
Accumulation unit value at beginning of period $1.11 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.11 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 21 19 6 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
200 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86 $1.00
Accumulation unit value at end of period $1.57 $1.63 $1.41 $1.05 $1.85 $1.59 $1.44 $1.25 $1.10 $0.86
Number of accumulation units outstanding at end
of period (000 omitted) 447 873 1,505 1,719 1,897 2,032 2,013 1,844 1,212 209
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.06 $0.99 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.06 $0.99 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 3 28 9 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85 $1.00
Accumulation unit value at end of period $1.98 $2.24 $1.76 $1.27 $2.13 $1.86 $1.68 $1.43 $1.16 $0.85
Number of accumulation units outstanding at end
of period (000 omitted) 212 350 628 721 821 841 769 737 543 94
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (05/21/2002)
Accumulation unit value at beginning of period $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75 $1.00
Accumulation unit value at end of period $1.21 $1.47 $1.32 $1.06 $1.90 $1.64 $1.41 $1.20 $1.07 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 62 122 147 189 159 108 64 53 23
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.16 $1.04 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.18 $1.16 $1.04 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 18 2 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.01 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.14 $1.01 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 22 28 9 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.09 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.00 $1.09 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.30 $1.05 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.21 $1.30 $1.05 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 11 5 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.02 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.17 $1.14 $1.02 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of period $1.26 $1.10 $0.92 $1.62 $1.47 $1.40 $1.30 $1.24 $0.97 $1.00
Accumulation unit value at end of period $1.14 $1.26 $1.10 $0.92 $1.62 $1.47 $1.40 $1.30 $1.24 $0.97
Number of accumulation units outstanding at end
of period (000 omitted) 6 6 6 6 15 11 11 11 12 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (05/21/2002)
Accumulation unit value at beginning of period $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75 $1.00
Accumulation unit value at end of period $1.24 $1.35 $1.15 $0.82 $1.56 $1.43 $1.24 $1.15 $1.00 $0.75
Number of accumulation units outstanding at end
of period (000 omitted) 16 42 72 64 58 59 56 51 62 30
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.09 $1.04 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.09 $1.04 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 10 2 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.14 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 8 36 15 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of period $1.57 $1.37 $1.08 $1.69 $1.75 $1.52 $1.48 $1.27 $0.98 $1.00
Accumulation unit value at end of period $1.52 $1.57 $1.37 $1.08 $1.69 $1.75 $1.52 $1.48 $1.27 $0.98
Number of accumulation units outstanding at end
of period (000 omitted) 29 77 120 113 111 125 144 139 57 1
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 201
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.04 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.10 $1.17 $1.04 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 8 39 17 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (11/30/2009)
Accumulation unit value at beginning of period $1.33 $1.07 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.33 $1.33 $1.07 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (05/30/2000)
Accumulation unit value at beginning of period $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04 $1.10
Accumulation unit value at end of period $1.48 $1.47 $1.35 $1.16 $1.51 $1.47 $1.33 $1.31 $1.19 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 662 1,080 1,849 2,581 3,209 3,243 3,188 2,934 2,457 1,585
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (05/21/2002)
Accumulation unit value at beginning of period $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87 $1.00
Accumulation unit value at end of period $2.74 $2.60 $2.31 $1.76 $2.85 $2.26 $1.74 $1.51 $1.17 $0.87
Number of accumulation units outstanding at end
of period (000 omitted) 18 23 33 60 136 124 98 53 40 --
----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.25 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.11 $1.25 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 20 7 3 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.35 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.24 $1.35 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78 $1.00
Accumulation unit value at end of period $1.08 $1.11 $1.03 $0.72 $1.34 $1.19 $1.11 $1.07 $1.01 $0.78
Number of accumulation units outstanding at end
of period (000 omitted) 64 217 274 315 318 339 399 377 130 9
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.49 $1.64 $1.44 $1.04 $1.76 $1.68 $1.44 $1.28 $1.09 $0.77
Number of accumulation units outstanding at end
of period (000 omitted) 57 110 210 287 384 376 391 303 154 25
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04 $1.00
Accumulation unit value at end of period $1.69 $1.70 $1.50 $1.28 $1.51 $1.39 $1.31 $1.29 $1.20 $1.04
Number of accumulation units outstanding at end
of period (000 omitted) 365 704 1,221 1,572 1,717 1,600 1,586 1,442 995 38
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (05/21/2002)
Accumulation unit value at beginning of period $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79 $1.00
Accumulation unit value at end of period $1.58 $1.63 $1.34 $0.99 $1.61 $1.65 $1.45 $1.34 $1.13 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 76 117 205 221 249 248 220 170 121 33
----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (11/30/2009)
Accumulation unit value at beginning of period $1.11 $0.99 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.12 $1.11 $0.99 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 6 24 12 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 12,384 13,419 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 15,343 15,181 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 5,679 5,530 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 5,420 2,526 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
202 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.13 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 9 48 20 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.29 $1.07 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.19 $1.29 $1.07 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.09 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 57,387 56,613 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.09 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 56,777 57,303 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 40,955 40,503 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.09 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 40,197 41,590 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 15,369 12,869 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 15,201 16,063 -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/21/2002)
Accumulation unit value at beginning of period $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79 $1.00
Accumulation unit value at end of period $1.60 $1.69 $1.38 $1.02 $1.50 $1.59 $1.34 $1.28 $1.08 $0.79
Number of accumulation units outstanding at end
of period (000 omitted) 35 45 62 68 80 78 77 86 54 21
----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (11/30/2009)
Accumulation unit value at beginning of period $1.27 $1.03 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.27 $1.03 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 15 5 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (11/30/2009)
Accumulation unit value at beginning of period $1.32 $1.08 $1.00 -- -- -- -- -- -- --
Accumulation unit value at end of period $1.26 $1.32 $1.08 -- -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 10 5 -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit value at beginning of period $1.03 $0.89 $0.59 $1.15 $1.00 -- -- --
Accumulation unit value at end of period $0.78 $1.03 $0.89 $0.59 $1.15 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 11 11 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $0.99 $0.89 $0.76 $1.30 $1.27 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.03 $0.99 $0.89 $0.76 $1.30 $1.27 $1.10 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- 1 1 1 1 1
----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of period $1.15 $1.13 $0.86 $1.87 $1.80 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.91 $1.15 $1.13 $0.86 $1.87 $1.80 $1.36 $1.19
Number of accumulation units outstanding at end
of period (000 omitted) 119 166 258 325 254 299 244 97
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 203
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of period $0.98 $0.84 $0.66 $0.90 $1.00 -- -- --
Accumulation unit value at end of period $0.95 $0.98 $0.84 $0.66 $0.90 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.02 $0.90 $0.68 $1.19 $1.00 $1.06 $1.06 $1.00
Accumulation unit value at end of period $1.01 $1.02 $0.90 $0.68 $1.19 $1.00 $1.06 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 47 53 67 79 84 341 176 40
----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of period $1.12 $1.01 $0.86 $1.20 $1.30 $1.12 $1.09 $1.00
Accumulation unit value at end of period $1.11 $1.12 $1.01 $0.86 $1.20 $1.30 $1.12 $1.09
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.01 $1.03 $1.05 $1.05 $1.02 $1.00 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.03 $1.05 $1.05 $1.02 $1.00 $0.99
Number of accumulation units outstanding at end
of period (000 omitted) 27 27 135 79 179 46 12 3
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.19 $1.12 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.25 $1.19 $1.12 $1.00 $1.09 $1.06 $1.03 $1.03
Number of accumulation units outstanding at end
of period (000 omitted) 30 31 486 520 845 368 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.33 $1.16 $0.93 $1.59 $1.51 $1.28 $1.15 $1.00
Accumulation unit value at end of period $1.24 $1.33 $1.16 $0.93 $1.59 $1.51 $1.28 $1.15
Number of accumulation units outstanding at end
of period (000 omitted) 109 138 433 428 358 461 217 --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $0.99 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.02 $0.99 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of accumulation units outstanding at end
of period (000 omitted) 112 256 279 279 273 345 410 258
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $2.47 $2.10 $1.23 $2.72 $2.01 $1.53 $1.17 $1.00
Accumulation unit value at end of period $1.91 $2.47 $2.10 $1.23 $2.72 $2.01 $1.53 $1.17
Number of accumulation units outstanding at end
of period (000 omitted) 38 50 92 136 101 171 143 66
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of period $1.14 $1.11 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.22 $1.14 $1.11 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding at end
of period (000 omitted) 26 28 346 223 382 430 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit value at beginning of period $1.21 $1.10 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.26 $1.21 $1.10 $0.78 $1.06 $1.06 -- --
Number of accumulation units outstanding at end
of period (000 omitted) 29 30 24 31 33 100 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.48 $1.32 $0.88 $1.19 $1.20 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.53 $1.48 $1.32 $0.88 $1.19 $1.20 $1.10 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 68 154 172 215 267 389 278 141
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of period $1.45 $1.31 $0.94 $1.18 $1.17 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.51 $1.45 $1.31 $0.94 $1.18 $1.17 $1.11 $1.09
Number of accumulation units outstanding at end
of period (000 omitted) 9 10 206 152 192 84 -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.39 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14 $1.00
Accumulation unit value at end of period $1.19 $1.39 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.05 $0.92 $0.68 $1.25 $1.24 $1.14 $1.07 $1.00
Accumulation unit value at end of period $1.00 $1.05 $0.92 $0.68 $1.25 $1.24 $1.14 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) -- -- 5 19 22 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of period $0.98 $0.82 $0.66 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $0.94 $0.98 $0.82 $0.66 $1.12 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 17 17 363 289 252 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
204 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of period $0.86 $0.77 $0.57 $1.13 $1.00 -- -- --
Accumulation unit value at end of period $0.71 $0.86 $0.77 $0.57 $1.13 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.89 $0.74 $0.53 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.80 $0.89 $0.74 $0.53 $0.99 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.10 $0.98 $0.79 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.10 $1.10 $0.98 $0.79 $1.29 $1.25 $1.11 $1.08
Number of accumulation units outstanding at end
of period (000 omitted) 36 20 3 4 6 7 8 3
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.04 $1.03 $0.99 $1.04 $1.01 $0.99 $1.00 $1.00
Accumulation unit value at end of period $1.03 $1.04 $1.03 $0.99 $1.04 $1.01 $0.99 $1.00
Number of accumulation units outstanding at end
of period (000 omitted) 30 30 102 66 140 131 58 29
----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit value at beginning of period $1.44 $1.16 $0.95 $1.35 $1.41 $1.20 $1.16 $1.00
Accumulation unit value at end of period $1.32 $1.44 $1.16 $0.95 $1.35 $1.41 $1.20 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) 8 14 197 155 161 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of period $0.95 $0.83 $0.71 $1.10 $1.00 -- -- --
Accumulation unit value at end of period $0.82 $0.95 $0.83 $0.71 $1.10 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.81 $0.75 $0.61 $1.09 $1.00 -- -- --
Accumulation unit value at end of period $0.68 $0.81 $0.75 $0.61 $1.09 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.22 $1.19 $0.93 $1.52 $1.49 $1.25 $1.14 $1.00
Accumulation unit value at end of period $0.97 $1.22 $1.19 $0.93 $1.52 $1.49 $1.25 $1.14
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of period $1.06 $0.99 $0.70 $0.98 $1.00 -- -- --
Accumulation unit value at end of period $1.06 $1.06 $0.99 $0.70 $0.98 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 9 23 164 146 204 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.36 $1.18 $0.89 $1.59 $1.38 $1.26 $1.11 $1.00
Accumulation unit value at end of period $1.29 $1.36 $1.18 $0.89 $1.59 $1.38 $1.26 $1.11
Number of accumulation units outstanding at end
of period (000 omitted) 176 304 388 550 587 963 536 195
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.21 $1.15 $1.01 $1.07 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.27 $1.21 $1.15 $1.01 $1.07 $1.05 $1.03 $1.03
Number of accumulation units outstanding at end
of period (000 omitted) 65 78 287 300 490 122 111 26
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.78 $1.41 $1.03 $1.74 $1.54 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.56 $1.78 $1.41 $1.03 $1.74 $1.54 $1.40 $1.21
Number of accumulation units outstanding at end
of period (000 omitted) 29 37 90 136 109 127 60 4
----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.27 $1.15 $0.93 $1.69 $1.48 $1.28 $1.10 $1.00
Accumulation unit value at end of period $1.03 $1.27 $1.15 $0.93 $1.69 $1.48 $1.28 $1.10
Number of accumulation units outstanding at end
of period (000 omitted) 47 84 93 97 96 150 156 96
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.33 $1.20 $0.91 $1.31 $1.29 $1.11 $1.12 $1.00
Accumulation unit value at end of period $1.33 $1.33 $1.20 $0.91 $1.31 $1.29 $1.11 $1.12
Number of accumulation units outstanding at end
of period (000 omitted) 9 33 9 28 31 33 34 29
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.80 $1.60 $1.38 $1.32 $1.22 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.75 $1.80 $1.60 $1.38 $1.32 $1.22 $1.10 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) 63 115 259 283 481 448 244 107
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 205
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of period $1.09 $1.04 $0.81 $1.43 $1.43 $1.19 $1.12 $1.00
Accumulation unit value at end of period $1.00 $1.09 $1.04 $0.81 $1.43 $1.43 $1.19 $1.12
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.50 $1.22 $0.94 $1.52 $1.50 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.38 $1.50 $1.22 $0.94 $1.52 $1.50 $1.32 $1.19
Number of accumulation units outstanding at end
of period (000 omitted) 53 87 155 185 225 289 177 70
----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.76 $0.69 $0.58 $0.93 $1.00 -- -- --
Accumulation unit value at end of period $0.77 $0.76 $0.69 $0.58 $0.93 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $0.97 $0.86 $0.72 $1.29 $1.17 $1.13 $1.06 $1.00
Accumulation unit value at end of period $0.87 $0.97 $0.86 $0.72 $1.29 $1.17 $1.13 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 3 3 11 11 12 118 -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of period $1.22 $1.05 $0.75 $1.46 $1.34 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.11 $1.22 $1.05 $0.75 $1.46 $1.34 $1.18 $1.10
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.92 $0.89 $0.72 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $0.94 $0.92 $0.89 $0.72 $1.03 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.88 $0.80 $0.61 $1.04 $1.00 -- -- --
Accumulation unit value at end of period $0.81 $0.88 $0.80 $0.61 $1.04 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 14 41 282 132 103 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.13 $0.99 $0.79 $1.25 $1.31 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.08 $1.13 $0.99 $0.79 $1.25 $1.31 $1.15 $1.13
Number of accumulation units outstanding at end
of period (000 omitted) 195 315 440 509 526 817 589 206
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.93 $0.83 $0.62 $1.05 $1.00 -- -- --
Accumulation unit value at end of period $0.86 $0.93 $0.83 $0.62 $1.05 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 16 16 314 298 290 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of period $1.03 $0.84 $0.60 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.02 $1.03 $0.84 $0.60 $1.03 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $1.15 $1.07 $0.93 $1.22 $1.20 $1.09 $1.09 $1.00
Accumulation unit value at end of period $1.14 $1.15 $1.07 $0.93 $1.22 $1.20 $1.09 $1.09
Number of accumulation units outstanding at end
of period (000 omitted) 9 9 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of period $2.00 $1.80 $1.38 $2.27 $1.82 $1.41 $1.24 $1.00
Accumulation unit value at end of period $2.09 $2.00 $1.80 $1.38 $2.27 $1.82 $1.41 $1.24
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- --
Accumulation unit value at end of period $0.67 $0.77 $0.64 $0.46 $0.85 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2 6 64 100 52 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of period $1.17 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $1.06 $1.17 $0.90 $0.58 $1.12 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
206 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.03 $0.96 $0.68 $1.28 $1.15 $1.09 $1.06 $1.00
Accumulation unit value at end of period $1.00 $1.03 $0.96 $0.68 $1.28 $1.15 $1.09 $1.06
Number of accumulation units outstanding at end
of period (000 omitted) 44 77 70 80 65 152 149 51
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.39 $1.23 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit value at end of period $1.25 $1.39 $1.23 $0.90 $1.54 $1.48 $1.29 $1.15
Number of accumulation units outstanding at end
of period (000 omitted) 3 3 3 4 6 8 9 3
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.32 $1.18 $1.01 $1.21 $1.13 $1.07 $1.07 $1.00
Accumulation unit value at end of period $1.31 $1.32 $1.18 $1.01 $1.21 $1.13 $1.07 $1.07
Number of accumulation units outstanding at end
of period (000 omitted) 156 263 573 562 807 629 440 207
----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of period $1.34 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.28 $1.34 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- 1 2 2 2 --
----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of period $1.12 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.12 $1.12 $1.01 $0.85 $1.03 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 12 12 192 276 368 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 196 167 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 29 132 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 559 683 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 67 175 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of period $0.84 $0.76 $0.59 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.79 $0.84 $0.76 $0.59 $0.99 -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 21 21 391 251 239 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.26 $1.06 $0.79 $1.27 $1.23 $1.08 $1.10 $1.00
Accumulation unit value at end of period $1.16 $1.26 $1.06 $0.79 $1.27 $1.23 $1.08 $1.10
Number of accumulation units outstanding at end
of period (000 omitted) -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,745 1,181 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.09 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 3,206 3,977 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 1,623 1,506 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 2,462 2,178 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 207
VARIABLE ACCOUNT CHARGES OF 2.00% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 394 620 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at end
of period (000 omitted) 61 100 -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of period $1.43 $1.17 $0.88 $1.31 $1.40 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.34 $1.43 $1.17 $0.88 $1.31 $1.40 $1.19 $1.15
Number of accumulation units outstanding at end
of period (000 omitted) 82 136 167 190 222 276 305 123
----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit value at beginning of period $2.10 $1.71 $1.17 $2.19 $1.92 $1.43 $1.20 $1.00
Accumulation unit value at end of period $1.76 $2.10 $1.71 $1.17 $2.19 $1.92 $1.43 $1.20
Number of accumulation units outstanding at end
of period (000 omitted) 23 22 79 123 88 117 92 25
----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of period $1.37 $1.13 $0.81 $1.37 $1.33 $1.26 $1.15 $1.00
Accumulation unit value at end of period $1.29 $1.37 $1.13 $0.81 $1.37 $1.33 $1.26 $1.15
Number of accumulation units outstanding at end
of period (000 omitted) 48 83 154 168 174 174 158 63
----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
208 RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE INNOVATIONS SELECT VARIABLE ANNUITY -- PROSPECTUS 209
LOGO
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45304 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R) FLEXCHOICE SELECT VARIABLE ANNUITY
CONTRACT OPTION L: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/
VARIABLE ANNUITY
CONTRACT OPTION C: INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/
VARIABLE ANNUITY
New contracts are not currently being offered.
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
This prospectus describes two versions of the Contract Option L and Contract
Option C: the Current Contract (applications signed on or after Nov. 30, 2009,
subject to state availability) and the Original Contract (applications signed
prior to Nov. 30, 2009, or in states where the Current Contract was
unavailable). The information in this prospectus applies to both contracts
unless stated otherwise.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contracts and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers other variable annuity contracts in addition to the
contracts described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, surrender
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and surrendering money from the contracts we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contracts described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contracts and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contracts described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contracts and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACTS IN BRIEF...................... 5
EXPENSE SUMMARY............................. 8
CONDENSED FINANCIAL INFORMATION............. 18
FINANCIAL STATEMENTS........................ 18
THE VARIABLE ACCOUNT AND THE FUNDS.......... 18
THE GUARANTEE PERIOD ACCOUNTS (GPAS)........ 32
THE FIXED ACCOUNT........................... 34
BUYING YOUR CONTRACT........................ 37
CHARGES..................................... 41
VALUING YOUR INVESTMENT..................... 52
MAKING THE MOST OF YOUR CONTRACT............ 53
SURRENDERS.................................. 62
TSA -- SPECIAL PROVISIONS................... 63
CHANGING THE ANNUITANT...................... 63
CHANGING OWNERSHIP.......................... 63
BENEFITS IN CASE OF DEATH................... 64
OPTIONAL BENEFITS........................... 72
THE ANNUITY PAYOUT PERIOD................... 87
TAXES....................................... 89
VOTING RIGHTS............................... 93
SUBSTITUTION OF INVESTMENTS................. 93
ABOUT THE SERVICE PROVIDERS................. 94
ADDITIONAL INFORMATION...................... 95
APPENDICES TABLE OF CONTENTS AND
CROSS-REFERENCE TABLE..................... 97
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 98
APPENDIX B: EXAMPLE --
SURRENDER CHARGES FOR CONTRACT OPTION L... 100
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 109
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES
OF RIDERS................................. 115
APPENDIX E: SECURESOURCE SERIES OF
RIDERS --
ADDITIONAL RMD DISCLOSURE................. 123
APPENDIX F: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 125
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 127
APPENDIX H: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED BEFORE
MAY 1, 2006............................... 129
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER DISCLOSURE..................... 130
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT
RIDER DISCLOSURE.......................... 142
APPENDIX K: INCOME ASSURER BENEFIT RIDERS
DISCLOSURE................................ 150
APPENDIX L: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 159
APPENDIX M: SECURESOURCE RIDER DISCLOSURE... 160
APPENDIX N: SECURESOURCE 20 RIDER
DISCLOSURE................................ 173
APPENDIX O: SECURESOURCE STAGES RIDER
DISCLOSURE................................ 187
APPENDIX P: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 197
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 208
--------------------------------------------------------------------------------
2 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount prior to the
application of amounts to an annuity payment plan.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITIZATION START DATE: The date when annuity payments begin according to the
applicable annuity payment plan (referred to as "Retirement date" in the
Original Contract). Throughout this prospectus when we use the term
"Annuitization start date," it includes the term "Retirement date."
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
death (Current Contract), or owner's or annuitant's death (Original Contract)
while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT (CURRENT CONTRACT): The person who becomes the annuitant
when the current annuitant dies prior to the annuitization start date. In the
case of joint ownership, one owner must also be the contingent annuitant.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the regular fixed account and
the Special DCA fixed account (Current Contract) or the one-year fixed account
and the DCA fixed account (Original Contract). Amounts you allocate to the fixed
account earn interest rates we declare periodically. The regular fixed account
under Current Contract Option C and one-year fixed account under Original
Contract Option C may not be available or may be significantly limited in some
states.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates
for guarantee periods we declare when you allocate purchase payments or transfer
contract value to a GPA. These guaranteed rates and periods of time may vary by
state. Unless an exception applies, transfers or surrenders from a GPA done more
than 30 days before the end of the guarantee period will receive a market value
adjustment, which may result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is surrendered or transferred more than 30
days before the end of its guarantee period.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
OWNER (YOU, YOUR): The person or persons identified in the contract as owners(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. The owner or
any joint owner may be a nonnatural person (e.g. irrevocable trust or
corporation) or a revocable trust. In this case, the annuitant will be deemed to
be the owner for contract provisions that are based on the age or life of the
owner. When the contract is owned by a revocable trust, the annuitant selected
should be the grantor of the trust to qualify for income tax deferral. Any
contract provisions that are based on the age of the owner will be based on the
age of the oldest owner. Any ownership change, including continuation of the
contract by your spouse under the spousal continuation provision of the
contract, redefines "owner", "you" and "your".
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Custodial and investment only plans under Section 401(a) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract (referred to as "Withdrawal value" in the Original
Contract). It is the contract value minus any applicable charges, plus any
positive or negative market value adjustment. Throughout this prospectus when we
use the term "Surrender" it includes the term "Withdrawal".
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract (referred to as "Surrender value" in the Current
Contract). It is the contract value minus any applicable charges, plus any
positive or negative market value adjustment. Throughout this prospectus when we
use the term "Surrender" it includes the term "Withdrawal".
--------------------------------------------------------------------------------
4 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACTS IN BRIEF
This prospectus describes two versions of the Contract Option L and Contract
Option C: the Current Contract (applications signed on or after Nov. 30, 2009,
subject to state availability) and the Original Contract (applications signed
prior to Nov. 30, 2009, or in states where the Current Contract was
unavailable). The primary differences are disclosed in the following sections:
"Key Terms", "Expense Summary", "Buying Your Contract", "Benefits in Case of
Death", and "Optional Benefits."
Each contract has different expenses. Contract Option L has lower expenses than
Contract Option C. Contract Option L has a four-year surrender charge schedule
that applies to each purchase payment you make. Contract Option C eliminates the
purchase payment surrender charge schedule, but has a higher mortality and
expense risk fee than Contract Option L. Contract Option L includes the option
to purchase a living benefit rider. Contract Option C includes the option to
purchase only one living benefit rider, Accumulation Protector Benefit rider;
other living benefit riders are not currently available on Contract Option C.
Your investment professional can help you determine which contract is best
suited to your needs based on factors such as your investment goals and how long
you intend to keep your contract.
PURPOSE: These contracts allow you to accumulate money for retirement or a
similar long-term goal. You do this by making one or more purchase payments. For
the Current Contract, you may allocate your purchase payments to the regular
fixed account (Contract Option L only), the Special DCA fixed account, GPAs
and/or subaccounts of the variable account under the contract. For the Original
Contract, you may allocate your purchase payments to the one-year fixed account,
if included (Contract Option L only), the DCA fixed account (if part of your
contract), the GPAs and/or subaccounts of the variable account under the
contract. When you invest in the subaccounts of the variable account, you risk
losing amounts you invest. These accounts, in turn, may earn returns that
increase the value of the contract. If the contract value goes to zero due to
underlying fund's performance or deduction of fees, the contract will no longer
be in force and the contract (including any death benefit riders) will
terminate. You may be able to purchase an optional benefit to reduce the
investment risk you assume under the contract. Beginning at a specified time in
the future called the annuitization start date, these contracts provide lifetime
or other forms of payout of your contract value (less any applicable premium tax
and/or other charges).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
FREE LOOK PERIOD: You may return your contract to your investment professional
or to our corporate office within the time stated on the first page of your
contract and receive a full refund of the contract value. We will not deduct any
contract charges or fees. However, you bear the investment risk from the time of
purchase until you return the contract and any positive or negative market value
adjustment will apply; the refund amount may be more or less than the payment
you made. (EXCEPTION: If the law requires, we will refund all of your purchase
payments.)
ACCOUNTS: Generally, you may allocate purchase payments among the:
subaccounts of the variable account, each of which invests in a fund with a
particular investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
the annuitization start date will equal or exceed the total purchase payments
you allocate to the subaccounts. (See "The Variable Account and the Funds").
GPAs which earn interest at rates that we declare when you allocate purchase
payments or transfer contract value to these accounts. The required minimum
investment in a GPA is $1,000. These accounts may not be available in all
states. (See "The Guarantee Period Accounts (GPAs)").
for the Current Contract:
- regular fixed account (currently Contract Option L only), which earns
interest at rates that we adjust periodically. There are restrictions on
transfers from this account and may be restrictions on the amount you can
allocate to this account (see "Buying Your Contract", "Transfer policies"
and "The Regular Fixed Account").
- Special DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain
in this account. (See "Special DCA Fixed Account").
for the Original Contract:
- one-year fixed account (Contract Option L only), if part of your contract,
which earns interest at rates that we adjust periodically. There are
restrictions on the amount you can allocate to this account as well as on
transfers from this account (see "Buying Your Contract", "Transfer policies"
and "The One-Year Fixed Account").
- DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract
value can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until the
annuitization start date, and once per contract year among the subaccounts after
the annuitization start date. Transfers out of the GPAs done more than 30 days
before the end of the guarantee period will be subject to an MVA, unless an
exception applies. You may establish automated transfers among the accounts.
Transfers into the Special DCA fixed account (Current Contract) and DCA fixed
account (Original Contract) are not permitted. GPAs, the regular fixed account
(Current Contract) and the one-year fixed account (Original Contract) are
subject to special restrictions. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
SURRENDERS: You may surrender all or part of your contract value at any time
before the annuitization start date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and income taxes (including a
10% IRS penalty if you make surrenders prior to your reaching age 59 1/2) and
may have other tax consequences. If you have elected the SecureSource Stages
rider or the SecureSource 20 rider, please consider carefully when you take
withdrawals. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be reset based on your contract value at that time and you will no longer be
eligible to receive the 20% credit available under the SecureSource 20 rider or
any future rider credits under the SecureSource Stages. Certain other
restrictions may apply. (See "Surrenders").
OPTIONAL BENEFITS: You can buy optional benefits with your contract for an
additional charge if you meet certain criteria. We offer optional death benefits
and optional living benefits. Optional living benefits include: different
versions of the guaranteed minimum withdrawal benefits, which permit you to
withdraw a guaranteed amount from the contract over a period of time,
Accumulation Protector Benefit rider, which provides you with a guaranteed
contract value at the end of specified waiting period regardless of the
volatility inherent in the investments in the subaccounts, and Income Assurer
Benefit rider, which provides you with a guaranteed minimum income regardless of
the volatility inherent in the investments in the subaccounts . Guaranteed
minimum withdrawal benefits are SecureSource series riders, Guarantor Withdrawal
Benefit rider and Guarantor Withdrawal Benefit for Life rider. When used in this
prospectus, the term "SecureSource series" includes: the SecureSource Stages 2
riders, the SecureSource Stages riders, the SecureSource 20 riders and the
SecureSource riders, except where the SecureSource Stages 2 riders, the
SecureSource Stages riders, SecureSource 20 riders and SecureSource riders are
specifically referenced and distinguished from other riders in the SecureSource
series.
Optional living benefits require the use of a Portfolio Navigator program (PN
program) investment option which may limit transfers and allocations; may limit
the timing, amount and allocation of purchase payments; and may limit the amount
of surrenders that can be taken under the optional benefit during a contract
year. For more information on optional living benefits, please see "Optional
Benefits -- Optional Living Benefits". Optional benefits vary by state and may
have eligibility requirements.
We offer the following optional death benefits: MAV Death Benefit, 5%
Accumulation Death Benefit, Enhanced Death Benefit, Benefit Protector Death
Benefit rider and Benefit Protector Plus Death Benefit rider. Benefit Protector
Death Benefit rider and Benefit Protector Plus Death Benefit rider are intended
to provide an additional benefit to your beneficiary to help offset expenses
after your death such as funeral expenses or federal and state taxes.
--------------------------------------------------------------------------------
6 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
BENEFITS IN CASE OF DEATH: For the Current Contract, if you die before the
annuitization start date, we will pay the beneficiary an amount based on the
applicable death benefit. For the Original Contract, if you or the annuitant die
before the annuitization start date, we will pay the beneficiary an amount based
on the applicable death benefit. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the annuitization start
date. You may choose from a variety of plans to make sure that payouts continue
as long as you like. If you buy a qualified annuity, the payout schedule must
meet IRS requirements. We can make payouts on a fixed or variable basis, or
both. During the annuity payout period, your choices for subaccounts may be
limited. The GPAs, the Special DCA fixed account (Current Contract) and the DCA
fixed accounts (Original Contract) are not available after the annuitization
start date. (See "The Annuity Payout Period").
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A SURRENDER FROM THESE CONTRACTS. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAY PAY WHEN YOU MAKE A SURRENDER FROM ONE OF THESE CONTRACTS. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
You select either contract Option L or Option C at the time of application.
Option C has no surrender charge schedule but carries a higher mortality and
expense risk fee than Option L.
CONTRACT OPTION L
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 8%
1 8
2 7
3 6
4+ 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE MAXIMUM: $50 CURRENT: $40
ANNUAL CONTRACT ADMINISTRATIVE CHARGE IF YOUR CONTRACT VALUE MAXIMUM: $20 CURRENT: $0
EQUALS OR EXCEEDS $50,000
CONTRACT ADMINISTRATIVE CHARGE AT FULL SURRENDER MAXIMUM: $50 CURRENT: $40
--------------------------------------------------------------------------------
8 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE DEATH
BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND
EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO
THE MORTALITY AND EXPENSE RISK FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.55% 0.15% 1.70%
ROPP Death Benefit 1.55 0.15 1.70
MAV Death Benefit 1.80 0.15 1.95
5% Accumulation Death Benefit 1.95 0.15 2.10
Enhanced Death Benefit 2.00 0.15 2.15
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION C AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.65% 0.15% 1.80%
ROPP Death Benefit 1.65 0.15 1.80
MAV Death Benefit 1.90 0.15 2.05
5% Accumulation Death Benefit 2.05 0.15 2.20
Enhanced Death Benefit 2.10 0.15 2.25
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROPP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. The optional living benefits require participation
in the PN program. The fees apply only if you have selected one of these
benefits.
SECURESOURCE STAGES 2(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
SECURESOURCE STAGES 2(SM) - JOINT LIFE RIDER FEE MAXIMUM: 2.25% CURRENT: 1.15%
(Charged annually on the contract anniversary as a percentage of contract value
or the total Benefit Base, whichever is greater.)
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 1.50%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed after July 18, 2010, but prior to Oct. 4,
2010, the current fee is 1.10%.
SECURESOURCE(R) STAGES - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) STAGES - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.35%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Benefit Base, whichever is greater.)
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009, or in states where the Current
Contract was not available)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
You selected either contract Option L or Option C at the time of application.
Option C has no surrender charge schedule but carries a higher mortality and
expense risk fee than Option L.
CONTRACT OPTION L
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 8%
1 8
2 7
3 6
Thereafter 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
Under this annuity payout plan, you can choose to take a surrender. The amount
that you can surrender is the present value of any remaining variable payouts.
The discount rate we use in the calculation will be 5.17% if the assumed
investment rate is 3.5% and 6.67% if the assumed investment rate is 5%. The
surrender charge equals the present value of the remaining payouts using the
assumed investment rate minus the present value of the remaining payouts using
the discount rate. (See "Charges -- Surrender Charge" and "The Annuity Payout
Period -- Annuity Payout Plans.")
THE NEXT TWO TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE AND AT FULL SURRENDER $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full surrender.)
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE EITHER CONTRACT OPTION L OR OPTION C AND ONE OF THE DEATH
BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE MORTALITY AND
EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO
YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO
THE MORTALITY AND EXPENSE RISK FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.55% 0.15% 1.70%
MAV Death Benefit 1.75 0.15 1.90
5% Accumulation Death Benefit 1.90 0.15 2.05
Enhanced Death Benefit 1.95 0.15 2.10
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
IF YOU SELECT CONTRACT OPTION C AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.65% 0.15% 1.80%
MAV Death Benefit 1.85 0.15 2.00
5% Accumulation Death Benefit 2.00 0.15 2.15
Enhanced Death Benefit 2.05 0.15 2.20
--------------------------------------------------------------------------------
10 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL DEATH BENEFITS
If eligible, you may select an optional death benefit in addition to the ROP and
MAV Death Benefits. The fees apply only if you select one of these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits, if available in your state. The fees apply only if you elected one of
these benefits when you purchased your contract. Each optional living benefit
requires participation in the PN program.
ACCUMULATION PROTECTOR BENEFIT RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%(1)
FOR APPLICATIONS SIGNED ON OR AFTER AUG. 10, 2009 BUT PRIOR TO NOV. 30, 2009,
SUBJECT TO STATE AVAILABILITY, OR IN STATES WHERE THE CURRENT CONTRACT IS NOT
AVAILABLE:
SECURESOURCE(R) 20 - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.25%
SECURESOURCE(R) 20 - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009, BUT PRIOR TO AUG. 10, 2009,
OR IN STATES WHERE THE CURRENT CONTRACT AND SECURESOURCE 20 ARE NOT AVAILABLE:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO JAN. 26, 2009:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(2)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(2)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(2)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For contracts with applications signed prior to Jan. 26, 2009, the current
charge is 0.55% and for contract applications signed between Jan. 26, 2009
and May 30, 2009, the current fee is 0.80%.
(2) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein 0.55% 0.25% 0.11% --% 0.91%
VPS Balanced Wealth
Strategy Portfolio
(Class B)
AllianceBernstein 0.75 0.25 0.19 -- 1.19
VPS Global Thematic
Growth Portfolio
(Class B)
AllianceBernstein 0.55 0.25 0.05 -- 0.85
VPS Growth and
Income Portfolio
(Class B)
AllianceBernstein 0.75 0.25 0.07 -- 1.07
VPS International
Value Portfolio
(Class B)
American Century VP 0.47 0.25 0.01 -- 0.73
Inflation
Protection, Class
II
American Century VP 1.31 0.25 0.02 -- 1.58
International,
Class II
American Century VP 0.90 0.25 0.01 -- 1.16
Mid Cap Value,
Class II
American Century VP 0.90 0.25 0.01 -- 1.16
Ultra(R), Class II
American Century VP 0.88 0.25 -- -- 1.13
Value, Class II
Columbia Variable 0.33 0.13 0.14 -- 0.60(1)
Portfolio - Cash
Management Fund
(Class 3)
Columbia Variable 0.41 0.13 0.13 -- 0.67
Portfolio - Divers-
ified Bond Fund
(Class 3)
Columbia Variable 0.57 0.13 0.13 -- 0.83
Portfolio - Divers-
ified Equity Income
Fund (Class 3)
Columbia Variable 0.66 0.13 0.16 0.01 0.96
Portfolio - Dynamic
Equity Fund (Class
3)
Columbia Variable 1.07 0.13 0.25 -- 1.45(1)
Portfolio - Emergi-
ng Markets
Opportunity Fund
(Class 3)
Columbia Variable 0.42 0.13 0.14 -- 0.69
Portfolio - Global
Inflation Protected
Securities Fund
(Class 3)
Columbia Variable 0.63 0.25 0.15 -- 1.03(1),(2)
Portfolio - High
Income Fund (Class
2)
Columbia Variable 0.58 0.13 0.17 -- 0.88(1)
Portfolio - High
Yield Bond Fund
(Class 3)
Columbia Variable 0.57 0.13 0.14 -- 0.84
Portfolio - Income
Opportunities Fund
(Class 3)
Columbia Variable 0.79 0.13 0.21 -- 1.13
Portfolio - In-
ternational
Opportunity Fund
(Class 3)
Columbia Variable 0.71 0.13 0.17 -- 1.01(1)
Portfolio - Large
Cap Growth Fund
(Class 3)
Columbia Variable 0.97 -- 0.13 -- 1.10(1),(2)
Portfolio - Marsico
Growth Fund (Class
1)
Columbia Variable 1.02 0.25 0.20 -- 1.47(1),(2)
Portfolio - Marsico
International
Opportunities Fund
(Class 2)
Columbia Variable 0.76 0.13 0.17 -- 1.06(1)
Portfolio - Mid Cap
Growth Opportunity
Fund (Class 3)
Columbia Variable 0.74 0.13 0.14 -- 1.01
Portfolio - Mid Cap
Value Opportunity
Fund (Class 3)
Columbia Variable 0.10 0.13 0.27 -- 0.50
Portfolio - S&P 500
Index Fund (Class
3)
Columbia Variable 0.71 0.13 0.26 -- 1.10(1)
Portfolio - Select
Large-Cap Value
Fund (Class 3)
Columbia Variable 0.36 0.13 0.15 -- 0.64
Portfolio - Short
Duration U.S.
Government Fund
(Class 3)
Columbia Variable 0.87 0.25 0.12 0.02 1.26(1),(3)
Portfolio - Small
Cap Value Fund
(Class 2)
--------------------------------------------------------------------------------
12 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Credit Suisse 0.50% 0.25% 0.31% --% 1.06%(4)
Trust - Commodity
Return Strategy
Portfolio
Dreyfus Investment 0.75 0.25 0.11 -- 1.11
Portfolios MidCap
Stock Portfolio,
Service Shares
Dreyfus Investment 0.75 0.25 0.08 -- 1.08
Portfolios
Technology Growth
Portfolio, Service
Shares
Dreyfus Variable 0.75 0.25 0.05 -- 1.05
Investment Fund
Appreciation
Portfolio, Service
Shares
Dreyfus Variable 0.75 0.25 0.35 -- 1.35
Investment Fund
International
Equity Portfolio,
Service Shares
Dreyfus Variable 1.00 0.25 0.25 -- 1.50
Investment Fund
International Value
Portfolio, Service
Shares
Eaton Vance VT 0.57 0.50 0.08 -- 1.15
Floating-Rate
Income Fund
Fidelity(R) VIP 0.56 0.25 0.09 -- 0.90
Contrafund(R)
Portfolio Service
Class 2
Fidelity(R) VIP 0.56 0.25 0.11 -- 0.92
Growth Portfolio
Service Class 2
Fidelity(R) VIP 0.32 0.25 0.10 -- 0.67
Investment Grade
Bond Portfolio
Service Class 2
Fidelity(R) VIP Mid 0.56 0.25 0.10 -- 0.91
Cap Portfolio
Service Class 2
Fidelity(R) VIP 0.71 0.25 0.14 -- 1.10
Overseas Portfolio
Service Class 2
FTVIPT Franklin 0.45 0.25 0.02 -- 0.72
Income Securities
Fund - Class 2
FTVIPT Franklin 0.62 0.25 0.02 0.01 0.90(5)
Rising Dividends
Securities
Fund - Class 2
FTVIPT Franklin 0.50 0.25 0.29 0.01 1.05
Small-Mid Cap
Growth Securities
Fund - Class 2
FTVIPT Mutual 0.60 0.25 0.13 -- 0.98
Shares Securities
Fund - Class 2
FTVIPT Templeton 0.46 0.25 0.10 -- 0.81
Global Bond
Securities
Fund - Class 2
FTVIPT Templeton 0.74 0.25 0.04 -- 1.03
Growth Securities
Fund - Class 2
Goldman Sachs VIT 0.80 -- 0.06 -- 0.86(6)
Mid Cap Value
Fund - Institution-
al Shares
Goldman Sachs VIT 0.62 -- 0.08 -- 0.70(7)
Structured U.S.
Equity
Fund - Institution-
al Shares
Invesco V.I. Global 0.75 0.25 0.37 -- 1.37
Health Care Fund,
Series II Shares
Invesco V.I. 0.71 0.25 0.32 -- 1.28
International
Growth Fund, Series
II Shares
Invesco V.I. Mid 0.73 0.25 0.30 -- 1.28
Cap Core Equity
Fund, Series II
Shares
Invesco Van Kampen 0.67 0.25 0.28 -- 1.20(8)
V.I. American
Franchise Fund,
Series II Shares
Invesco Van Kampen 0.56 0.25 0.24 -- 1.05(9)
V.I. Comstock Fund,
Series II Shares
Invesco Van Kampen 0.75 0.25 0.33 -- 1.33(10)
V.I. Mid Cap Growth
Fund, Series II
Shares
Invesco Van Kampen 0.69 0.25 0.31 -- 1.25
V.I. Value
Opportunities Fund,
Series II Shares
Janus Aspen Series 0.56 0.25 0.07 -- 0.88
Janus Portfolio:
Service Shares
Legg Mason 0.75 -- 0.14 -- 0.89
ClearBridge
Variable Small Cap
Growth
Portfolio - Class I
MFS(R) Investors 0.75 0.25 0.07 -- 1.07
Growth Stock
Series - Service
Class
MFS(R) New 0.90 0.25 0.08 -- 1.23
Discovery
Series - Service
Class
MFS(R) Total Return 0.75 0.25 0.06 -- 1.06(11)
Series - Service
Class
MFS(R) Utilities 0.73 0.25 0.08 -- 1.06
Series - Service
Class
Morgan Stanley UIF 0.85 0.35 0.47 -- 1.67(12)
Global Real Estate
Portfolio, Class II
Shares
Morgan Stanley UIF 0.75 0.35 0.30 -- 1.40(12)
Mid Cap Growth
Portfolio, Class II
Shares
Morgan Stanley UIF 0.80 0.35 0.29 -- 1.44(12)
U.S. Real Estate
Portfolio, Class II
Shares
Oppenheimer Capital 0.68 0.25 0.12 -- 1.05
Appreciation
Fund/VA, Service
Shares
Oppenheimer Global 0.63 0.25 0.13 -- 1.01
Securities Fund/VA,
Service Shares
Oppenheimer Global 0.58 0.25 0.13 0.07 1.03(13)
Strategic Income
Fund/VA, Service
Shares
Oppenheimer Main 0.69 0.25 0.14 -- 1.08(14)
Street Small- &
Mid-Cap Fund(R)/VA,
Service Shares
PIMCO VIT All Asset 0.43 0.25 -- 0.74 1.42(15)
Portfolio, Advisor
Share Class
Putnam VT Global 0.63 0.25 0.21 -- 1.09
Health Care
Fund - Class IB
Shares
Putnam VT 0.70 0.25 0.17 -- 1.12
International
Equity Fund - Class
IB Shares
Putnam VT Multi-Cap 0.56 0.25 0.16 -- 0.97
Growth Fund - Class
IB Shares
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Small Cap 0.63% 0.25% 0.15% 0.11% 1.14%
Value Fund - Class
IB Shares
Variable -- 0.25 0.02 0.79 1.06
Portfolio - Aggres-
sive Portfolio
(Class 2)
Variable -- 0.25 0.02 0.79 1.06
Portfolio - Aggres-
sive Portfolio
(Class 4)
Variable -- 0.25 0.02 0.61 0.88
Portfolio - Conser-
vative Portfolio
(Class 2)
Variable -- 0.25 0.02 0.61 0.88
Portfolio - Conser-
vative Portfolio
(Class 4)
Variable 0.71 0.13 0.13 -- 0.97(16)
Portfolio - Davis
New York Venture
Fund (Class 3)
Variable 0.77 0.13 0.13 -- 1.03(16)
Portfolio - Goldman
Sachs Mid Cap Value
Fund (Class 3)
Variable -- 0.25 0.02 0.71 0.98
Portfolio - Modera-
te Portfolio (Class
2)
Variable -- 0.25 0.02 0.71 0.98
Portfolio - Modera-
te Portfolio (Class
4)
Variable -- 0.25 0.02 0.75 1.02
Portfolio - Modera-
tely Aggressive
Portfolio (Class 2)
Variable -- 0.25 0.02 0.75 1.02
Portfolio - Modera-
tely Aggressive
Portfolio (Class 4)
Variable -- 0.25 0.02 0.66 0.93
Portfolio - Modera-
tely Conservative
Portfolio (Class 2)
Variable -- 0.25 0.02 0.66 0.93
Portfolio - Modera-
tely Conservative
Portfolio (Class 4)
Variable 0.91 0.13 0.15 0.02 1.21(16)
Portfolio - Partne-
rs Small Cap Value
Fund (Class 3)
Wanger 0.89 -- 0.13 -- 1.02(2)
International
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3), 0.925% for Columbia Variable Portfolio - Select Large-Cap Value
Fund (Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value
Fund (Class 2).
(2) Other expenses have been restated to reflect contractual changes to certain
other fees.
(3) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4) Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5) The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
--------------------------------------------------------------------------------
14 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(9) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(11) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15) PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES,
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
CONTRACT OPTION L
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
SecureSourceStages 2 - Joint Life rider and the Benefit Protector Plus Death
Benefit(1),(3). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,409 $2,673 $3,363 $6,541 $689 $2,041 $3,363 $6,541
CONTRACT OPTION C
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
Accumulation Protector Benefit Rider and the Benefit Protector Plus Death
Benefit(1),(3). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option C $649 $1,924 $3,177 $6,205 $649 $1,924 $3,177 $6,205
ALL CURRENT CONTRACTS
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROPP Death Benefit and do not select any
optional benefits(2). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,004 $1,490 $1,382 $2,911 $266 $813 $1,382 $2,911
Contract Option C 276 843 1,433 3,013 276 843 1,433 3,013
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
CONTRACT OPTION L
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider or SecureSource 20 - Joint Life
rider and the Benefit Protector Plus Death Benefit.(2),(3) Although your actual
costs may be lower, based on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,420 $2,703 $3,410 $6,627 $700 $2,070 $3,410 $6,627
--------------------------------------------------------------------------------
16 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT OPTION C
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit and the Benefit
Protector Plus Death Benefit(2). Although your actual costs may be lower, based
on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option C $457 $1,375 $2,302 $4,650 $457 $1,375 $2,302 $4,650
ALL ORIGINAL CONTRACTS
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits(2). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Contract Option L $1,004 $1,490 $1,382 $2,911 $266 $813 $1,382 $2,911
Contract Option C 276 843 1,433 3,013 276 843 1,433 3,013
(1) In these examples, the contract administrative charge is $50.
(2) In these examples, the contract administrative charge is $40.
(3) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix P.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
18 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue including, but not limited to, expense payments
and non-cash compensation a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue, including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in the contract and whether you should allocate purchase
payments or contract value to a subaccount that invests in a particular fund
(see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and making withdrawal from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
20 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PURCHASE PAYMENTS AND
TRANSFERS TO ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST
IN SHARES OF THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks capital growth. American Century Investment
International, Class Management, Inc.
II
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks long-term growth of Columbia Management
Portfolio - Select capital. Investment Advisers, LLC
Large-Cap Value Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks capital appreciation. The Dreyfus Corporation
Portfolios
Technology Growth
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Investors N Y Seeks capital appreciation. MFS(R) Investment Management
Growth Stock
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available for contracts in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. These
periods of time vary by state. The required minimum investment in each GPA is
$1,000. (Exception: if a PN program model portfolio includes one or more GPAs,
the required minimum investment does not apply.) These accounts are not offered
after the annuitization start date.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments
--------------------------------------------------------------------------------
32 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
having price durations tending to match the applicable guarantee periods. These
instruments include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or surrender out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window, you may choose to start a new guarantee period of the same length,
transfer the contract value from the specified GPA to a GPA of another length,
transfer the contract value from the specified GPA to any of the subaccounts,
the regular fixed account (Current Contract) or the one-year fixed account
(Original Contract), or surrender the value from the specified GPA (all subject
to applicable surrender and transfer provisions). If we do not receive any
instructions by the end of your guarantee period, our current practice is to
automatically transfer the contract value from the specified GPA into the
shortest GPA term offered in your state. If no GPAs are offered, we will
transfer the value to the regular fixed account (Current Contract) or the one-
year fixed account (Original Contract), if available. If the regular fixed
account (Current Contract) or the one-year fixed account (Original Contract) is
not available, we will transfer the value to the money market or cash management
variable subaccount we designate.
We guarantee the contract value allocated to the GPAs, including the interest
credited, if you do not make any transfers or surrenders from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you surrender or transfer contract value from a
GPA including surrenders under the SecureSource series of riders, the Guarantor
Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early surrenders." The application of an
MVA may result in either a gain or loss of principal.
For the Current Contract, the 30-day rule does not apply and no MVA will apply
to:
amounts surrendered under contract provisions that waive surrender charges for
Hospital or Nursing Home Confinement and Terminal Illness Disability
Diagnosis;
amounts transferred automatically under the PN program; and
amounts deducted for fees and charges.
Amounts we pay as death claims will not be reduced by any MVA.
For the Original Contract, the 30-day rule does not apply and no MVA will apply
to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts deducted for fees and charges; or
amounts we pay as death claims.
When you request an early surrender, we adjust the early surrender amount by an
MVA formula. The early surrender amount reflects the relationship between the
guaranteed interest rate you are earning in your current GPA and the interest
rate we are crediting on new GPAs that end at the same time as your current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the early surrender, the time remaining in your guarantee period
and your guaranteed interest rate. The MVA is negative, zero or positive
depending on how the guaranteed interest rate on your GPA
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
compares to the interest rate of a new GPA for the same number of years as the
guarantee period remaining on your GPA. This is summarized in the following
table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO APPLICATIONS SIGNED ON OR AFTER MAY 1, 2006 AND IF
AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. For
the Current Contract, the fixed account includes the regular fixed account and
the Special DCA fixed account. For the Original Contract, the fixed account
includes the one-year fixed account and the DCA fixed account. We credit
interest on amounts you allocate to the fixed account at rates we determine from
time to time in our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns we earn on
our general account investments, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
on amounts invested in the fixed account may vary by state but will not be lower
than state law allows. We back the principal and interest guarantees relating to
the fixed account. These guarantees are based on the continued claims-paying
ability of RiverSource Life. You should be aware that our general account is
exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. You
should also be aware that we issue other types of insurance and financial
products as well, and we also pay our obligations under these products from
assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
THE REGULAR FIXED ACCOUNT
(Not available under Contract Option C unless included in a PN program
investment option you selected)
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the regular fixed account. The value of the
regular fixed account increases as we credit interest to the regular fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the regular fixed
account is guaranteed for one year. Thereafter, we will change the rates from
time to time at our discretion, but your interest rate for each purchase payment
or transfer will never change more frequently than annually. There are
restrictions on transfers from this account and may be restrictions on the
amount you can allocate to this account (see "Making the Most of Your
Contract -- Transfer policies").
THE SPECIAL DCA FIXED ACCOUNT
You may allocate purchase payments to the Special DCA fixed account. You may not
transfer contract value to the Special DCA fixed account.
You may allocate your entire initial purchase payment to the Special DCA fixed
account for a term of six or twelve months. We reserve the right to offer
shorter or longer terms for the Special DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the Special DCA fixed account to the subaccounts or PN program investment
option you select monthly so that, at the end of the Special DCA fixed account
term, the balance of the Special DCA fixed account is zero. The first Special
DCA monthly transfer occurs one day after we receive your payment. You may not
use the regular fixed account or any GPA as a destination for the Special DCA
monthly transfer. (Exception: if a PN program is in effect, and the PN program
investment option you selected, if applicable, includes the regular fixed
account or any GPA, amounts will be transferred from the Special DCA fixed
account to the regular fixed account or GPA according to the allocation
percentage established for the PN program investment option you have selected.)
--------------------------------------------------------------------------------
34 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The value of the Special DCA fixed account increases when we credit interest to
the Special DCA fixed account, and decreases when we make monthly transfers from
the Special DCA fixed account. When you allocate a purchase payment to the
Special DCA fixed account, the interest rates applicable to that purchase
payment will be the rates in effect for the Special DCA fixed account term you
choose on the date we receive your purchase payment. The applicable interest
rate is guaranteed for the length of the term for the Special DCA fixed account
term you choose. We credit and compound interest daily based on a 365-day year
(366 in a leap year) so as to produce the annual effective rate which we
declare. We credit interest only on the declining balance of the Special DCA
fixed account; we do not credit interest on amounts that have been transferred
from the Special DCA fixed account. As a result, the net effective interest
rates we credit will be less than the declared annual effective rates.
Generally, we will credit the Special DCA fixed account with interest at the
same annual effective rate we apply to the regular fixed account on the date we
receive your purchase payment, regardless of the length of the term you select.
From time to time, we may credit interest to the Special DCA fixed account at
promotional rates that are higher than those we credit to the regular fixed
account. We reserve the right to declare different annual effective rates:
for the Special DCA fixed account and the regular fixed account; and
for the Special DCA fixed accounts with terms of differing length.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the Special DCA fixed account for a six month term;
the Special DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the regular fixed account,
the GPAs and/or the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the regular account and the GPAs.
Once you establish a Special DCA fixed account, you cannot allocate additional
purchase payments to it. However, you may establish another Special DCA fixed
account and allocate new purchase payments to it.
If you participate in the PN program and you change to a different PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from the Special DCA fixed account to your newly-elected PN
program investment option.
If your contract permits, and you discontinue your participation in a PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from your Special DCA fixed account for the remainder of the
term to the subaccounts in accordance with your current Special DCA fixed
account allocation instructions. If your current Special DCA fixed account
allocation instructions include a fund to which allocations are restricted and
you do not provide new instructions, we will transfer prorated amounts to the
valid portion of your allocation instruction.
You may discontinue any Special DCA fixed account before the end of its term by
giving us notice. If you do so, we will transfer the remaining balance of the
Special DCA fixed account to the PN program investment option in effect, or if
no PN program investment option is in effect, in accordance with your investment
instructions to us to the regular fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the regular fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the Special DCA fixed account does not guarantee that
any subaccount will gain in value nor will it protect against a decline in value
if market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account.(1) The value of the
one-year fixed account increases as we credit interest to the one-year fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. We
credit the one-year fixed account with the current guaranteed annual rate that
is in effect on the date we receive your purchase payment or you transfer
contract value to the one-year fixed account. The interest rate we apply to each
purchase payment or transfer to the one-year fixed account is guaranteed for one
year. There are restrictions on the amount you can allocate to the one-year
fixed account as well as on transfers from this account (see "Making the Most of
Your Contract -- Transfer policies").
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
(1) For Contract Option C, the one-year fixed account may not be available, or
may be significantly limited in some states. See your contract for the
actual terms at the one-year fixed account you purchased.
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The first DCA monthly transfer occurs one day after we receive your
payment.
The value of the DCA fixed account increases when we credit interest to the DCA
fixed account, and decreases when we make monthly transfers from the DCA fixed
account. When you allocate a purchase payment to the DCA fixed account, the
interest rates applicable to that purchase payment will be the rates in effect
for the DCA fixed account term you choose on the date we receive your purchase
payment. The applicable interest rate is guaranteed for the length of the term
for the DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the DCA fixed account; we do not credit interest on amounts that have
been transferred from the DCA fixed account. As a result, the net effective
interest rates we credit will be less than the declared annual effective rates.
Generally, we will credit the DCA fixed account with interest at the same annual
effective rate we apply to the one-year fixed account on the date we receive
your purchase payment, regardless of the length of the term you select. From
time to time, we may credit interest to the DCA fixed account at promotional
rates that are higher than those we credit to the one-year fixed account. We
reserve the right to declare different annual effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account that are transferred to the one-year
fixed account;
for amounts in the DCA fixed account that are transferred to the GPAs;
for amounts in the DCA fixed account that are transferred to the subaccounts.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
while a DCA fixed account term is in progress, we will allocate transfers from
the DCA fixed account for the remainder of the term in accordance with your
--------------------------------------------------------------------------------
36 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
investment instructions to us to the one-year fixed account, the GPAs and the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. You may buy Contract Option L
or Contract Option C. Contract Option L has a four-year surrender charge
schedule. Contract Option C eliminates the per purchase payment surrender charge
schedule in exchange for a higher mortality and expense risk fee. Contract
Option L includes the option to purchase a living benefit rider. Contract Option
C under Current Contract, includes the option to purchase only one living
benefit rider, Accumulation Protector Benefit rider; other living benefit riders
are not currently available under Contract Option C. Both contracts have the
same underlying funds. As the owner, you have all rights and may receive all
benefits under the contract.
You may select a qualified or nonqualified annuity. Generally, you can own a
nonqualified annuity in joint tenancy with rights of survivorship only in
spousal situations. You cannot own a qualified annuity in joint tenancy. For the
Current Contract, you can buy a contract if you are 85 or younger. For the
Original Contract, you can buy a contract if you and the annuitant are age 85 or
younger. (The age limit may be younger for qualified annuities in some states.)
When you applied, you could have selected:
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
contract Option L or contract Option C;
GPAs, the regular fixed account (if included), the Special DCA fixed account
and/or subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available under your Contract Option, you could have also
selected one of the following optional living benefits (all require the use of
the PN program):
SecureSource Stages 2 riders;
SecureSource Stages rider; or
Accumulation Protector Benefit rider
The Current Contract provides for allocation of purchase payments to the GPAs,
the regular fixed account (Contract Option L only), the Special DCA fixed
account and/or the subaccounts of the variable account subject to the $1,000
required minimum investment for the GPAs. For Contract Option L, we currently
allow you to allocate the total amount of purchase payment to the regular fixed
account. We reserve the right to limit purchase payment allocations to the
regular fixed account at any time
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
on a non-discriminatory basis with notification, subject to state restrictions.
You cannot allocate purchase payments to the fixed account for six months
following a partial surrender from the fixed account, a lump sum transfer from
the regular fixed account, or termination of automated transfers from the
Special DCA fixed account prior to the end of the Special DCA fixed account
term.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
contract Option L or Option C;
GPAs, the one-year fixed account (if included), the DCA fixed account (if
included) and/or subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit Rider(2); or
- Benefit Protector Plus Death Benefit Rider(2).
In addition, if available in your state, you could have also selected one of the
following optional living benefits (all require the use of the PN program):
SecureSource 20 riders;
SecureSource rider;
Accumulation Protector Benefit rider;
Guarantor Withdrawal Benefit for Life rider;
Guarantor Withdrawal Benefit rider;
Income Assurer Benefit - MAV rider;
Income Assurer Benefit - 5% Accumulation Benefit Base rider; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider.
(1) There is no additional charge for this feature.
(2) Not available with 5% Accumulation or Enhanced Death Benefit.
The Original Contract provides for allocations of purchase payments to the GPAs,
the one-year fixed account (if included), the DCA fixed account (if included)
and/or to the subaccounts in even 1% increments subject to the required $1,000
required minimum investment for the GPAs. For Contract Option L, the amount of
any purchase payment allocated to the one-year fixed account in total cannot
exceed 30% of the purchase payment. More than 30% of a purchase payment may be
so allocated if you establish an automated dollar-cost averaging arrangement
with respect to the purchase payment according to procedures currently in
effect. We reserve the right to further limit purchase payment allocations to
the one-year fixed account if the interest rate we are then crediting on new
purchase payments allocated to the one-year fixed account is equal to the
minimum interest rate stated in the contract. For Contract Option C, the one-
year fixed account may not be available or may be significantly limited in some
states. See your contract for the actual terms of the one-year fixed account you
purchased.
FOR BOTH THE CURRENT CONTRACT AND THE ORIGINAL CONTRACT:
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
--------------------------------------------------------------------------------
38 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the annuitization start date.
THE ANNUITIZATION START DATE
CURRENT CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments. If
your contract is annuitized, the contract goes into payout and only the annuity
payout provisions continue. Unless annuity payout Plan E is selected, you will
no longer have access to your contract value. This means that the death benefit
and any optional benefits you have elected will end. When we process your
application, we will establish the annuitization start date to be the maximum
age (or contract anniversary if applicable). You also can change the
annuitization start date, provided you send us written instructions at least 30
days before annuity payouts begin.
The annuitization start date must be:
no earlier than the 30th day after the contract's effective date; and no later
than
the owner's 95th birthday or the tenth contract anniversary, if later,
or such other date as agreed to by us.
Six months prior to your annuitization date, we will contact you with your
options including the option to postpone your annuitization start date to a
future date. You can also choose to delay the annuitization of your contract
beyond age 95 indefinitely, to the extent allowed by applicable tax laws.
If you do not make an election, annuity payouts using the contract's default
option of annuity payout Plan B - Life with 10 years certain will begin on the
annuitization start date and your monthly annuity payments will continue for as
long as the annuitant lives. If the annuitant does not survive 10 years,
beneficiaries will continue to receive payments until 10 years of payments have
been made. Some distributors require annuitization by age 95. In that case, the
option to continue to defer the annuitization start date after age 95 is not
available.
If you own a qualified annuity (for example, an IRA) and tax laws require that
you take distributions from your annuity prior to your new annuitization start
date, your contract will not be automatically annuitized. However, if you
choose, you can elect to request annuitization or take surrenders to meet your
required minimum distributions.
Please see "SecureSource Stages 2 -- Other Provisions" section regarding options
under this rider at the annuitization start date.
ORIGINAL CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments and you
will receive the first payment on the annuitization start date. The first
annuity payment will be made as provided by the annuity payment plan you select.
When we process your application, we will establish the annuitization start date
to be the maximum age (or contract anniversary if applicable). You also can
change the annuitization start date, provided you send us written instructions
at least 30 days before annuity payouts begin.
The annuitization start date must be:
the annuitant's 90th(1) birthday or the tenth contract anniversary, if
purchased after age 80(1),
or such other date as agreed upon by us.
Prior to your annuitization start date, we will contact you with your options.
If you do not make an election, your annuitization start date will be deferred.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
annuitization start date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select an annuitization start date
that is later than April 1 of the year following the calendar year when they
reach age 70 1/2).
If you satisfy your required minimum distributions in the form of partial
surrenders from this contract, annuity payouts can start:
As late as the annuitant's 90th(1) birthday or the tenth contract anniversary,
if later, or a date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, will delay the
annuitization start date for these contracts.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the annuitization start date must be
no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
while the contract is in force and before the annuitization start date. If there
is more than one beneficiary, we will pay each beneficiary's designated share
when we receive their completed claim. A beneficiary will bear the investment
risk of the variable account until we receive the beneficiary's completed claim.
If there is no named beneficiary, the default provisions of your contract will
apply. (See "Benefits in Case of Death" for more about beneficiaries.)
If you select one of the SecureSource series - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
If we do not receive your initial purchase payment within 180 days from the
application signed date, we will consider your contract void from the start.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS (WITHOUT CORPORATE OFFICE APPROVAL)
- CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state
availability)
MAXIMUM TOTAL PURCHASE PAYMENTS* BASED ON YOUR AGE ON THE EFFECTIVE DATE OF
THE PAYMENT:
For the first year and
total:
through age 85 $1,000,000
age 86 or older $0
For each subsequent year:
through age 85 $100,000
age 86 or older $0
- ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Jan. 26, 2009, after initial purchase payments are received, limited
additional purchase payments allowed for contracts with the Guarantor Withdrawal
Benefit rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource
riders, subject to state restrictions. Initial purchase payments are: 1)
payments received with the application, and 2) Tax Free Exchanges, rollovers,
and transfers listed on the annuity application, paper work initiated within 30
days from the application signed date and received within 180 days from the
application signed date.
For contracts issued in all states except those listed below, the only
additional purchase payments that will be allowed on/after Jan. 26, 2009 are the
maximum annual contribution permitted by the Code for qualified annuities.
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract with the Guarantor Withdrawal Benefit
rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource riders will
be limited to $100,000 for the life of your contract. The limit does not apply
to initial purchase payments,
--------------------------------------------------------------------------------
40 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Feb. 27, 2012, no additional purchase payments are allowed for
contracts with SecureSource Stages 2 riders, SecureSource Stages riders and
SecureSource 20 riders subject to certain exceptions listed below.
Certain exceptions apply and the following additional purchase payments will be
allowed on or after Feb. 27, 2012:
a. Current tax year contributions for TSAs and Custodial and investment only
plans under Section 401(a) of the Code, up to the annual limit set by the
IRS.
b. Prior and current tax year contributions up to the annual limit set up by the
IRS for any Qualified Accounts except TSAs and 401(a)s. This annual limit
applies to IRAs, Roth IRAs and SEP plans.
We reserve the right to change these current rules any time, subject to state
restrictions.
The riders also prohibit additional purchase payments while the rider is
effective, if (1) you decline a rider fee increase, or (2) the Annual Lifetime
Payment (ALP) is established and your contract value on an anniversary is less
than four times the ALP. (For the purpose of this calculation only, the ALP is
determined using percentage B, as described under "Optional Living
Benefits -- SecureSource Stages 2 Riders, SecureSource Stages Riders and
SecureSource 20 Riders.")
Additional purchase payment restrictions for the Accumulation Protector Benefit
rider
Additional purchase payments are prohibited during the waiting period after the
first 180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
For the Current Contract, additional purchase payments are also allowed within
180 days from the last contract anniversary if you exercise the elective step up
option.
Subject to state restrictions, we reserve the right to change the above purchase
payment limitations, including making further restrictions, upon written notice.
* These limits apply in total to all RiverSource Life annuities you own unless
a higher maximum applies to your contract. We reserve the right to waive or
increase the maximum limit. For qualified annuities, the Code's limits on
annual contributions also apply. Additional purchase payments for inherited
IRA contracts cannot be made unless the payment is IRA money inherited from
the same decedent.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, surrenders or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully surrendered. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
that applies to the fixed account. For the Current Contract, we reserve the
right to increase this charge after the first contract anniversary to a maximum
of $50.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary. For the Current Contract, we reserve the right to
charge up to $20 after the first contract anniversary for contracts with
contract value of $50,000 or more.
If you take a full surrender from your contract, we will deduct the charge at
the time of surrender regardless of the contract value. We cannot increase the
annual contract administrative charge for the Original Contract. This charge
does not apply to amounts applied to an annuity payment plan or to the death
benefit (other than when deducted from the Full Surrender Value component of the
death benefit for the Current Contract).
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the fixed account and GPAs. We cannot
increase these fees.
The contract (either Option L or Option C) and the death benefit guarantee in
effect determine the mortality and expense risk fee you pay.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MORTALITY AND
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE
CV Death Benefit* 1.55%
ROPP Death Benefit 1.55
MAV Death Benefit 1.80
5% Accumulation Death Benefit 1.95
Enhanced Death Benefit 2.00
MORTALITY AND
IF YOU SELECT CONTRACT OPTION C AND: EXPENSE RISK FEE
CV Death Benefit* 1.65%
ROPP Death Benefit 1.65
MAV Death Benefit 1.90
5% Accumulation Death Benefit 2.05
Enhanced Death Benefit 2.10
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MORTALITY AND
IF YOU SELECT CONTRACT OPTION L AND: EXPENSE RISK FEE
ROP Death Benefit 1.55%
MAV Death Benefit 1.75
5% Accumulation Death Benefit 1.90
Enhanced Death Benefit 1.95
--------------------------------------------------------------------------------
42 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
MORTALITY AND
IF YOU SELECT CONTRACT OPTION C AND: EXPENSE RISK FEE
ROP Death Benefit 1.65%
MAV Death Benefit 1.85
5% Accumulation Death Benefit 2.00
Enhanced Death Benefit 2.05
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of annuitants live. If, as a group, owners or annuitants outlive
the life expectancy we assumed in our actuarial tables, then we must take money
from our general assets to meet our obligations. If, as a group, owners or
annuitants do not live as long as expected, we could profit from the mortality
risk fee. We deduct the mortality risk fee from the subaccounts during the
annuity payout period even if the annuity payout plan does not involve a life
contingency.
Expense risk arises because we cannot increase the contract administrative
charge for the Original Contract, we are limited on how much we can increase the
contract administrative charge for the Current Contract, and we cannot increase
the variable account administrative charge and these charges may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge will cover sales and distribution expenses.
SURRENDER CHARGE
You select either contract Option L or Option C at the time of application.
Contract Option C has no purchase payment surrender charge schedule but carries
a higher mortality and expense risk fee than contract Option L. If you select
contract Option L and you surrender all or part of your contract value before
the annuitization start date, we may deduct a surrender charge. As described
below, a surrender charge schedule applies to each purchase payment you make.
The surrender charge lasts for four years from the date of each purchase payment
(see "Expense Summary").
You may surrender an amount during any contract year without a surrender charge.
We call this amount the total free amount (FA for the Current Contract, TFA for
the Original Contract). Throughout this prospectus when we use the acronym FA,
it includes TFA. The FA varies depending on whether your contract includes one
of the SecureSource series of riders, the Guarantor Withdrawal Benefit for Life
rider or the Guarantor Withdrawal Benefit rider:
CURRENT CONTRACT WITHOUT SECURESOURCE STAGES RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year; or
current contract earnings.
During the first contract year, the FA is the greater of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITHOUT SECURESOURCE RIDER, GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year; or
current contract earnings.
CURRENT CONTRACT WITH SECURESOURCE STAGES RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year;
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
current contract earnings; or
the Remaining Annual Lifetime Payment (this amount will be zero during the
waiting period).
During the first contract year, the FA is the greatest of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITH SECURESOURCE RIDER OR GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment.
ORIGINAL CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment to be the prior contract
anniversary's contract value during the first contract year.
Amounts surrendered in excess of the FA may be subject to a surrender charge as
described below.
A surrender charge will apply if the amount you surrender includes any of your
prior purchase payments that are still within their surrender charge schedule.
To determine whether your surrender includes any of your prior purchase payments
that are still within their surrender charge schedule, we surrender amounts from
your contract in the following order:
1. First, we surrender the FA. Contract earnings are surrendered first, followed
by purchase payments. We do not assess a surrender charge on the FA. We
surrender payments that are considered part of the FA on a first-in, first-
out (FIFO) basis for the Current Contract, and last-in, first-out (LIFO)
basis for the Original Contract.
2. Next, we surrender purchase payments received that are beyond the surrender
charge period shown in your contract. We surrender these payments on a FIFO
basis. We do not assess a surrender charge on these payments.
3. Finally, we surrender any additional purchase payments received that are
still within the surrender charge period shown in your contract. We surrender
these payments on a FIFO basis. We do assess a surrender charge on these
payments.
The amount of purchase payments surrendered is calculated using a prorated
formula based on the percentage of contract value being surrendered. As a
result, the amount of purchase payments surrendered may be greater than the
amount of contract value surrendered.
We determine your surrender charge by multiplying each of your payments
surrendered which could be subject to a surrender charge by the applicable
surrender charge percentage (see "Expense Summary"), and then adding the total
surrender charges.
For a partial surrender, we will determine the amount of contract value that
needs to be surrendered, which after any surrender charge and any positive or
negative market value adjustment, will equal the amount you request.
EXAMPLE: Each time you make a purchase payment under the contract option L, a
surrender charge schedule attaches to that purchase payment. The surrender
charge percentage for each purchase payment declines according to the surrender
charge schedule shown in your contract. (THE SURRENDER CHARGE PERCENTAGES FOR
THE 4-YEAR SURRENDER CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY".) For example, if you select contract Option L, during the first two
years after a purchase payment is made, the surrender charge percentage attached
to that payment is 8%. The surrender charge percentage for that payment during
the fourth year after it is made is 6%. At the beginning of the fifth year after
that purchase payment is made, and thereafter, there is no longer a surrender
charge as to that payment.
For an example, see Appendix B.
WAIVER OF SURRENDER CHARGES FOR CONTRACT OPTION L
We do not assess surrender charges for:
surrenders each year that represent the total free amount for that year;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which surrender charges are waived
can be no greater than the RMD amount calculated under your specific contract
--------------------------------------------------------------------------------
44 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
currently in force. (Please note that, if you are buying a new contract with
inherited IRA money, we will not waive surrender charges for a five-year
distribution and, therefore, if that option is selected, you should choose a
surrender charge period that is no longer than the time remaining in the five-
year period.);
amounts applied to an annuity payment plan (EXCEPTION: As described below, if
you select annuity payout Plan E, and choose later to surrender the value of
your remaining annuity payments, we will assess a surrender charge. This
exception also applies to contract Option C.)
surrenders made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions). For the Current Contract, waiver of surrender
charges for Contingent events will not apply to Tax Free Exchanges, rollovers
and transfers to another annuity contract;
amounts we refund to you during the free look period; and
death benefits.
CURRENT CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you are confined to a hospital or nursing home and have
been for the prior 60 days or confinement began within 30 days following a 60
day confinement period. Such confinement must begin after the contract issue
date. Your contract will include this provision when you are under age 76 at
contract issue. You must provide us with a letter containing proof
satisfactory to us of the confinement as of the date you request the
surrender. We must receive your surrender request no later than 91 days after
your release from the hospital or nursing home. The amount surrendered must be
paid directly to you.
Surrenders you make if you are disabled with a medical condition and are
diagnosed in the second or later contract years with reasonable medical
certainty, that the disability will result in death within 12 months or less
from the date of the diagnosis. You must provide us with a licensed
physician's statement containing the terminal illness diagnosis, the expected
date of death and the date the terminal illness was initially diagnosed. The
amount surrendered must be paid directly to you.
ORIGINAL CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the surrender.
Surrenders you make if you or the annuitant are diagnosed in the second or
later contract years as disabled with a medical condition that with reasonable
medical certainty will result in death within 12 months or less from the date
of the diagnosis. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
BOTH CONTRACTS:
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5%. The
surrender charge equals the present value of the remaining payouts using the
assumed investment return minus the present value of the remaining payouts using
the discount rate. The surrender charge will apply whether you have Contract
Option L or Contract Option C. (See "Charges -- Surrender Charge" and "The
Annuity Payout Period -- Annuity Payout Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax on the
annuitization start date, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full surrender
from your contract.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
OPTIONAL LIVING BENEFIT CHARGES
SECURESOURCE STAGES 2 RIDER CHARGE
We deduct an annual charge for this optional feature only if you select it as
follows:
SecureSource Stages 2 -- Single Life rider, 0.95%
SecureSource Stages 2 -- Joint Life rider, 1.15%
The charge is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages 2 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated or until the contract value reduces to zero. If the
contract or rider is terminated for any reason, we will deduct the charge,
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the SecureSource Stages 2 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each investment option. The SecureSource Stages 2 -- Single Life rider fee
will not exceed a maximum of 1.75%. The SecureSource Stages 2 -- Joint Life
rider fee will not exceed a maximum of 2.25%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iv) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(v) the ability to change your investment option to one that is more
aggressive than your current investment option. Any change to a less
aggressive investment option will further limit the investment
options available to the then current and less aggressive investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive investment option than your current investment option and if the
new investment option has a higher current annual rider fee. The annual rider
fees associated with the available investment option may change at our
discretion, however these changes will not apply to this rider unless you
change your current investment option to a more aggressive one. The new fee
will be in effect on the valuation date we receive your written request to
change your investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same investment option or move to a less
aggressive one. Also, this type of fee increase does not allow you to
terminate the rider.
If your rider fee increases, on the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different fees that were in effect that year, adjusted for the number of
calendar days each fee was in effect.
The fee does not apply after the annuitization start date.
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 1.50%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. For contract applications signed on or after
May 3, 2010, we prorate this charge among all accounts and the subaccounts in
the same proportion as your interest in each bears to your total contract value.
For contract applications
--------------------------------------------------------------------------------
46 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
signed prior to June 1, 2009, the charge will be prorated among the GPAs, the
one-year fixed account and the subaccounts. We will modify this prorated
approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or on the annuitization start date,
we will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) For contract applications signed prior to Oct. 4 2010, the following charges
apply:
APPLICATION SIGNED DATE CURRENT CHARGE
Before Jan. 26, 2009 0.55%
Jan. 26, 2009 -- May 30, 2009 0.80%
May 3, 2010 -- July 18, 2010 0.95%
July 19, 2010 -- Oct. 3 2010 1.10%
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider fee will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuitization start date.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
SECURESOURCE STAGES RIDER FEE
We deduct a charge for this optional feature only if you select it as follows:
SecureSource Stages - Single Life rider, 1.10%
SecureSource Stages - Joint Life rider, 1.35%
The fee is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge adjusted for
the number of calendar days coverage was in place since we last deducted the
charge.
Currently the SecureSource Stages rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource Stages - Single Life
rider fee will not exceed a maximum of 2.00%. The SecureSource Stages - Joint
Life rider fee will not exceed a maximum of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups, any ability to make additional purchase
payments,
(ii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iii) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current investment option. Any change to
a less aggressive PN program investment option will further limit the
PN program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment option and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive model. Also, this type of fee increase does not allow
you to terminate the rider.
--------------------------------------------------------------------------------
48 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
SECURESOURCE 20 RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource 20 - Single Life rider, 1.25%;
SecureSource 20 - Joint Life rider, 1.55%.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource 20 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee. If the RBA reduces to zero but the contract
value has not been depleted, you will continue to be charged.
Currently the SecureSource 20 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource 20 - Single Life rider
fee will not exceed a maximum charge of 2.00%. The SecureSource 20 - Joint Life
rider fee will not exceed a maximum charge of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any pending increase to the ALP due to the 20% credit on the later
of the third rider anniversary or the date the ALP is established,
and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current one. Any change to a less
aggressive PN program investment option will further limit the PN
program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee increase after any
increase is more than 0.25 percentage points higher than your fee before
the increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment options and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive PN program investment option. Also, this type of fee
increase does not allow you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, or the contract value reduces to zero. If the contract is terminated
for any reason or on the annuitization start date, we will deduct the charge
from the proceeds payable, adjusted for the number of calendar days coverage was
in place since we last deducted the fee. If the RBA goes to zero but the
contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each investment option. The Guarantor Withdrawal Benefit for
Life rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each investment option.
(1) See disclosure in Appendix I.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or on the annuitization start date, we will deduct the
charge, adjusted for the number of calendar days coverage was in place since we
last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but
the contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we
--------------------------------------------------------------------------------
50 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
receive your written request to step up or change your PN program investment
option. On the next contract anniversary, we will calculate an average rider
fee, for the preceding contract year only, that reflects the various different
charges that were in effect that year, adjusted for the number of calendar days
each fee was in effect.
The charge does not apply after the annuitization start date.
(1) See disclosure in Appendix J.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or on
the annuitization start date, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix K.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
For the Original Contract, on the annuitization start date and if the contract
is terminated for any reason other than death, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
Current Contract: the sum of your purchase payments allocated to the regular
fixed account (if included) and the Special DCA fixed account, and transfer
amounts to the regular fixed account (including any positive or negative MVA
on amounts transferred from the GPAs);
Original Contract: the sum of your purchase payments allocated to the one-year
fixed account (if included) and the DCA fixed account (if included), and
transfer amounts to the one-year fixed account (including any positive or
negative MVA on amounts transferred from the GPAs);
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges for contract Option L) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, we subtract a certain number of accumulation
units from your contract each time you take a partial surrender, transfer
amounts out of a subaccount, or we assess a contract administrative charge, a
surrender charge or fee for any optional riders with annual charges (if
applicable).
--------------------------------------------------------------------------------
52 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial surrenders;
surrender charges (for contract Option L);
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, for the
Original Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the one-year fixed account or one-year GPA to one or more subaccounts. Automated
transfers are not available for GPA terms of two or more years. You can also
obtain the benefits of dollar-cost averaging by setting up regular automatic SIP
payments or by establishing an interest sweep strategy. Interest sweeps are a
monthly transfer of the interest earned from the one-year fixed account or one-
year GPA into the subaccounts of your choice. If you participate in an interest
sweep strategy the interest you earn on the one-year fixed account or one-year
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
GPA will be less than the annual interest rate we apply because there will be no
compounding. For the Current Contract, you might transfer a set amount monthly
from a relatively conservative subaccount to a more aggressive one, or to
several others, or from the regular fixed account to one or more subaccounts.
You may not set up an automated transfer to or from the GPAs or set up an
automated transfer to the regular fixed account. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments.
The Current Contract does not allow an interest sweep strategy.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the Special DCA fixed account (Current Contract)
and the DCA fixed account (Original Contract). See the "Special DCA Fixed
Account", "DCA Fixed Account" and "Portfolio Navigator Program" sections in this
prospectus for details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix H -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in a PN program, asset rebalancing is
available for use with the Special DCA fixed account (Current Contract) and the
DCA fixed account (Original Contract) (see "Special DCA Fixed Account" and "DCA
Fixed Account") only if your subaccount allocation for asset rebalancing is
exactly the same as your subaccount allocation for transfers from the Special
DCA fixed account and the DCA fixed account. If you change your subaccount
allocations under the asset rebalancing program or the Special DCA fixed account
and the DCA fixed account, we will automatically change the subaccount
allocations so they match. If you do not wish to have the subaccount allocation
be the same for the asset
--------------------------------------------------------------------------------
54 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
rebalancing program and the Special DCA fixed account and the DCA fixed account,
you must terminate the asset rebalancing program or the Special DCA fixed
account and the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the fund of
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
funds investment options. If you begin taking income from your contract and have
a living benefit rider that requires a move to a certain model portfolio once
you begin taking income, you will be transferred to the fund of funds that
corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolios investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA fixed account
(Original Contract) or Special DCA fixed account (Current Contract), when
available (see "The Special DCA Fixed Account" and "DCA Fixed Account"), and you
are participating in the PN program, we will make monthly transfers in
accordance with your instructions from the DCA fixed account (Original Contract)
or Special DCA fixed account (Current Contract), into the investment option or
model portfolio you have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
--------------------------------------------------------------------------------
56 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM;
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full surrender. Surrender charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDERS : The
SecureSource series or the Guarantor Withdrawal Benefit for Life riders
require that your contract value be invested in one of the PN program
investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the SecureSource series rider or the
Guarantor Withdrawal Benefit for Life rider once you have selected it, you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE
SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY
IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full surrender if you do not
want to invest in any of the PN program investment options. Surrender charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM
(AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE
CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
For the Current Contract, you may transfer contract value from any one
subaccount, GPAs, the regular fixed account and the Special DCA fixed account to
another subaccount before the annuitization start date. For the Original
Contract, you may transfer contract value from any one subaccount, GPAs, the
one-year fixed account, or the DCA fixed account to another subaccount before
the annuitization start date. Certain restrictions apply to transfers involving
the GPAs, the regular fixed account and the one-year fixed account. You may not
transfer contract value to the Special DCA fixed account or the DCA fixed
account. You may not transfer contract value from the Special DCA fixed account
or the DCA fixed account except as part of automated monthly transfers.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period, unless an exception applies.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
TRANSFER POLICIES
CURRENT CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the regular fixed
account (if included) at any time. However, if you made a transfer from the
regular fixed account to the subaccounts or the GPAs, took a partial surrender
from the fixed account or terminated automated transfers from the Special DCA
fixed account, you may not make a transfer from any subaccount or GPA to the
regular fixed account for six months following that transfer, partial
surrender or termination.
You may transfer contract values from the regular fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the regular fixed account are not subject to an MVA. For Contract Option
L, you may transfer the entire contract value to the regular fixed account.
Subject to state restrictions, we reserve the right to limit transfers to the
regular fixed account at any time on a non-discriminatory basis with
notification. Transfers out of the regular fixed account, including automated
transfers, are limited to 30% of regular fixed account value at the beginning
of the contract year(1) or $10,000, whichever is greater. Because of this
limitation, it may take you several years to transfer all your contract value
from the regular fixed account. You should carefully consider whether the
regular fixed account meets your investment criteria before you invest.
Subject to state restrictions, we reserve the right to change the percentage
allowed to be transferred from the regular fixed account at any time on a non-
discriminatory basis with notification.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs or the
regular fixed account into the Special DCA fixed account. However, you may
transfer contract values as automated monthly transfers from the Special DCA
fixed account to the subaccounts or the PN program model portfolio or
investment option in effect. (See "Special DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and Special DCA fixed account.
(1) All purchase payments received into the regular fixed account prior to your
transfer request are considered your beginning of contract year value during
the first contract year.
ORIGINAL CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account (if included) at any time. However, if you made a transfer from the
one-year fixed account to the subaccounts or the GPAs, you may not make a
transfer from any subaccount or GPA back to the one-year fixed account for six
months following that transfer.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to further limit transfers to or from the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values as automated monthly transfers from the DCA fixed account to
any of the investment options available under your contract, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPA, as described above. (See "DCA Fixed
Account.")
--------------------------------------------------------------------------------
58 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and DCA fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or surrender to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
CURRENT CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire subaccount balance**
ORIGINAL CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $500 or entire account balance
--------------------------------------------------------------------------------
60 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ALL CONTRACTS
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of
the distribution.
** The contract value after a partial surrender must be at least $500.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
Your investment professional can help you set up automated transfers among your
subaccounts, regular fixed account (Current Contract), the one-year fixed
account (Original Contract) or GPAs or automated partial surrenders from the
GPAs, regular fixed account, one-year fixed account, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract) or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account (Original Contact only) to
any one of the subaccounts may not exceed an amount that, if continued, would
deplete the one-year fixed account within 12 months.
Automated transfers from the regular fixed account (Current Contract only) are
limited to 30% of the regular fixed account values at the beginning of the
contract year or $10,000, whichever is greater.
Automated surrenders may be restricted by applicable law under some contracts.
You may not make additional purchase payments if automated partial surrenders
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a Special DCA fixed account (Current
Contract) or DCA fixed account (Original Contract) (see "Special DCA Fixed
Account", "Fixed Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
If you have one of the SecureSource series of riders, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, you may set
up automated partial surrenders up to the benefit amount available for
withdrawal under the rider.
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $50
ORIGINAL CONTRACT:
Transfers or surrenders: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $250 or entire contract balance
ORIGINAL CONTRACT:
Transfers or surrenders: $500 or entire account balance
MAXIMUM AMOUNT
CURRENT CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $100,000
ORIGINAL CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $25,000
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone surrender within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and surrenders are automatically available. You may request
that telephone transfers and surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before the
annuitization start date by sending us a written request or calling us. If we
receive your surrender request in good order at our corporate office before the
close of business, we will process your surrender using the accumulation unit
value we calculate on the valuation date we received your surrender request. If
we receive your surrender request at our corporate office at or after the close
of business, we will process your surrender using the accumulation unit value we
calculate on the next valuation date after we received your surrender request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, surrender charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make surrenders after the
annuitization start date except under Variable Annuity Payout Plan E. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Any partial surrenders you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected one of the SecureSource
series of riders, the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider and your partial surrenders in any contract
year exceed the permitted surrender amount under the terms of the rider, your
benefits under the rider may be reduced (see "Optional Benefits"). The first
partial surrender request during the first contract year, for the SecureSource
Stages 2 rider and any partial surrender request that reverses previous step-ups
during the 3-year waiting period or exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement. This form shows the
projected effect of the surrender on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you.
In addition, surrenders you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
SURRENDER POLICIES
CURRENT CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
Special DCA fixed account and/or the regular fixed account (if included) in the
same proportion as your value in each account correlates to your total contract
value, unless requested otherwise(1). The minimum contract value after partial
surrender is $500.
ORIGINAL CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
DCA fixed account, and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise(1). After executing a partial surrender, the value in each
subaccount, one-year fixed account or GPA must be either zero or at least $50.
(1) If you elected one of the SecureSource series of riders, you do not have the
option to request from which account to surrender.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
--------------------------------------------------------------------------------
62 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING THE ANNUITANT
For the Current Contract, if you have a nonqualified annuity and are a natural
person (excluding a revocable trust), you may change the annuitant or contingent
annuitant if the request is made prior to the annuitization start date and while
the existing annuitant or contingent annuitant is living. The change will become
binding on us when we receive it. If you and the annuitant are not the same
person and the annuitant dies before the annuitization start date, the owner
becomes the annuitant unless a contingent annuitant has been previously
selected. You may not change the annuitant if you have a qualified annuity or
there is non-natural or revocable trust ownership.
For the Original Contract, annuitant changes are not allowed.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office. We
will honor any change of ownership request received in good order that we
believe is authentic and we will use reasonable procedures to confirm
authenticity. If we follow these procedures, we will not take any responsibility
for the validity of the change.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders and
any owner was not an owner before the change, all owners (including any prior
owner who is still an owner after the ownership change) (along with the
annuitant for the Original Contract) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract.
If you have an Income Assurer Benefit rider and/or the Benefit Protector Plus
rider, the riders will terminate upon transfer of ownership of the annuity
contract.
For the Original Contract, our current administrative practice is that if you
have the Benefit Protector rider, the owner can choose to terminate the Benefit
Protector rider during the 30-day window following the effective date of the
ownership change.
For the Current Contract, if you have the Benefit Protector rider, if any owner
is older than age 75 immediately following the ownership change, the rider will
terminate upon change of ownership. If all owners are younger than age 76, the
rider continues unless the owner chooses to terminate it during the 30-day
window following the effective date of the ownership change. The Benefit
Protector death benefit values may be reset (see "Optional Death
Benefits - Benefit Protector Death Benefit Rider").
For the Current Contract, the death benefit may change due to a change of
ownership. If any owner is older than age 85 immediately following the ownership
change, the MAV Death Benefit, 5% Accumulation Death Benefit and EDB will
terminate, the ROPP Death Benefit will be unavailable, and the Contract Value
Death Benefit will apply. If any owner is older than age 79 but all owners are
younger than age 86, the MAV Death Benefit, the 5% Accumulation Death Benefit,
and the EDB will terminate and the ROPP Death Benefit will apply. If all owners
are age 79 or younger, the ROPP Death Benefit, MAV Death Benefit, 5%
Accumulation Death Benefit or EDB will continue. The ROPP Death Benefit, MAV
Death Benefit, 5% Accumulation Death Benefit and EDB values may be reset (see
"Benefits in the Case of Death"). If the death benefit that applies to your
contract changes due to an ownership change, the mortality and expense risk fee
may change as well (see "Charges - Mortality and Expense Risk Fee").
The SecureSource series - Joint Life rider, if selected, only allows transfer of
the ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force,
subject to state restrictions. For the SecureSource Stages 2 - Joint Life rider,
if ownership is transferred from a covered spouse to their revocable trust(s),
the annuitant must be one of the covered spouses. The Accumulation Protector
Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for
Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of
ownership of the annuity contract and the values may be reset. For SecureSource
rider and Guarantor Withdrawal Benefit for Life rider, any ownership change that
impacts the guarantees provided will not be considered in good order until we
receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the ownership change on the rider benefits or a verbal acknowledgement
that you understand and accept the impacts that have been explained to you. For
the Secure Source Stages 2 - Single Life riders, Secure Source 20 - Single Life
and SecureSource Stages - Single Life riders, an ownership change that results
in different covered person will terminate the rider, subject to state
restrictions. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
We will pay the death benefit to your beneficiary upon your death if you die
before the annuitization start date while this contract is in force. If a
contract has more than one person as the owner, we will pay the benefits upon
the first to die of any owner. The basic death benefit available under your
contract at contract issue is the ROPP Death Benefit. In addition to the ROPP
Death Benefit, we also offer the following optional death benefits at contract
issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
--------------------------------------------------------------------------------
64 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If it is available in your state and if you are age 79 or younger at contract
issue, you can elect any one of the above optional death benefits. If you are
age 80 or older at contract issue, the ROPP Death Benefit will apply.
Once you elect a death benefit, you cannot change it; however the death benefit
that applies to your contract may change due to an ownership change (see
"Changing Ownership") or continuation of the contract by the spouse under the
spousal continuation provision.
We show the death benefit that applies to your contract at issue on your
contract's data page. The death benefit determines the mortality and expense
risk fee that is assessed against the subaccounts. (See "Charges -- Mortality
and Expense Risk Fee.")
We will base the benefit paid on the death benefit coverage in effect on the
date of your death.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROPP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the
partial surrender.
DB = the applicable ROPP value or MAV on the date of (but prior to) the
partial surrender
CV = contract value on the date of (but prior to) the partial surrender.
COVERED LIFE CHANGE: is either continuation of the contract by a spouse under
the spousal continuation provision, or an ownership change where any owner after
the ownership change was not an owner prior to the change.
CONTRACT VALUE DEATH BENEFIT (CV DEATH BENEFIT): is the death benefit available
if any owner after an ownership change or spouse who continues the contract
under the spousal continuation provision is over age 85 and therefore cannot
qualify for the ROPP death benefit. Under this benefit, we will pay the
beneficiary the greater of:
- the Full Surrender Value, or
- the contract value after any rider charges have been deducted.
FULL SURRENDER VALUE: is the contract value immediately prior to the surrender
(immediately prior to payment of a death claim for death benefits) less:
any surrender charge,
pro rata rider charges,
the contract charge, and
plus:
any positive or negative market value adjustment.
RETURN OF PURCHASE PAYMENTS (ROPP) DEATH BENEFIT
The ROPP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for surrenders.
If you die before the annuitization start date and while this contract is in
force, the death benefit will be the greatest of:
1. the contract value after any rider charges have been deducted,
2. the ROPP Value, or
3. the Full Surrender Value.
ROPP VALUE: is the total purchase payments on the contract issue date.
Additional purchase payments will be added to the ROPP value. Adjusted partial
surrenders will be subtracted from the ROPP value.
After a covered life change for a spouse who continues the contract and is age
85 or younger, we reset the ROPP value to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value). If the spouse who continues
the contract is age 86 or older, the ROPP Death Benefit will terminate and he or
she will be eligible for the CV death benefit.
After a covered life change other than for the spouse who continues the
contract, if the prior owner and all current owners are eligible for the ROPP
death benefit we reset the ROPP value on the valuation date we receive your
request for the ownership change to the contract value after any rider charges
have been deducted, if the contract value is less.
If the prior owner was not eligible for the ROPP but all current owners are
eligible, we reset the ROPP value to the contract value after any rider charges
have been deducted on the valuation date we receive your request for the
ownership change.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
IF AVAILABLE IN YOUR STATE AND YOU ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU
MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE
YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE
THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR CERTAIN OLDER
ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 80. BE SURE TO
DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS
ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you die while the contract is in force
and before the annuitization start date, the death benefit will be the greatest
of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV; or
4. the Full Surrender Value as described above.
The MAV equals the ROPP value prior to the first contract anniversary. Every
contract anniversary prior to the earlier of your 81st birthday or your death,
we compare the MAV to the current contract value and we reset the MAV to the
higher amount. The MAV is increased by any additional purchase payments and
reduced by adjusted partial surrenders.
After a covered life change for a spouse who is age 79 or younger and continues
the contract, we reset the MAV to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value).
After a covered life change other than for a spouse who continues the contract,
if all owners are under age 80, we reset the MAV on the valuation date we
receive your request for the ownership change to the lesser of these two values:
(a) the contract value after any rider charges have been deducted, or
(b) the MAV on that date, but prior to the reset.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the MAV. If your spouse is
over age 79 but younger than age 86 when the contract was continued, he or she
will be eligible for the ROPP death benefit. If your spouse is age 86 or older
when the contract was continued, he or she will be eligible for the CV death
benefit.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you die while the contract is
in force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the 5% accumulation death benefit floor; or
4. the Full Surrender Value as described above.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% ACCUMULATION DEATH BENEFIT FLOOR: is equal to the sum of:
1. the contract value in the Excluded Accounts (currently, regular fixed account
and GPAs), if any, and
2. the variable account floor.
PROTECTED ACCOUNT BASE (PAB) AND EXCLUDED ACCOUNT BASE (EAB): Adjustments to
variable account floor require tracking amounts representing purchase payments,
not previously surrendered, that are allocated or transferred to the Protected
Accounts (currently, subaccounts and the Special DCA fixed account) and Excluded
Accounts.
- PAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Protected Accounts.
- EAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Excluded Accounts.
--------------------------------------------------------------------------------
66 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT FLOOR: Variable account floor is PAB increased on contract
anniversaries prior to the earlier of your 81st birthday or your death.
NET TRANSFER: If multiple transfers are made on the same valuation day, they are
combined to determine the net amount of contract value being transferred between
the Protected Accounts and Excluded Accounts. This net transfer amount is used
to adjust the EAB, PAB and variable account floor values.
ESTABLISHMENT OF VARIABLE ACCOUNT FLOOR, PAB AND EAB
On the contract date, 1) variable account floor and PAB are established as your
initial purchase payment allocated to the Protected Accounts; and 2) EAB is
established as your initial purchase payment allocated to the Excluded Accounts.
ADJUSTMENTS TO VARIABLE ACCOUNT FLOOR, PAB AND EAB
Variable account floor, PAB and EAB are adjusted by the following:
1. When an additional purchase payment is made;
(A) any payment you allocate to the Protected Accounts are added to PAB and to
variable account floor, and
(B) any payment you allocate to the excluded accounts are added to EAB.
2. When transfers are made to the Protected Accounts from the Excluded Accounts,
we increase PAB and variable account floor, and we reduce EAB.
The amount we deduct from EAB and add to PAB and to variable account floor is
calculated for each net transfer using the following formula:
A = the amount the contract value in the Excluded Accounts is reduced by the
net transfer
B = EAB on the date of (but prior to) the transfer
C = the contract value in the Excluded Accounts on the date of (but prior to)
the transfer.
3. When partial surrenders are made from the Excluded Accounts, we reduce EAB by
the same amount as calculated above for transfers from the Excluded Accounts,
using surrender amounts in place of transfer amounts. Partial surrenders from
Excluded Accounts do not increase PAB.
4. When transfers are made to the Excluded Accounts from the Protected Accounts,
we reduce PAB and variable account floor, and increase EAB.
The amounts we deduct from PAB and variable account floor are calculated for
each net transfer using the following formula:
A = the amount the contract value in the Protected Accounts is reduced by the
net transfer
B = the applicable PAB or variable account floor on the date of (but prior
to) the transfer
C = the contract value in the Protected Accounts on the date of (but prior
to) the transfer.
The amount we subtract from PAB is added to EAB.
5. When partial surrenders are made from the Protected Accounts, we reduce PAB
and variable account floor by the same amount as calculated above for
transfers from the Protected Accounts, using surrender amounts in place of
transfer amounts. Partial surrenders from Protected Accounts do not increase
EAB.
6. After a covered life change for a spouse who continues the contract, variable
account floor and PAB are reset to the contract value in the Protected
Accounts on the date of continuation. EAB is reset to the contract value in
the Excluded Accounts on the date of continuation. The contract value is
after any rider charges have been deducted and after any increase to the
contract value due to the death benefit that would otherwise have been paid
(without regard to the Full Surrender Value).
7. After a covered life change other than for a spouse who continues the
contract, variable account floor, PAB and EAB are reset on the valuation date
we receive your written request for the covered life change if all owners are
eligible for the 5% Accumulation Death Benefit.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
Variable account floor and PAB are reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Protected Accounts on that date, and
B = Variable account floor on that date (but prior to the reset).
EAB is reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Excluded Accounts on that date, and
B = EAB on that date (but prior to the reset).
8. On a contract anniversary when variable account floor is greater than zero:
(A) On the first contract anniversary, we increase variable account floor by
an amount equal to 5%, multiplied by variable account floor as of 60 days
after the contract date.
(B) On each subsequent contract anniversary prior to the earlier of your 81st
birthday or your death, we increase variable account floor by 5%,
multiplied by the prior contract anniversary's variable account floor.
(C) Any variable account floor increase on contract anniversaries does not
increase PAB or EAB.
For contracts issued in New Jersey and Washington state, the cap on the variable
account floor is 200% of PAB.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the 5% Accumulation Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you die while the contract is in
force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV as described above;
4. the 5% accumulation death benefit floor as described above; or
5. the Full Surrender Value as described above.
If your spouse chooses to continue the contract under spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the Enhanced Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
For an example of how each death benefit is calculated, see Appendix C.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner or
annuitant, we will pay the benefits upon the first to die of any owner or the
annuitant. The basic death benefit available under your contract at contract
issue is the ROP Death Benefit. In addition to the ROP Death Benefit, we also
offer the following optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
We will base the benefit paid on the death benefit coverage you chose when you
purchased the contract.
--------------------------------------------------------------------------------
68 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
HERE ARE SOME TERMS USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the partial
surrender.
DB = the applicable ROP value or MAV on the date of (but prior to) the partial
surrender.
CV = contract value on the date of (but prior to) the partial surrender.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for surrenders.
If you or the annuitant die before the annuitization start date and while this
contract is in force, the death benefit will be the greater of these two values,
minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
surrenders.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR CERTAIN OLDER ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE
LIMITED AFTER AGE 80. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL
WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
surrenders; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract
anniversary. On the first contract anniversary, we set the MAV as the greater of
these two values:
(a) current contract value; or
(b) total purchase payments applied to the contract minus adjusted partial
surrenders.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by adjusted partial surrenders. Every contract anniversary after that
prior to the earlier of your or the annuitant's 81st birthday, we compare the
MAV to the current contract value and we reset the MAV to the higher amount.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before the annuitization start date, the
death benefit will be the greatest of these three values, minus any applicable
rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
surrenders; or
3. the 5% variable account floor.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts or the DCA fixed account and subtract adjusted transfers and partial
surrenders from the subaccounts or the DCA fixed account. On each contract
anniversary after the first, through age 80, we add an amount to the variable
account floor equal to 5% of the prior anniversary's variable account floor. We
stop adding this amount after you or the annuitant reach age 81 or after the
earlier of your or the annuitant's death.
PST X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL SURRENDERS = ---------
SAV
PST = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial surrender or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
surrender.
SAV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer or partial surrender.
The amount of purchase payments surrendered or transferred from any subaccount
or fixed account (if applicable) or GPA account is calculated as (a) times (b)
where:
(a) is the amount of purchase payments in the account or subaccount on the date
of but prior to the current surrender or transfer; and
(b) is the ratio of the amount of contract value transferred or surrendered from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current surrender or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments allocated to the subaccounts and the
DCA fixed account that have not been surrendered or transferred out of the
subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
surrenders;
3. the MAV on the date of death as described above; or
4. the 5% variable account floor as described above.
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE THE ANNUITIZATION START DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value). To do this your spouse must, on the date our death claim
requirements are fulfilled, give us written instructions to continue the
contract as owner.
There will be no surrender charges on contract Option L from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse will be subject to all limitations
and/or restrictions of those features or riders just as if they were purchasing
a new contract and the values may be reset. (see "Optional Benefits" and
"Benefits in the Case of Death") If the death benefit applicable to the contract
changes due to spousal continuation, the mortality and expense risk fee may
change as well (see "Charges -- Mortality and Expense Risk Fee").
--------------------------------------------------------------------------------
70 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
FOR THE ORIGINAL CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid. To do this your spouse
must, on the date our death claim requirements are fulfilled, give us written
instructions to continue the contract as owner.
There will be no surrender charges on contract Option L from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse and the new annuitant (if applicable)
will be subject to all limitations and/or restrictions of those features or
riders just as if they were purchasing a new contract and the values may be
reset. (See "Optional Benefits" and "Optional Death Benefits".)
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid (without
regard to the Full Surrender Value). To do this your spouse must, on the date
our death claim requirements are fulfilled, give us written instructions to
keep the contract in force. There will be no surrender charges on contract
Option L from that point forward unless additional purchase payments are made.
If you elected any optional contract features or riders, your spouse will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract and the values may be reset
(see "Optional Benefits", "Optional Death Benefits" and "Benefits in the Case
of Death"). If the death benefit applicable to the contract changes due to
spousal continuation, the mortality and expense risk fee may change as well
(see "Charges -- Mortality and Expense Risk Fee").
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the Investment Options Form or the Portfolio Navigator
Enrollment Form. No additional purchase payments will be accepted. The death
benefit payable on the death of the non-spouse beneficiary is the CV death
benefit.
If you purchased this contract as an inherited IRA and your spouse is the sole
beneficiary, he or she can elect to continue this contract as an inherited
IRA.
If you purchased this contract as an inherited IRA and your spouse is not the
sole beneficiary, he or she can elect an alternative payment plan for their
share of the death benefit and all optional death benefits and living benefits
will terminate. Your spouse must follow the schedule of minimum withdrawals
established based on your life expectancy.
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator enrollment form. No additional purchase payments will be
accepted. The death benefit payable on the death of the non-spouse beneficiary
is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum withdrawals established based on the life expectancy of
your beneficiary.
FOR THE ORIGINAL CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid. To do
this your spouse must, on the date our death claim requirements are fulfilled,
give us written instructions to keep the contract in force. There will be no
surrender charges on contract Option L from that point forward unless
additional purchase payments are made. If you elected any optional contract
features or riders, your spouse and the new annuitant (if applicable) will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract and the values may be reset.
(See "Optional Benefits" and "Optional Death Benefits".)
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the investment options form or the Portfolio Navigator
enrollment form. No additional purchase payments will be accepted. The death
benefit payable on the death of the non-spouse beneficiary is the CV death
benefit.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
--------------------------------------------------------------------------------
72 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL LIVING BENEFITS
SECURESOURCE STAGES 2 RIDERS
The SecureSource Stages 2 rider is an optional benefit that you can add to your
contract for an additional charge. This benefit is intended to provide to you,
after the lifetime benefit is established, a specified withdrawal amount
annually for life, even if your contract value is zero, subject to the terms and
provisions described in this section. Additionally, this benefit offers a credit
feature to help in low or poor performing markets and a step up feature to lock
in contract anniversary gains.
The SecureSource Stages 2 rider may be appropriate for you if you intend to make
periodic withdrawals from your annuity contract after the waiting period and
wish to ensure that market performance will not adversely affect your ability to
withdraw income over your lifetime. This rider may not be appropriate for you if
you do not intend to limit withdrawals to the amount allowed in order to receive
the full benefits of the rider.
Your benefits under the rider can be reduced if any of the following occurs:
- If you take any withdrawals during the 1-year waiting period, the lifetime
benefit amount will be determined using percentage B for the appropriate age
band as long as rider benefits are payable;
- If you withdraw more than the allowed withdrawal amount in a contract year,
or you take withdrawals before the lifetime benefit is available;
- If you take a withdrawal and later choose to allocate your contract value to
a fund of funds that is more aggressive than the target fund;
- If the contract value is 20% or more below purchase payments increased by
any contract anniversary gains or rider credits and adjusted for withdrawals
(see withdrawal adjustment base described below).
The SecureSource Stages 2 rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year after the lifetime benefit is established. Your age at the time of
the first withdrawal will determine the age band for as long as benefits are
payable except as described in the lifetime payment percentage provision.
As long as your total withdrawals during the current year do not exceed the
lifetime benefit amount, you will not be assessed a surrender charge. If you
withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and benefits will be reduced in accordance with excess
withdrawal processing. At any time, you may withdraw any amount up to your
entire surrender value, subject to excess withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages 2 riders available under your
contract:
- SecureSource Stages 2 -- Single Life
- SecureSource Stages 2 -- Joint Life
The information in this section applies to both SecureSource Stages 2 riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages 2 -- Single Life rider covers one person. The
SecureSource Stages 2 -- Joint Life Rider covers two spouses jointly who are
named at contract issue. You may elect only the SecureSource Stages 2 -- Single
Life rider or the SecureSource Stages 2 -- Joint Life rider, not both, and you
may not switch riders later. You must elect the rider when you purchase your
contract. The rider effective date will be the contract issue date.
The SecureSource Stages 2 rider is an optional benefit that you may select for
an additional annual charge if:
- SINGLE LIFE: you are 85 or younger on the date the contract is issued; or
- JOINT LIFE: you and your spouse are 85 or younger on the date the contract
is issued.
The SecureSource Stages 2 riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
The SecureSource Stages 2 rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
- SINGLE LIFE: death (see "At Death" heading below).
- JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages 2 rider are:
AGE BANDS: Each age band is associated with a two lifetime payment percentages.
The covered person (JOINT LIFE: the younger covered spouse) must be at least the
youngest age shown in the first age band for the annual lifetime payment to be
established. After the annual lifetime payment is established, in addition to
your age, other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: the younger covered spouse)
has reached the youngest age in the first age band. After the waiting period,
the annual withdrawal amount guaranteed by the rider can vary each contract
year.
ANNUAL STEP-UP: an increase in the benefit base and/or the principal back
guarantee and a possible increase in the lifetime payment percentage that is
available each rider anniversary if your contract value increases, subject to
certain conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken before the annual lifetime payment is
established, or (2) a withdrawal that is greater than the remaining annual
lifetime payment after the annual lifetime payment is established.
EXCESS WITHDRAWAL PROCESSING: a reduction in benefits if a withdrawal is taken
before the annual lifetime payment is established or if a withdrawal exceeds the
remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band. The
difference between percentage A and percentage B is referred to as the income
bonus. Percentage B is referred to as the minimum lifetime payment percentage.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you take withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. After the annual lifetime payment is
established, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten contract anniversaries based on a rider credit percentage of 8% for
the first anniversary and 6% thereafter, as long as no withdrawals have been
taken since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and excess withdrawals may reduce or eliminate
the benefit of any rider credits. Rider credits may result in higher rider
charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
limiting benefits under the rider. If you take any withdrawals during the
waiting period, the lifetime benefit amount will be determined using percentage
B, the minimum lifetime payment percentage, for the appropriate age band and
percentage A, and therefore the income bonus, will not be available as long as
rider benefits are payable. The waiting period starts on the rider effective
date and ends on the day prior to the first anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage after the waiting period. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit.
--------------------------------------------------------------------------------
74 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
IMPORTANT SECURESOURCE STAGES 2 RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages 2 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 1-year waiting period, the
lifetime benefit amount will be determined using percentage B for the
appropriate age band and percentage A, and therefore the income bonus, will
not be available as long as rider benefits are payable. Any withdrawals in the
first 10 years will terminate any remaining rider credits. Also, if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider will be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must elect one of the
investment options under the PN program. This requirement limits your choice
of investment options. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option classification as shown in your contract if your
current investment option is more aggressive than the target investment option
classification. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option is currently the Moderate investment option. We reserve the
right to change the target investment option to an investment option
classification that is more aggressive than the Moderate investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset, you are in a
withdrawal phase. During withdrawal phases you may request to change your
investment option to the target investment option or any investment option
that is more conservative than the target investment option without a benefit
reset as described below. If you are in a withdrawal phase and you choose to
allocate your contract value to an investment option that is more aggressive
than the target investment option, you will be in the accumulation phase again
and your rider benefit will be reset as follows:
1. the BB, PBG and WAB will be reset to the contract value, if less than
their current amount; and
2. the ALP and RALP, if available, will be recalculated. You may request to
change your investment option by written request on an authorized form or
by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource Stages 2 rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
charge will continue to be deducted until the contract or rider is terminated
or the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages 2 -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages 2 -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of nonnatural
or revocable trust ownership). The rider will terminate at the death of the
contract owner because the original covered spouse will be unable to elect the
spousal continuation provision of the contract (see "Joint Life only: Covered
Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
owner's death provision, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of the
trust must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource Stages 2 -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period the lifetime benefit amount will be determined using
percentage B for as long as rider benefits are payable. While the rider
permits certain excess withdrawals to be taken for the purpose of satisfying
RMD requirements for your contract alone without reducing future benefits
guaranteed under the rider, there can be no guarantee that changes in the
federal income tax law after the effective date of the rider will not require
a larger RMD to be taken, in which case, future guaranteed withdrawals under
the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person or a revocable trust, the covered spouses are the annuitant
and the legally married spouse of the annuitant. The covered spouses lives are
used to determine when the annual lifetime payment is established, and the
duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading
below). The covered spouses are established on the rider effective date and
cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: younger covered spouses) has
reached age 50. When the ALP is established and at all times thereafter, the ALP
is equal to the BB multiplied by the lifetime payment percentage. Anytime the
lifetime payment percentage or BB changes as
--------------------------------------------------------------------------------
76 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
described below, the ALP will be recalculated. After the waiting period and when
the ALP is established, the first withdrawal taken in each contract year will
set and fix the lifetime payment percentage for the remainder of the contract
year.
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the annual lifetime payment guaranteed
for withdrawal for the remainder of the contract year. The RALP is established
at the same time as the ALP. The RALP equals the ALP less all withdrawals in the
current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band used to calculate the initial ALP is
the percentage for the covered person's attained age (JOINT LIFE: younger
covered spouse's attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouse's subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouse's attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any rider
fee increase or if a withdrawal has been taken since the ALP was established,
then the lifetime payment percentage will not change on subsequent birthdays.)
Upon annual step-ups (see "Annual Step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was established and no rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether percentage A or percentage B is used for each
applicable age band:
During the waiting period, percentage B will be used. If you take a withdrawal
in the waiting period, percentage B will be used and the income bonus will not
be available for as long as rider benefits are payable.
If no withdrawal is taken during the waiting period, after the waiting period a
comparison of your contract value and the withdrawal adjustment base (WAB)
determines whether percentage A or percentage B is used to calculate the ALP
unless the percentage is fixed as described below. Market volatility, a
prolonged flat, low or down market, rider credits, and the deduction of charges
all impact whether you are eligible for percentage A or percentage B. On each
valuation date, if the
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
benefit determining percentage is less than the 20% adjustment threshold, then
percentage A is used in calculating your ALP, otherwise percentage B is used.
The benefit determining percentage is calculated as follows, but it will not be
less than zero:
1 - (a/b) where:
a = Contract value at the end of the prior valuation period
b = WAB at the end of the prior valuation period
After the ALP is established and after the waiting period, the first withdrawal
taken in each contract year will set and fix the lifetime payment percentage for
the remainder of the contract year. Beginning on the next rider anniversary, the
lifetime payment percentage can change on each valuation day as described above
until a withdrawal is taken in that contract year.
However, at the earliest of (1), (2) or (3) below Percentage A or Percentage B
will be set and remain fixed as long as the benefit is payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values
(benefit base (BB), credit base (CB) and withdrawal adjustment base (WAB)) and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: If the WAB and CB are greater
than zero, the WAB and CB will be increased by the amount of each additional
purchase payment. The BB and PBG will be increased by the amount of each
additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits.
When a withdrawal is taken:
(a) If the first withdrawal is taken during the waiting period, the WAB will
be permanently reset to zero. If the first withdrawal is taken after the
waiting period, the WAB will be reduced by the "adjustment for
withdrawal," as defined below.
(b) If the ALP is established and the withdrawal is less than or equal to the
RALP, the BB does not change and the PBG is reduced by the amount of the
withdrawal, but it will not be less than zero.
(c) If the ALP is not established, excess withdrawal processing will occur as
follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not be less
than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the withdrawal and
further reduced by an amount calculated as follows, but it will not be
less than zero:
a = the amount of the withdrawal minus the RALP
b = the PBG minus the RALP on the date of (but prior to) the withdrawal
c = the contract value on the date of (but prior to) the withdrawal minus
the RALP
The BB will be reduced by an amount as calculated below:
--------------------------------------------------------------------------------
78 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
d = the amount of the withdrawal minus the RALP
e = the BB on the date of (but prior to) the withdrawal
f = the contract value on the date of (but prior to) the withdrawal minus
the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is reduced by a
withdrawal in the same proportion as the contract value is reduced, the
proportional amount deducted is the "adjustment for withdrawal." The "adjustment
for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PBG (as applicable) on the date of (but prior to) the
withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
- The WAB on rider anniversaries: Unless the WAB is permanently reset to zero
or you decline any rider fee increase, the WAB (after any rider credit is
added) will be increased to the contract value, if the contract value is
greater.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
rider fee increase, rider credits are available for the first ten contract
anniversaries. On the first anniversary, the rider credit equals the credit
base (CB) 180 days following the rider effective date multiplied by 8%. On any
subsequent anniversaries, the rider credit equals the CB as of the prior rider
anniversary multiplied by 6%. On the first anniversary the BB and WAB will be
set to the greater of the current BB, or the BB 180 days following the
contract date increased by the rider credit and any additional purchase
payments since 180 days following the rider effective date. On any subsequent
rider credit dates the BB and WAB will be set to the greater of the current
BB, or the BB on the prior anniversary increased by the rider credit and any
additional purchase payments since the prior anniversary. If the CB is greater
than zero, the CB will be permanently reset to zero on the 10th rider
anniversary after any adjustment to the WAB and BB, and there will be no
additional rider credits.
- ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-
up may be available. If you decline any rider fee increase, future annual
step-ups will no longer be available.
The annual step-up will be executed on any rider anniversary where the
contract value is greater than the PBG or the BB after any rider credit is
added. If an annual step-up is executed, the PBG, BB and lifetime payment
percentage will be adjusted as follows: The PBG will be increased to the
contract value, if the contract value is greater. The BB (after any rider
credit is added) will be increased to the contract value, if the contract
value is greater. If the covered person's attained age (Joint Life: younger
covered spouses attained age) on the rider anniversary is in a higher age band
and (1) there is an increase to BB due to a step-up or (2) the BB is at the
maximum of $10,000,000 so there was no step-up of the BB, then the higher age
band will be used to determine the appropriate lifetime payment percentage,
regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of your RMD that exceeds the benefit amount will not be subject to
excess withdrawal processing provided that the following conditions are met:
- The annual lifetime payment is established;
- The RMD is for your contract alone;
- The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
- The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on
the contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. If any withdrawal is taken in the
waiting period, including RMDs, Percentage B for the applicable age band will be
used as long as rider benefits are payable. Any withdrawals taken before the
annual lifetime payment is established or withdrawing amounts greater than the
remaining annual lifetime payment that do not meet these conditions will result
in excess withdrawal processing. The amount in excess of the
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
RALP that is not subject to excess withdrawal processing will be recalculated if
the ALP changes due to lifetime payment percentage changes. See Appendix E for
additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages 2 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource Stages
2 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
Unless you decline a rider fee increase, at the time of spousal continuation, a
step-up may be available. All annual step-up rules (see "Rider Anniversary
Processing -- Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that the RALP will be reduced for any prior
withdrawals in that contract year. The WAB, if greater than zero, will be
increased to the contract value if the contract value is greater. The spousal
continuation step-up is processed on the valuation date spousal continuation is
effective.
RULES FOR SURRENDER: Minimum contract values following surrender no longer apply
to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that contract year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
- elect to take the death benefit under the terms of the contract, or
- elect to take the principal back guarantee available under this rider, or
- continue the contract and the SecureSource Stages 2 -- Joint Life rider
under the spousal continuation option.
--------------------------------------------------------------------------------
80 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
1. If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are
equal to the PBG on the date of death.
2. If the PBG is greater than zero and the ALP is not established, the BB on
the date of death multiplied by the lifetime payment percentage used for
the youngest age in the first age band will be paid annually until total
payments to the beneficiary are equal to the PBG on the date of death.
In either of the above cases:
- After the date of death, there will be no additional rider credits or annual
step-ups.
- The lifetime payment percentage used will be set as of the date of death.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
3. On the date of death (JOINT LIFE: remaining covered spouse's date of
death), if the CB is greater than zero, the CB will be permanently reset to
zero, and there will be no additional rider credits.
4. If the PBG equals zero, the benefit terminates. No further payments are
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: If your annuitization start date is the maximum
annuitization start date, you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the SecureSource Stages 2 rider. Under the rider's payout option, the minimum
amount payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages 2 rider cannot be terminated either by you or us except
as follows:
- SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
- SINGLE LIFE: after the death benefit is payable, the rider will terminate.
- SINGLE LIFE: spousal continuation will terminate the rider.
- JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a
beneficiary of a participant in an employer sponsored retirement plan, the
rider will terminate.
- On the annuitization start date, the rider will terminate.
- You may terminate the rider if your annual rider fee after any increase is
more than 0.25 percentage points higher than your fee before the increase.
(see "Charges -- SecureSource Stages 2 rider charge").
- When the contract value is zero and either the annual lifetime payment is
not established or a withdrawal in excess of the remaining annual lifetime
payment is taken, the rider will terminate.
- Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
ACCUMULATION PROTECTOR BENEFIT RIDER
(AVAILABLE FOR CONTRACT OPTION L AND CONTRACT OPTION C)
The Accumulation Protector Benefit rider is an optional benefit, available for
contract applications signed on or after May 3, 2010, that you may select for an
additional charge. We have offered a different version of the Accumulation
Protector Benefit
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
rider for the Original Contract Option L with applications signed prior to June
1, 2009. The description of the Accumulation Protector Benefit rider in this
section applies to both Original Contract and Current Contract unless noted
otherwise. The Accumulation Protector Benefit rider specifies a waiting period
that ends on the benefit date. The Accumulation Protector Benefit rider provides
a one-time adjustment to your contract value on the benefit date if your
contract value is less than the Minimum Contract Accumulation Value (defined
below) on that benefit date. On the benefit date, if the contract value is equal
to or greater than the Minimum Contract Accumulation Value, as determined under
the Accumulation Protector Benefit rider, the Accumulation Protector Benefit
rider ends without value and no benefit is payable.
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: if you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
For the Current Contract, if you are (or if the owner is a non-natural person,
then the annuitant is) age 80 or younger at contract issue and this rider is
available in your state, you may elect the Accumulation Protector Benefit rider
at the time you purchase your contract and the rider effective date will be the
contract issue date. For the Original Contract, you may have elected the
Accumulation Protector Benefit rider at the time you purchased your contract and
the rider effective date was the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further charges for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial surrenders or make a full surrender; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource Stages 2 rider.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the regular fixed account that are available under
the contract to other contract owners who do not elect this rider. You may
allocate qualifying purchase payments to the Special DCA fixed account, when
available (see "The Special DCA Fixed Account"), and we will make monthly
transfers into the PN program investment option you have chosen. (See "Making
the Most of Your Contract -- Portfolio Navigator Program");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider. Some exceptions apply (see
"Additional Purchase Payments with Elective Step Up" below). In addition, we
reserve the right to change these additional purchase payment limitations,
including making further restrictions, upon written notice;
if you purchase this contract as a qualified annuity, for example, an IRA, you
may need to take partial surrenders from your contract to satisfy the RMDs
under the Code. Partial surrenders, including those used to satisfy RMDs, will
reduce any potential benefit that the Accumulation Protector Benefit rider
provides. You should consult your tax advisor if you have any questions about
the use of this rider in your tax situation;
if you think you may surrender all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step-up option (described below) or your
surviving spouse exercises the spousal continuation elective step-up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your investment option to one that causes
the Accumulation Protector Benefit rider charge to increase (see "Charges").
Be sure to discuss with your investment professional whether an Accumulation
Benefit rider is appropriate for your situation.
--------------------------------------------------------------------------------
82 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL SURRENDERS: The adjustment made for each partial
surrender from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial surrender to the contract value on the date of (but
immediately prior to) the partial surrender; and
(b) is the MCAV on the date of (but immediately prior to) the partial surrender.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your investment option after we have exercised our
rights to increase the rider fee.
Your initial MCAV is equal to your initial purchase payment. It is increased by
the amount of any subsequent purchase payments received within the first 180
days that the rider is effective. It is reduced by any adjustments for partial
surrenders made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option or provide any benefit that can be surrendered or paid
upon death. Rather the elective step up is an interim calculation used to arrive
at the final MCAV, which is used to determine whether a benefit will be paid
under the rider on the benefit date.
The elective step up option is not available for inherited IRAs or if the
benefit date would be after the annuitization start date.
ADDITIONAL PURCHASE PAYMENTS WITH ANNUAL ELECTIVE STEP UPS -- CURRENT CONTRACT
ONLY
If your MCAV is increased as a result of elective step up, you have 180 days
from the latest contract anniversary to make additional purchase payments, if
allowed under the base contract. The MCAV will include the amount of any
additional purchase payments received during this period. We reserve the right
to change these additional purchase payment limitations.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
receive their written request to step up for the entire contract year. In
addition, the waiting period will restart as of the most recent contract
anniversary.
CHANGE OF OWNERSHIP OR ASSIGNMENT
Subject to state limitations, a change of ownership or assignment is subject to
our approval.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full surrender;
- annuitization begins;
- the contract terminates as a result of the death benefit being paid; or
- when a beneficiary elects an alternative payment plan which is an inherited
IRA.
The rider will terminate on the benefit date.
For an example, see Appendix L.
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE JULY 19, 2010)
If you bought a contract before July 19, 2010 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
------------------------------------------------------------------------------------------------------------------------
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
------------------------------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider B") Appendix J
------------------------------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider A") Appendix J
2006
------------------------------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit for Life Appendix I
------------------------------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix K
------------------------------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 SecureSource Rider Appendix M
------------------------------------------------------------------------------------------------------------------------
Before Nov. 30, 2009 SecureSource 20 Rider Appendix N
------------------------------------------------------------------------------------------------------------------------
Before July 19, 2010 SecureSource Stages Rider Appendix O
------------------------------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
OPTIONAL ADDITIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you (Current Contract) or you or the annuitant (Original Contract)
are 70 or older at the rider effective date, The Benefit Protector does not
provide any additional benefit before the first rider anniversary.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector to your contract. You must elect the
Benefit Protector at the time you purchase your contract and your rider
effective date will be the contract issue date. You may not select this rider if
you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector is appropriate for your situation.
--------------------------------------------------------------------------------
84 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The Benefit Protector provides that if you (Current Contract) or you or the
annuitant (Original Contract) die after the first rider anniversary, but before
the annuitization start date, and while this contract is in force, we will pay
the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you (Current Contract) or you and the
annuitant (Original Contract) were under age 70 on the rider effective date;
or
- 15% of your earnings at death if you (Current Contract) or you or the
annuitant (Original Contract) were 70 or older on the rider effective date.
For the Current Contract, if this rider is effective after the contract date or
if there has been a covered life change, remaining purchase payment is
established or set as the contract value on the rider effective date or, if
later, the date of the most recent covered life change. Thereafter, remaining
purchase payments is increased by the amount of each additional purchase payment
and adjusted for each partial surrender.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
remaining purchase payments (also referred to as purchase payments not
previously surrendered under the Original Contract). Partial surrenders will
come from any earnings before reducing purchase payments in the contract. The
earnings at death may not be less than zero and may not be more than 250% of the
purchase payments not previously surrendered that are one or more years old.
Note: Purchase payments not previously surrendered is calculated differently and
is not the same value as purchase payments not previously surrendered used in
the surrender charge calculation.
TERMINATING THE BENEFIT PROTECTOR
CURRENT CONTRACT:
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider within 30 days after any rider anniversary
beginning with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
Your spouse may terminate the rider within 30 days following the effective
date of the spousal continuation if your spouse is age 75 or younger.
A new owner may terminate the rider within 30 days following the effective
date of an ownership change if the new owner is age 75 or younger.
The rider will terminate for a spousal continuation or ownership change if the
spouse or new owner is age 76 or older at the time of the change.
The rider will terminate after the death benefit is payable, unless the spouse
continues the contract under spousal continuation provision.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
ORIGINAL CONTRACT:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
Our current administrative practice allows a new owner or your spouse to
terminate the rider within 30 days following the effective date of the
ownership change or spousal continuation.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the annuitization
start date, your spouse may keep the contract as owner. For Current Contract,
your spouse will be subject to all the limitations and restrictions of the rider
just as if they were purchasing a new contract and the age of the new spouse at
the time of the change will be used to determine the earnings at death
percentage going forward. If your spouse does not qualify for the rider on the
basis of age we will terminate the rider. If they do qualify for the rider on
the basis of age we will set the contract value equal to the death benefit that
would otherwise have been paid (without regard to the Full Surrender Value) and
we will substitute this new contract value on the date of death for "remaining
purchase payments" used in calculating earnings at death.
For Current Contract, after a covered life change other than a spouse that
continues the contract, the new owner will be subject to all the limitations and
restrictions of the rider just as if they were purchasing a new contract and the
age of the new owner at the time of the change will be used to determine the
earnings at death percentage going forward. If the new owner does not qualify
for the rider on the basis of age we will terminate the rider. If they do
qualify for the rider on the basis of age
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
we will substitute the contract value on the date of the ownership changes for
remaining purchase payments used in calculating earnings at death.
For an example, see Appendix F.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you (Current Contract), or you or the annuitant (Original
Contract) are 70 or older at the rider effective date. It does not provide any
additional benefit before the first rider anniversary and it does not provide
any benefit beyond what is offered under the Benefit Protector rider during the
second rider year. Be sure to discuss with your investment professional whether
or not the Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector Plus to your contract. You must elect
the Benefit Protector Plus at the time you purchase your contract and your rider
effective date will be the contract issue date. This rider is only available for
transfers, exchanges or rollovers. If this is a non-qualified annuity,
transfers, exchanges or rollovers must be from another annuity or life insurance
policy. You may not select this rider if you select the Benefit Protector Rider,
5% Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you (Current Contract), or you or
the annuitant (Original Contract) die after the first rider anniversary, but
before the annuitization start date, and while this contract is in force, we
will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously surrendered as follows:
PERCENTAGE IF YOU (CURRENT CONTRACT) PERCENTAGE IF YOU (CURRENT CONTRACT)
RIDER YEAR WHEN DEATH OR YOU AND THE ANNUITANT (ORIGINAL CONTRACT) ARE OR YOU OR THE ANNUITANT (ORIGINAL CONTRACT) ARE
OCCURS; UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU (CURRENT CONTACT) OR YOU AND THE
ANNUITANT (ORIGINAL CONTRACT) ARE UNDER
RIDER YEAR WHEN DEATH OCCURS; AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase
payment*)
Five or more 40% x (earnings at death + 50% of initial purchase
payment*)
IF YOU (CURRENT CONTRACT) OR YOU OR THE
ANNUITANT (ORIGINAL CONTRACT) ARE AGE 70
RIDER YEAR WHEN DEATH OCCURS; OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase
payment*)
Five or more 15% x (earnings at death + 50% of initial purchase
payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously surrendered.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract, on
the annuitization start date, or when the death benefit is payable.
The rider will terminate if there is an ownership change.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
--------------------------------------------------------------------------------
86 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value for the Current Contract). We will then terminate the
Benefit Protector Plus (see "Benefits in Case of Death").
For an example, see Appendix G.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting on the annuitization start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements. We do not deduct any surrender charges under the
payout plans listed below, except under annuity payout Plan E. (See
"Charges -- Surrender charge under Annuity Payout Plan E").
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your annuitization
start date after any rider charges have been deducted, plus any positive or
negative MVA (less any applicable premium tax). Additionally, we currently allow
you to use part of the amount available to purchase payouts, leaving any
remaining contract value to accumulate on a tax-deferred basis. If you select a
variable annuity payout, we reserve the right to limit the number of subaccounts
in which you may invest. The GPAs and the Special DCA fixed account (Current
Contract) and the DCA fixed account (Original Contract) are not available during
this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate.
For information with respect to transfers between accounts after annuity payouts
begin, (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the annuitization start
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% Table A in the contract. The assumed investment rate affects
both the amount of the first payout and the extent to which subsequent payouts
increase or decrease. For example, annuity payouts will increase if the
investment return is above the assumed investment rate and payouts will decrease
if the return is below the assumed investment rate. Using a 5% assumed interest
rate results in a higher initial payout, but later payouts will increase more
slowly when annuity unit values rise and decrease more rapidly when they
decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before the annuitization start date. Generally, you may select one of
the Plans A through E below or another plan agreed to by us. Some of the annuity
payout plans may not be available if you have selected the Income Assurer
Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
before the elected period expires. We calculate the guaranteed payout period
from the annuitization start date. If the annuitant outlives the elected
guaranteed payout period, we will continue to make payouts until the
annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. (See "Charges -- Surrender charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your surrender to the full discounted value. A 10% IRS penalty
tax could apply if you take a surrender. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix I: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix J: Guarantor Withdrawal Benefit Rider"). The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in the
frequency that you elect. The frequencies will be among those offered by us at
the time but will be no less frequent than annually. If, at the death of the
owner, total payouts have been made for less than the RBA, the remaining
payouts will be paid to the beneficiary.
REMAINING BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH
THE SECURESOURCE 20 RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource 20 Riders"). The amount paid in the current contract
year will be reduced for any prior withdrawals in that year. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequent
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you have the responsibility for electing a payout plan under
your contract that complies with applicable law. Your contract describes your
--------------------------------------------------------------------------------
88 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
payout plan options. The options will meet certain IRS regulations governing
RMDs if the payout plan meets the incidental distribution benefit requirements,
if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
For qualified and nonqualified contracts with the SecureSource Stages rider, on
the annuitization start date you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the rider. Under the rider's payout option, the minimum amount payable shown in
Table B will not apply, and you will receive the ALP provided by this rider
until the later of the death of covered person (JOINT LIFE: both covered
spouses) or depletion of the PBG. If you choose to receive the ALP, the amount
payable each year will be equal to the ALP on the annuitization start date. The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually. If You choose to
receive the ALP rather than a payout option available under the contract, all
other contract features, rider features and charges terminate after the
annuitization start date except for the principal back guarantee. You must
select a payout plan as of the annuitization start date set forth in your
contract.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitization start date. If you do
not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time amounts are applied to an annuity payout plan. If
the calculations show that monthly payouts would be less than $20, we have the
right to pay the amount that would otherwise have been applied to a plan to the
owner in a lump sum or to change the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you (Current Contract), or you or the
annuitant (Original Contract) die after annuity payouts begin, we will pay any
amount payable to the beneficiary as provided in the annuity payout plan in
effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike surrenders described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
SURRENDERS: Generally, if you surrender all or part of your nonqualified annuity
before the annuitization start date, including surrenders under any optional
withdrawal benefit rider, your surrender will be taxed to the extent that the
contract value
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
immediately before the withdrawal exceeds the investment in the contract.
Different rules may apply if you exchange another contract into this contract.
You also may have to pay a 10% IRS penalty for surrenders of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
surrender, including surrenders under any optional withdrawal benefit rider, we
may deduct federal, and in some cases state withholding against the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Annuitization Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a surrender for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity or qualified long-term care insurance
--------------------------------------------------------------------------------
90 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
contract, or for an endowment contract under which payments will begin no later
than payments would have begun under the contract exchanged, (3) the exchange of
an annuity contract for another annuity or for a qualified long-term care
insurance contract, and (4) the exchange of a qualified long-term care insurance
contract for a qualified long-term care insurance contract. However, if the life
insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
SURRENDERS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire surrender will generally be includable as ordinary income and
is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
SURRENDERS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required surrenders called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a surrender, including surrenders
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Annuitization Start Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
surrenders from your contract. However, the IRS may determine that these charges
should be treated as partial surrenders subject to taxation to the extent of any
gain as well as the 10% tax penalty for surrenders before the age of 59 1/2, if
applicable.
We reserve the right to report charges for these riders as partial surrenders if
we, as a withholding and reporting agent, believe that we are required to report
them. In addition, we will report any benefits attributable to these riders on
your death (Current Contract), or your or the annuitant's death (Original
Contract) as an annuity death benefit distribution, not as proceeds from life
insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
--------------------------------------------------------------------------------
92 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
subaccount investing in the Columbia Variable Portfolio -- Cash Management Fund
(Class 3). You may then transfer this reallocated amount in accordance with the
transfer provisions of your contract (see "Transferring Between Accounts"
above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
The contract is offered to customers of various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any legal responsibility
to pay amounts that are owed under the contract. The obligations and
guarantees under the contract are our sole responsibility.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 5.75% each time a purchase
payment is made for contract Option L and 1.00% for contract Option C. We may
also pay ongoing trail commissions of up to 1.25% of the contract value. We do
not pay or withhold payment of trail commissions based on which investment
options you select.
We may pay selling firms an additional sales commission of up to 1.00% of
purchase payments for both contract options offered for a period of time we
select. For example, we may offer to pay an additional sales commission to get
selling firms to market a new or enhanced contract or to increase sales during
the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
--------------------------------------------------------------------------------
94 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
(1934 Act) is incorporated by reference into this prospectus, as well as all of
our subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K filed with the SEC under the 1934 Act. To access
this document, see "SEC Filings" under "Investors Relations" on our website at
www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
96 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 98 p. 32
Appendix B: Example -- Surrender Charges Charges -- Surrender Charges
for Contract Option L p. 100 p. 43
Appendix C: Example -- Death Benefits p. 109 Benefits in Case of Death p. 64
Appendix D: Example -- SecureSource Optional Benefits -- Optional Living
series of riders p. 115 Benefits p. 73
Appendix E: SecureSource series of Optional Benefits -- Optional Living
riders -- Additional RMD Disclosure p. 123 Benefits p. 73
Appendix F: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 125 Death Benefit Rider p. 84
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 127 Plus Death Benefit Rider p. 86
Appendix H: Asset Allocation Program for
Contracts with Applications Signed
Before May 1, 2006 p. 129
Appendix I: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 130
Appendix J: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 142
Appendix K: Example -- Income Assurer N/A
Benefit Riders Disclosure p. 150
Appendix L: Example -- Accumulation Optional Benefits -- Optional Living
Protector Benefit Rider p. 159 Benefits p. 73
Appendix M: SecureSource Rider N/A
Disclosure p. 160
Appendix N: SecureSource 20 Rider Condensed Financial Information
Disclosure p. 173 (Unaudited) p. 18
Appendix O: SecureSource Stages Rider N/A
Disclosure p. 187
Appendix P: Condensed Financial
Information (Unaudited) p. 197
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract), regular fixed account
(Current Contract), and one-year fixed account (Original Contract) and the fees
and charges that apply to your contract.
The examples of death benefits and optional riders in appendices include a
partial surrender to illustrate the effect of a partial surrender on the
particular benefit. These examples are intended to show how the optional riders
operate, and do not take into account whether the rider is part of a qualified
contract. Qualified contracts are subject to required minimum distributions at
certain ages which may require you to take partial surrenders from the contract
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you
are considering the addition of certain death benefits and/or optional riders to
a qualified contract, you should consult your tax advisor prior to making a
purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early surrenders."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a surrender from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
surrender new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY SURRENDER AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or surrendered.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 surrender from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 3.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 2.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
98 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your surrender charge percentage is 6% due to the surrender
charge schedule under contract Option L. (See "Charges -- Surrender Charge"). We
do not apply MVAs to the amounts we deduct for surrender charges, so we would
deduct the surrender charge from your early surrender after we applied the MVA.
Also note that when you request an early surrender, we surrender an amount from
your GPA that will give you the net amount you requested after we apply the MVA
(and any applicable surrender charge under contract Option L), unless you
request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
APPENDIX B: EXAMPLE -- SURRENDER CHARGES FOR CONTRACT OPTION L
EXAMPLE -- SURRENDER CHARGES
We determine your surrender charge by multiplying the amount of each purchase
payment surrendered which could be subject to a surrender charge by the
applicable surrender charge percentage, and then totaling the surrender charges.
We calculate the amount of purchase payments surrendered (PPS) as:
Current Contract:
PPS = PPSC + PPF
PPSC = purchase payments surrendered that could be subject to a surrender charge
= (PS - FA) / (CV - FA) x (PP - PPF)
PPF = purchase payments surrendered that are not subject to a surrender charge
= FA - contract earnings, but not less than zero
PP = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
PS = amount the contract value is reduced by the surrender
FA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
CV = contract value prior to the surrender
Original Contract:
PPS = XSF + (ACV - XSF) / (CV - TFA) x (PPNPS - XSF)
XSF = 10% of prior anniversary's contract value - contract earnings, but not less
than zero
ACV = amount the contract value is reduced by the surrender - contract earnings,
but not less than zero
TFA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
PPNPS = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
CV = contract value prior to the surrender
When determining the surrender charge, contract earnings are defined as the
contract value, including any positive or negative MVA on amounts being
surrendered, less purchase payments not previously surrendered. We determine
current contract earnings by looking at the entire contract value, not the
earnings of any particular subaccount, GPA, the regular fixed account (Current
Contract), the one-year fixed account (Original Contract), the Special DCA fixed
account (Current Contract) or the DCA fixed account (Original Contract). If the
contract value is less than purchase payments received and not previously
surrendered, then contract earnings are zero.
The examples below show how the surrender charge for a full and partial
surrender is calculated for Contract Option L with a four-year surrender charge
schedule. Each example illustrates the amount of the surrender charge for both a
contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
100 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
FULL SURRENDER CHARGE CALCULATION -- FOUR-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
four-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS: 60,000.00 40,000.00
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS- FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 60,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 6.0% x 6.0%
---------- ----------
surrender charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: 56,960.00 37,212.00
--------------------------------------------------------------------------------
102 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
PARTIAL SURRENDER CHARGE CALCULATION -- FOUR-YEAR SURRENDER CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the surrender charge on a contract with a
four-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS (determined by iterative process described 15,319.15 15,897.93
above):
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS- FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 15,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,319.15 19,165.51
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,319.15 19,165.51
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 5,319.15 14,965.51
multiplied by the surrender charge rate: x 6.0% x 6.0%
---------- ----------
surrender charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,319.15 15,897.93
SURRENDER CHARGE: (319.15) (897.93)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
104 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
FULL SURRENDER CHARGE CALCULATION -- FOUR YEAR SURRENDER CHARGE SCHEDULE:
--------------------------------------------------------------------------------
This is an example of how we calculate the surrender charge on a contract with a
four-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You surrender the contract for its total value during the fourth contract year
after you made the single purchase payment. The surrender charge percentage in
the fourth year after a purchase payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PPNPS):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's Contract Value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) * (PPNPS -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 6.0% x 6.0%
---------- ----------
surrender charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: 56,960.00 37,212.00
--------------------------------------------------------------------------------
106 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
PARTIAL SURRENDER CHARGE CALCULATION -- FOUR-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
four-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment; and
You request a net partial surrender of $15,000.00 during the fourth contract
year after you made the single purchase payment. The surrender charge
percentage in the fourth year after a purchase payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 15,319.15 15,897.93
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,319.15 15,897.93
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) * (PPNPS -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
--------- ---------
PPS = 5,319.15 19,165.51
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,319.15 19,165.51
less XSF: 0.00 4,200.00
--------- ---------
amount of PPS subject to a surrender charge: 5,319.15 14,965.51
multiplied by the surrender charge rate: x 6.0% x 6.0%
--------- ---------
surrender charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,319.15 15,897.93
SURRENDER CHARGE: (319.15) (897.93)
--------- ---------
NET PARTIAL SURRENDER PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
108 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- DEATH BENEFITS
CURRENT CONTRACT:
EXAMPLE -- ROPP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including surrender charge) partial surrender; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROPP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROPP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable
account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
110 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = -1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable
account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE
5% ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
ORIGINAL CONTRACT:
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000. You select contract
Option L; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
during the second contract year the contract value falls to $22,000 and you
take a $1,500 partial surrender, including surrender charge; and
during the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $23,000.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES: $23,295.45
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. You select contract
Option L; and
on the first contract anniversary the contract value grows to $26,000; and
during the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
112 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts. You
select Contract Option L; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
during the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial surrender (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts. You
select Contract Option L; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
during the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial surrender (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS THE GREATEST OF FOUR VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a ROP Death Benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as:
1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $24,642.11
----------
EDB, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH IS THE 5% VARIABLE
ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
114 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES OF RIDERS
SECURESOURCE STAGES 2 RIDERS -- EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate investment option at issue.
HYPOTHETICAL LIFETI-
CONTRACT ASSUMED BENEFIT ME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $4,000 $4,000(1) 4%
1 0 0 98,000 108,000 108,000 9.3% 108,000 5,400 5,400(2) 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 5,700 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 125,134(5) 117,000 23.1% 118,877(5) 6,257(5) 0 5%
8 0 0 80,000 125,134 117,000 31.6% 118,877 6,257 6,257 5%
9 0 0 95,000 125,134 117,000 18.8% 118,877 7,508(4) 7,508(4) 6%(4)
(1) The ALP and RALP are based on percentage B until the end of the 1-year
waiting period.
(2) Since no withdrawal was taken, at the end of the 1-year waiting period, the
ALP and RALP are recalculated based on percentage A.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The Lifetime Payment Percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Lifetime Benefit Description - Determination of
Adjustment of Benefit Values".
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
EXAMPLE: SECURESOURCE STAGES
EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL LIFETI-
CONTRACT ASSUMED BENEFIT ME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $5,000 $ 0(1) 5%
1 0 0 98,000 108,000 108,000 9.3% 100,000 5,400 0 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 0 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000(2) 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 117,000(5) 117,000 23.1% 108,000(5) 5,850(5) 0 5%
8 0 0 80,000 117,000 117,000 31.6% 108,000 5,850 5,850 5%
9 0 0 95,000 117,000 117,000 18.8% 108,000 7,020(4) 7,020(4) 6%(4)
(1) The RALP is zero until the end of the 3-Year Waiting Period.
(2) At the end of the 3-Year waiting period, the RALP is set equal to the ALP.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Determination of Adjustment of Benefit Values" in
the "Lifetime Benefit Description."
--------------------------------------------------------------------------------
116 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE 20
EXAMPLE #1: LIFETIME BENEFIT NOT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER
ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 NA NA
1 0 0 98,000 100,000 2.0% 100,000 100,000 6,000 0 NA NA
2 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 NA NA
3 0 0 125,000 125,000 0.0% 125,000 125,000 7,500 7,500 NA NA
3.5 0 6,000 111,000 118,590 6.4% 125,000 119,000 7,500 1,500 NA NA
4 0 0 104,000 118,590 12.3% 125,000 119,000 7,500 7,500 7,140(1) 7,140(1)
5 0 0 90,000 118,590 24.1% 125,000 119,000 6,250(2) 6,250(2) 5,950(2) 5,950(2)
6 0 0 95,000 118,590 19.9% 125,000 119,000 7,500 7,500 7,140 7,140
6.5 0 7,500 87,500 87,500(3) 0.0% 125,000 111,500 7,500 0 5,250(3) 0
7 0 0 90,000 90,000 0.0% 125,000 111,500 7,500 7,500 5,400 5,400
7.5 0 10,000 70,000 70,000(4) 0.0% 70,000(4) 70,000(4) 4,200(4) 0 4,200(4) 0
8 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
(1) The ALP and RALP are established on the contract anniversary following the
date the covered person (younger Covered Spouse for Joint) reaches age 65 as
the greater of the ELB or the RBA, times the ALP percentage.
(2) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(3) The $7,500 withdrawal is greater than the $7,140 RALP allowed under the
lifetime benefit and therefore excess withdrawal processing is applied to
the ALP, resetting the ALP to the lesser of the prior ALP or the ALP
percentage times the contract value following the withdrawal. The WAB is
reset to the ALP after the reset divided by the current ALP percentage. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(4) The $10,000 withdrawal is greater than both the $7,500 RBP allowed under the
basic benefit and the $5,400 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
less than 20%, so the ALP percentage and GBP percentage are set at 6% for
the remainder of the contract year.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
EXAMPLE #2: LIFETIME BENEFIT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 65.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
Percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue. On the 7th
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 $6,000 $ 0
1 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 6,300 0
2 0 0 110,000 110,000 0.0% 110,000 110,000 6,600 0 6,600 0
3 0 0 110,000 120,000 8.3% 110,000 110,000 6,600 6,600(1) 7,200 7,200(1)
3.5 0 6,000 104,000 113,455 8.3% 110,000 104,000 6,600 600 7,200 1,200
4 0 0 100,000 113,455 11.9% 110,000 104,000 6,600 6,600 7,200 7,200
4.5 0 7,000 90,000 105,267 14.5% 90,000 90,000 5,400(2) 5,400(2) 7,200 200
5 0 0 80,000 105,267 24.0% 90,000 90,000 4,500(3) 4,500(3) 6,000(3) 6,000(3)
5.5 0 10,000 70,000 70,000(4) 0.0% 70,000 70,000 3,500(4) 3,500(4) 3,500(4) 3,500(4)
6 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
7 0 0 70,000 70,000(5) 0.0% 70,000(5) 70,000(5) 4,200(5) 4,200(5) 4,200(5) 4,200(5)
(1) At the end of the 3-Year waiting period, the RBP and RALP are set equal to
the GBP and ALP, respectively. The 20% rider credit is applied to the
lifetime benefit.
(2) The $7,000 withdrawal is greater than the $6,600 RBP allowed under the basic
benefit and therefore excess withdrawal processing is applied to the basic
benefit. The GBA is reset to the lesser of the prior GBA or the contract
value following the withdrawal. The RBA is reset to the lesser of the prior
RBA less the withdrawal or the contract value following the withdrawal. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(3) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(4) The $10,000 withdrawal is greater than both the $4,500 RBP allowed under the
basic benefit and the $6,000 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
greater than or equal to 20%, so the ALP percentage and GBP percentage are
set at 5% for the remainder of the contract year.
(5) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or the ALP percentage times the contract value. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. Any future
withdrawals will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
--------------------------------------------------------------------------------
118 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE RIDERS
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic Annual Step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied Annual Step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdrawal up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate PN program investment
option if you are invested more aggressively than the Moderate PN program
investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic Annual Step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied Annual Step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new Covered Person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdrawal up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The Annual Step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the Waiting Period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the Waiting Period, the RBP is the amount you can withdrawal without
incurring the GBA and RBA excess withdrawal processing, and the RALP is the
amount you can withdrawal without incurring the ALP excess withdrawal
processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
120 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate investment option at issue. On the 1st contract
anniversary, you elect to change to the Moderately Aggressive PN program
investment option. The target PN program investment option under the contract
is the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdrawal up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger Covered Spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive PN program model portfolio or
investment option during a withdrawal phase will reset the benefit. The GBA
is reset to the lesser of the prior GBA or the contract value. The RBA is
reset to the lesser of the prior RBA or the contract value. The ALP is reset
to the lesser of the prior ALP or 6% of the contract value. Any future
withdrawals will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdrawal up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the Waiting Period, the RBP is the amount you can withdrawal without
incurring the GBA and RBA excess withdrawal processing, and the RALP is the
amount you can withdrawal without incurring the ALP excess withdrawal
processing.
(2) On the third anniversary (after the end of the Waiting Period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
122 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: SECURESOURCE SERIES OF RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
SecureSource series of riders to satisfy the RMD rules under 401(a)(9) of the
Code without application of the excess withdrawal processing described in the
rider. We reserve the right to modify this administrative practice at any time
upon 30 days' written notice to you.
For SecureSource Stages and SecureSource 20 riders, owners subject to annual RMD
rules under Section 401(a)(9) of the Code, withdrawing from this contract during
the waiting period to satisfy these rules will set your benefits to zero and you
will not receive any future rider credit.
Amounts you withdraw from this contract (for SecureSource Stages and
SecureSource 20 riders, amounts you withdraw from this contract after the
waiting period) to satisfy these rules are not subject to excess withdrawal
processing under the terms of the rider subject to the following rules and our
current administrative practice:
For SecureSource and SecureSource 20 riders:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year*,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource series of riders.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current contract year,*
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year*.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
series of riders.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
For SecureSource Stages and SecureSource Stages 2 riders:
(1) Each calendar year, if your ALERMDA is greater than the ALP,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the ALP.
- The LABA will be reduced by the total of the amount that each withdrawal
in the current calendar year exceeds the RALP at the time of each
withdrawal, but shall not be reduced to less than zero.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 123
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
Stages and SecureSource Stages 2.
* For SecureSource 20 riders, adjusted for any subsequent changes between 5%
and 6% as described under "GBP Percentage and ALP Percentage".
The ALERMDA is:
(1) determined by us each calendar year (for SecureSource Stages and
SecureSource 20 riders, starting with the calendar year in which the waiting
period ends);
(2) based on your initial purchase payment and not the entire interest value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource Series
rider is attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your rider within the
SecureSource series of riders may not be sufficient to satisfy the requirements
under the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your available
RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP
as described under the excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing one of the SecureSource series of riders.
--------------------------------------------------------------------------------
124 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000. The MAV Death
Benefit equals the contract value. You have not reached the first contract
anniversary so the Benefit Protector does not provide any additional benefit at
this time.
On the first contract anniversary the contract value grows to $110,000. The death
benefit equals:
MAV death benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings at death
(MAV death benefit minus remaining purchase payments for the Current Contract or
MAV death benefit minus payments not previously surrendered for the Original
Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit on May 1, 2008 equals:
MAV death benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at $105,000 and you
request a partial surrender of $50,000, including the applicable 7% surrender
charge for contract Option L. We will surrender $10,500 from your contract value
free of charge (10% of your prior anniversary's contract value). The remainder of
the surrender is subject to a 7% surrender charge because your payment is in the
third year of the surrender charge schedule, so we will surrender $39,500 ($36,735
+ $2,765 in surrender charges) from your contract value. Altogether, we will
surrender $50,000 and pay you $47,235. We calculate purchase payments not
previously surrendered as $100,000 - $45,000 = $55,000 (remember that $5,000 of the
partial surrender is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously surrendered that are one or more years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously surrendered that are one or more years
old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 125
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector value. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up to a maximum of
100% of purchase payments not previously surrendered that are one or more years
old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old and the value of the Benefit Protector changes.
The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit which equals 40% of earnings at death (MAV
death benefit minus payments not previously surrendered):
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
126 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
you select contract Option L with the MAV Death Benefit.
During the first contract year the contract value grows to $105,000. The MAV Death
Benefit equals the contract value. You have not reached the first contract
anniversary so the Benefit Protector Plus does not provide any additional benefit
at this time.
On the first contract anniversary the contract value grows to $110,000. You have
not reached the second contract anniversary so the Benefit Protector Plus does not
provide any benefit beyond what is provided by the Benefit Protector at this time.
The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV Death Benefit minus remaining purchase payments for the Current Contract or
MAV Death Benefit minus payments not previously surrendered for the Original
Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to $105,000. The death
benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at $105,000 and you
request a partial surrender of $50,000, including the applicable 7% surrender
charge for contract Option L. We will surrender $10,500 from your contract value
free of charge (10% of your prior anniversary's contract value). The remainder of
the surrender is subject to a 7% surrender charge because your payment is in the
third year of the surrender charge schedule, so we will surrender $39,500 ($36,735
+ $2,765 in surrender charges) from your contract value. Altogether, we will
surrender $50,000 and pay you $47,235. We calculate purchase payments not
previously surrendered as $100,000 - $45,000 = $55,000 (remember that $5,000 of the
partial surrender is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector Plus benefit which equals 40% of earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls to $40,000. The death
benefit equals the previous death benefit. The reduction in contract value has no
effect.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 127
On the ninth contract anniversary the contract value grows to a new high of
$200,000. Earnings at death reaches its maximum of 250% of purchase payments not
previously surrendered that are one or more years old. Because we are beyond the
fourth contract anniversary the Benefit Protector Plus also reaches its maximum of
20%. The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously surrendered that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase payment of $50,000.
Your new contract value is now $250,000. The new purchase payment is less than one
year old and so it has no effect on the Benefit Protector Plus value. The death
benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death,
up to a maximum of 100% of purchase payments not previously surrendered that are
one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract issue and not
previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains $250,000 and the "new"
purchase payment is one year old. The value of the Benefit Protector Plus remains
constant. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of earnings at death
(MAV Death Benefit minus payments not previously surrendered):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract issue
and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
128 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts and any GPAs that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts and/or any GPAs that make up
the model portfolio you selected and the allocation percentages to those
subaccounts and/or any GPAs will not change unless we adjust the composition of
the model portfolio to reflect the liquidation, substitution or merger of an
underlying fund, a change of investment objective by an underlying fund or when
an underlying fund stops selling its shares to the variable account. We reserve
the right to change the terms and conditions of the asset allocation program
upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 129
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
your contract application was signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdrawal up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the annuitization start
date (see "Buying Your Contract -- The Annuitization Start Date"). Before the
retirement date, you have the right to withdrawal some or all of your contract
value, less applicable administrative, surrender and rider charges imposed under
the contract at the time of the withdrawal (see "Making the Most of Your
Contract -- Surrenders"). Because your contract value will fluctuate depending
on the performance of the underlying funds in which the subaccounts invest, the
contract itself does not guarantee that you will be able to take a certain
withdrawal amount each year before the annuitization start date, nor does it
guarantee the length of time over which such withdrawals can be made before the
annuitization start date.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdrawal an amount equal to
the GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdrawal an amount equal to
the value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdrawal an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
130 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdrawal an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdrawal less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdrawal more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, withdrawal
charges under the terms of the contract may apply (see "Charges -- Surrender
Charges"). The amount we actually deduct from your contract value will be the
amount you request plus any applicable surrender charge. Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator investment option, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 131
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program.") You may
allocate purchase payments to the DCA fixed account, when available, and we
will make monthly transfers into the investment option you have chosen.
Subject to state restrictions, we reserve the right to limit the number of
investment options from which you can select based on the dollar amount of
purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or after the annuitization start date.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment limitations, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdrawal from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
TFA may be greater than the RBP or RALP under this rider. Any amount you
withdrawal under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable to the extent
of earnings. Withdrawals before age 59 1/2 may also incur a 10% IRS early
withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdrawal each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts surrendered will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
132 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the RALP for the current contract year has been depleted, any
additional amounts surrendered will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any surrender charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 133
purchase payment. The step up reversal will only happen once during the waiting
period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above).
--------------------------------------------------------------------------------
134 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The guaranteed annual withdrawal amount during the waiting period is equal to
the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount surrendered is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount may be less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAWAL AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING
AND RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The Covered Person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero,
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 135
under the lifetime withdrawal benefit. The maximum ALP is $300,000. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAWAL AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or
--------------------------------------------------------------------------------
136 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 137
with the contract anniversary following the date the covered person reaches
age 65. At the end of this time period, the ALP will be reset to the lesser of
the RBA or the anniversary contract value, multiplied by 6%, and the RALP will
be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered
person reaches age 65, and then receive the ALP annually until the
latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered
person, or (ii) the RBA is reduced to zero. We will notify you of this
option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
--------------------------------------------------------------------------------
138 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged and the
ALP and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
annualized amounts will be paid in the frequency that you elect. The frequencies
will be among those offered by us at that time but will be no less frequent than
annually. If, at the death of the owner, total payouts have been made for less
than the RBA, the remaining payouts will be paid to the beneficiary (see "The
Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdrawal up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
140 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdrawal up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdrawal without
incurring the GBA and RBA excess withdrawal processing, and the RALP is the
amount you can withdrawal without incurring the ALP excess withdrawal
processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR WITHDRAWAL BENEFIT RIDER
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
RIDER A
your contract application was signed on or after April 30, 2005 in those
states where the SecureSource rider and/or the Guarantor Withdrawal Benefit
for Life rider are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
your contract application was signed prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a surrender charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdrawal under the terms of the rider in each contract year, subject to
certain restrictions prior to the third contract anniversary, as described
below). Under the enhanced rider, the allowed amount is equal to 7% of purchase
payments for the first three years, and the GBP in all other years.
If you surrender an amount greater than the allowed amount in a contract year,
we call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
withdrawal charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a surrender charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable surrender charge (see "Charges -- Surrender Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Surrenders").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or the annuitization start
date. If you select the Guarantor Withdrawal Benefit rider, you may not select
an Income Assurer Benefit rider or the Accumulation Protector Benefit rider. If
you exercise the annual step up election (see "Elective Step Up" and "Annual
Step Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
142 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
H: Asset Allocation Program for Contracts Purchased Before May 1, 2006"),
however, you may have elected to participate in the Portfolio Navigator
program after May 1, 2006. The Portfolio Navigator program and the asset
allocation program limit your choice of subaccounts, one-year fixed account
and GPAs (if available) to the PN program investment options or those that are
in the investment option you have selected. This means you will not be able to
allocate contract value to all of the subaccounts, GPAs or the one-year fixed
account that are available under the contract to contract owners who do not
elect this rider. You may allocate purchase payments to the DCA fixed account,
when available, and we will make monthly transfers into the investment option
you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment limitations, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdrawal in each contract year without incurring a
withdrawal charge (see "Charges -- Surrender Charge"). The FA may be greater
than GBP under this rider. Any amount you withdrawal in a contract year under
the contract's FA provision that exceeds the GBP is subject to the excess
withdrawal processing for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or after the
annuitization start date.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable to the extent
of earnings. Withdrawals before age 59 1/2 may also incur a 10% IRS early
withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdrawal each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts surrendered will count against and reduce any ABA.
These withdrawals will not be considered excess withdrawals as long as
they do not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to discontinue our administrative practice described
above and will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawal to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). You should consult your
tax advisor before you select this optional rider if you have any questions
about the use of this rider in your tax situation.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment. The total GBA
when an additional purchase payment is added is the sum of the individual GBAs
immediately prior to the receipt of the additional purchase payment, plus the
GBA associated with the additional purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. Note that if the partial withdrawal is taken during the first
three years, the GBA and the GBP are calculated after the reversal of any
prior step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE GBA. Note that if the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE
WILL BE APPLIED TO THE GBA. Note that if the partial withdrawal is taken
during the first three years, the GBA and the GBP are calculated after the
reversal of any prior step ups:
--------------------------------------------------------------------------------
144 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCEDURE
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCEDURE WILL BE APPLIED TO THE RBA. Note that if the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCEDURE WILL BE APPLIED
TO THE RBA. Note that if the partial withdrawal is taken during the first
three years, the RBA and the GBP are calculated after the reversal of any
prior step ups;
RBA EXCESS WITHDRAWAL PROCEDURE
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal procedure are
taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdrawal under the
terms of the rider in each contract year, subject to certain restrictions prior
to the third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdrawal less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdrawal less than the GBP in a
contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 145
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment, multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP and RBP, and may
extend the payment period or increase allowable payment.
--------------------------------------------------------------------------------
146 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have been paid;
the GBA will be reset to the greater of the GBA on the valuation date we receive
the spouse's written request to continue the contract and the death benefit that
would otherwise have been paid.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 147
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor(SM)
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
--------------------------------------------------------------------------------
148 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eight contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 149
APPENDIX K: INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if you purchased your contract prior to May 1, 2007. These riders
are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments paid in the last five years
before exercise of the benefit, which we reserve the right to exclude from the
calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
surrender charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the annuitization start date must be between 50 to 86 years
old; and
--------------------------------------------------------------------------------
150 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + i)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full surrender from the
contract, on the annuitization start date, or on the date that a death benefit
is payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
when a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 151
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments made to the contract minus proportionate adjustments for
partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by proportionate adjustments for partial withdrawals. Every contract
anniversary after that prior to the earlier of your or the annuitant's 81st
birthday, we compare the MAV to the current contract value and we reset the MAV
to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial surrenders; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such purchase
payment. The estimated contract value at such anniversary is calculated by
assuming that payments, any credits, and partial surrenders occurring in a
contract year take place at the beginning of the year for that anniversary and
every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer Benefit
5% variable account floor is calculated differently and is not the same value as
the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments made to the protected investment options minus
adjusted partial withdrawals and transfers from the protected investment
options; plus
an amount equal to 5% of your initial purchase payment allocated to the
protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments to or withdrawal or
transfer amounts from the protected investment options, we adjust the variable
account floor by adding the additional purchase payment and subtracting adjusted
surrenders and adjusted transfers. On each subsequent contract anniversary after
the first anniversary of the effective date of this rider, prior to the earlier
of your or the annuitant's 81st birthday, we increase the variable account floor
by adding the amount ("roll-up amount") equal to 5% of the prior contract
anniversary's variable account floor.
The amount of purchase payment surrendered from or transferred between the
excluded investment options and the protected investment options is calculated
as (a) times (b) where:
(a) is the amount of purchase payment in the investment options being
withdrawn or transferred on the date of but prior to the current surrender
or transfer; and
--------------------------------------------------------------------------------
152 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) is the ratio of the amount of the transfer or surrender to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current surrender or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted surrenders and adjusted transfers for the variable account floor are
equal to the amount of the surrender or transfer from the protected investment
options as long as the sum of the surrenders and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current surrender or transfer from the protected investment options plus
the sum of all prior surrenders and transfers made from the protected investment
options in the current policy year exceeds the roll-up amount from the prior
contract anniversary we will calculate the adjusted withdrawal or adjusted
transfer for the variable account floor as the result of (a) plus [(b) times
(c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any surrenders and transfers made from the protected investment options in
the current policy year but prior to the current surrender or transfer.
However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
surrender or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current surrender (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current surrender or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments (described
above); or
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial surrenders; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments (described
above);
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments (described
above).
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these following examples is to illustrate the operation of the
Income Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 153
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to choose a PN program investment option.
The riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program investment options
include protected investment options and excluded investment options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and/or the one-year fixed account). Excluded investment options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial surrenders or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BENEFIT BASE - MAV(2)
--------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
--------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
154 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 155
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
156 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D -- Joint and Last Survivor Life Annuity -- No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 157
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB -- MAX PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB -- MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
158 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX L :
EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
THE EXAMPLE ASSUMES:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
INITIAL PAYMENT 100,000
PARTIAL SURRENDER MCAV ACCUMULATION HYPOTHETICAL
END OF (BEGINNING OF ADJUSTMENT FOR MCAV BENEFIT ASSUMED
CONTRACT YEAR YEAR) PARTIAL SURRENDER -------- AMOUNT CONTRACT VALUE
1 $ 0 $ 0 $100,000 $ 0 $112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 159
APPENDIX M: SECURESOURCE RIDER DISCLOSURE
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
--------------------------------------------------------------------------------
160 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any withdrawals you take
under the contract will reduce the value of the death benefits (see "Benefits in
Case of Death"). Upon full withdrawal of the contract, you will receive the
remaining contract value less any applicable charges (see "Making the Most of
Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 161
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate purchase payments to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen. You may make two elective investment option
changes per contract year; we reserve the right to limit elective investment
option changes if required to comply with the written instructions of a fund
(see "Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static investment option, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed investment option per contract year
and will not cause your rider fee to increase.
The target investment option is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment
option that is more aggressive than the current target investment option after
30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your model portfolio or investment option to the target investment
option or investment option that is more conservative than the target
investment option without a benefit reset as described below. If you are in a
withdrawal phase and you choose to allocate your contract value to an
investment option that is more aggressive than the target investment option,
your rider benefit will be reset as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered spouse who is the owner of the contract (or
annuitant in the case of nonnatural ownership). The rider will terminate at
the
--------------------------------------------------------------------------------
162 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
death of the contract owner (or annuitant in the case of nonnatural ownership)
because the original spouse will be unable to elect the spousal continuation
provision of the contract (see "Joint Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the guaranteed amount of withdrawal available under the rider and
such withdrawals may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix E for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an interim
value used to calculate the amount available for withdrawals each year under the
basic withdrawal benefit (see
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 163
"Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of
the individual GBAs associated with each purchase payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. Please note that if the withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
--------------------------------------------------------------------------------
164 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 165
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
--------------------------------------------------------------------------------
166 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups may increase
your ALP, they may reduce or eliminate any benefit of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 167
PROCESSING IS APPLIED and may reduce the amount available for future
withdrawals. When determining if a withdrawal will result in excess withdrawal
processing, the applicable RALP will not yet reflect the amount of the current
withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix E for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
--------------------------------------------------------------------------------
168 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 169
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If
--------------------------------------------------------------------------------
170 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
spousal continuation is not available under the terms of the contract, the rider
terminates. The lifetime benefit of this rider ends at the death of the last
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set to the
ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 171
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
172 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX N: SECURESOURCE 20 RIDER DISCLOSURE
SECURESOURCE 20 RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary values. The SecureSource 20
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw your principal over time. This benefit
is intended for assets you plan to hold and let accumulate for at least three
years. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be re-established based on your contract value at that time and you will not
receive 20% credit offered under this rider.
There are two optional SecureSource 20 riders available under your contract:
SecureSource 20 -- Single Life; or
SecureSource 20 -- Joint Life.
The information in this section applies to both Secure Source 20 riders, unless
otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource 20 -- Single Life rider covers one person. The SecureSource
20 -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource 20 -- Single Life rider or the
SecureSource 20 -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource 20 rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if:
your contract application is signed on or after Aug. 10, 2009, but prior to
Nov. 30, 2009; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource 20 riders are not available under an inherited qualified
annuity.
The SecureSource 20 rider guarantees that after the waiting period, regardless
of the investment performance of your contract, you will be able to withdraw up
to a certain amount each year from the contract before the annuity payouts begin
until:
SINGLE LIFE: until death (see "At Death" heading below) or until the depletion
of the basic benefit.
JOINT LIFE: until the death of the last surviving covered spouse (see "Joint
Life only: Covered Spouses" and "At Death" headings below) or until the
depletion of the basic benefit.
KEY TERMS
The key terms associated with the SecureSource 20 rider are:
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and until your death (JOINT LIFE: the
death of both covered spouses). After the waiting period, the annual withdrawal
amount guaranteed by the rider can vary each contract year. The maximum ALP is
$300,000.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): the age at which the lifetime
benefit is established.
ENHANCED LIFETIME BASE (ELB): used in the calculation of the ALP on the later of
the ELB date or the establishment of the ALP. The ELB cannot be withdrawn or
annuitized and is not payable as a death benefit.
GUARANTEED BENEFIT AMOUNT (GBA): the total cumulative withdrawals guaranteed by
the rider under the basic benefit. The maximum GBA is $5,000,000. The GBA cannot
be withdrawn or annuitized and is not payable as a death benefit. It is an
interim value used to calculate the amount available for withdrawals each year
after the waiting period under the basic benefit (see "Guaranteed Benefit
Payment" below). At any time, the total GBA is the sum of the individual GBAs
associated with each purchase payment.
GUARANTEED BENEFIT PAYMENT (GBP): the basic benefit amount available each
contract year after the waiting period until the RBA is reduced to zero. After
the waiting period the annual withdrawal amount guaranteed by the rider can vary
each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 173
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. The RALP is the lifetime benefit amount
that can be withdrawn during the remainder of the current contract year.
REMAINING BENEFIT AMOUNT (RBA): each withdrawal you make reduces the amount that
is guaranteed by the rider for future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
REMAINING BENEFIT PAYMENT (RBP): as you make withdrawals during a contract year,
the remaining amount that the rider guarantees will be available for withdrawal
that year is reduced. The RBP is the basic benefit amount that can be withdrawn
during the remainder of the current contract year.
WAITING PERIOD: The period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
GBP Percentage and ALP Percentage. The WAB cannot be withdrawn or annuitized and
is not payable as a death benefit.
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
DESCRIPTION OF THE SECURESOURCE 20 RIDER
Before the lifetime benefit is established, the annual withdrawal amount
guaranteed by the riders after the waiting period is the basic benefit amount.
After the lifetime benefit is established and after the waiting period, the
riders guarantee that you have the option each contract year to cumulatively
withdraw an amount up to the lifetime benefit amount or the basic benefit
amount, but the riders do not guarantee withdrawal of both in a contract year.
The lifetime withdrawal benefit is established automatically:
SINGLE LIFE: on the rider anniversary date after the covered person reaches
age 65, or on the rider effective date if the covered person is age 65 or
older on the rider effective date (see "Annual Lifetime Payment Attained Age
(ALPAA)" heading below);
JOINT LIFE: on the rider anniversary date after the younger covered spouse
reaches age 65, or on the rider effective date if the younger covered spouse
is age 65 or older on the rider effective date (see "Annual Lifetime Payment
Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below).
The basic benefit amount and the lifetime benefit amount can vary based on the
relationship of your contract value to the Withdrawal Adjustment Base (WAB).
When the first withdrawal is taken each contract year after the waiting period,
the percentages used to determine the benefit amounts are set and fixed for the
remainder of that year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next year.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic benefit and lifetime benefit each has its own definition
of the allowed annual withdrawal amount. Therefore a withdrawal may be
considered an excess withdrawal for purposes of the lifetime benefit only, the
basic benefit only, or both.
At any time after the waiting period, as long as your withdrawal does not exceed
the greater of the basic benefit amount or the lifetime benefit amount, if
established, you will not be assessed a surrender charge or any market value
adjustment. If your withdrawals exceed the greater of the RBP or the RALP,
surrender charges under the terms of the contract may apply (see
"Charges -- Surrender Charges"). The amount we actually deduct from your
contract value will be the amount you request plus any applicable surrender
charge. Market value adjustments, if applicable, will also be made (see
"Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the
amount you request. Any withdrawals you take under the contract will reduce the
value of the death benefits (see "Benefits in Case of Death"). Upon full
withdrawal, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
Subject to conditions and limitations, an annual step-up can increase the basic
benefit amount and the lifetime benefit amount, if your contract value has
increased on a rider anniversary.
--------------------------------------------------------------------------------
174 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
Subject to conditions and limitations, if no withdrawals are taken prior to the
third rider anniversary, the 20% rider credit may increase the lifetime benefit
(if already established) or the Enhanced Lifetime Base (ELB) may increase the
lifetime benefit (when established).
The values associated with the basic benefit are GBA, RBA, GBP and RBP. The
values associated with the lifetime benefit are ALP, RALP and ELB. ALP and GBP
are similar in that they are the annual withdrawal amount for each benefit after
the waiting period. RALP and RBP are similar in that they are the remaining
amount that can be withdrawn during the current contract year for each benefit.
IMPORTANT SECURESOURCE 20 RIDER CONSIDERATIONS
You should consider whether a SecureSource 20 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the first death of any owner or
annuitant even if the covered person is still living (see "At Death"
heading below). Therefore, the rider will terminate when a death benefit
becomes payable. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the lifetime benefit terminates even though other contract
owners are still living; or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the lifetime benefit terminates even
though the owner is still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the death of the last surviving covered
spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If both the ALP and the
contract value are zero, the lifetime benefit will terminate.
(c) If the lifetime benefit is first established prior to the third rider
anniversary, the initial ALP is based on the basic benefit's RBA at that
time (see "Annual Lifetime Payment (ALP)" heading below). If the lifetime
benefit is first established on/after the third rider anniversary, the
initial ALP is based on the greater of the basic benefit's RBA and the ELB
at that time. Any withdrawal you take before the ALP is established
reduces the RBA and ELB and therefore may result in a lower amount of
lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be re-established based on your contract value at that time and you will
not receive 20% credit offered under this rider. Any withdrawal request within
the 3-year waiting period must be submitted in writing. Also, after the
waiting period if you withdraw more than the allowed withdrawal amount in a
contract year ("excess withdrawal"), the guaranteed amounts under the rider
may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of subaccounts, one-year fixed account and GPAs
(if available) to the PN program investment options (if applicable) you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect the rider. (See "Making the
Most of Your Contract -- Portfolio Navigator Program.") You may allocate
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the investment option you have chosen. You may make two
elective investment option changes per contract year; we reserve the right to
limit elective investment option changes if required to comply with the
written instructions of a fund (see "Market Timing").
You can allocate your contract value to any available investment options during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior to
any subsequent withdrawal. During these accumulation phases, you may request to
change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 175
portfolio, this reallocation will be made to the applicable fund of funds
investment option. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option classification is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment option
that is more aggressive than the current target investment option after 30 days
written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase and
you choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, you will be in the accumulation
phase again. If this is done after the waiting period, your rider benefit will
be reset as follows:
(a) the total GBA will be reset to the contract value, if your contract value
is less; and
(b) the total RBA will be reset to the contract value, if your contract value
is less; and
(c) the ALP, if established, will be reset to your current ALP Percentage
(either 6% or 5% as described under "GBP Percentage and ALP Percentage"
heading below) times the contract value, if this amount is less than the
current ALP; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(g) the WAB will be reset as follows:
- if the ALP has not been established, the WAB will be equal to the reset
GBA.
if the ALP has been established, the WAB will be equal to the reset ALP,
divided by the current ALP Percentage; and
(h) the ELB, if greater than zero, will be reset to the contract value, if
your contract value is less.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource 20 rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource 20 - Joint Life
rider and will not reduce the fee we charge for this rider. The benefit under
the SecureSource 20 - Joint Life rider continues for the covered spouse who is
the owner of the contract (or annuitant in the case of nonnatural ownership).
The rider will terminate at the death of the contract owner (or annuitant in
the case of nonnatural ownership) because the original covered spouse will be
unable to elect the spousal continuation provision of the contract (see "Joint
Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary. The
annuitant must also be an owner. For non-natural ownership arrangements that
allow for spousal continuation one covered spouse should be the annuitant and
the other covered spouse should be the sole primary beneficiary. For revocable
trust ownerships, the grantor of the trust must be the annuitant and the
beneficiary must either be the annuitant's spouse or a trust that names the
annuitant's spouse as the sole primary beneficiary. You are responsible for
establishing ownership arrangements that will allow for spousal continuation.
If you select the SecureSource 20 - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse can not
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds
--------------------------------------------------------------------------------
176 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
the RBP or RALP is subject to the excess withdrawal processing described below
for the GBA, RBA and ALP. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
BASIC BENEFIT DESCRIPTION
THE GBA AND RBA ARE DETERMINED AT THE FOLLOWING TIMES, SUBJECT TO THE MAXIMUM
AMOUNT OF $5,000,000, CALCULATED AS DESCRIBED:
At contract issue -- the GBA and RBA are equal to the initial purchase
payment.
When you make additional purchase payments -- If a withdrawal is taken during
the waiting period, the GBA and RBA will not change when a subsequent purchase
payment is made during the waiting period. Prior to any withdrawal during the
waiting period and after the waiting period, each additional purchase payment
will have its own GBA and RBA established equal to the amount of the purchase
payment.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you take a withdrawal during the waiting period -- the total GBA and
total RBA will be set equal to zero until the end of the waiting period.
When you take a withdrawal after the waiting period and the amount withdrawn
is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal and the GBA remains unchanged. If there have been
multiple purchase payments, both the total GBA and each payment's GBA
remain unchanged, and each payment's RBA is reduced in proportion to its
RBP.
(b) greater than the total RBP -- EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE GBA AND RBA.
On the rider anniversary at the end of the waiting period -- If the first
withdrawal is taken during the waiting period and you did not decline a rider
fee increase, the total GBA and the total RBA will be reset to the contract
value.
If the first withdrawal is taken during the waiting period and you decline a
rider fee increase, the total GBA and the total RBA will be reset to the
lesser of (1) the GBA at the time of the first withdrawal, plus any additional
purchase payments since the time of the first withdrawal, minus all
withdrawals, or (2) the contract value.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 177
Upon certain changes to your PN program investment options under the PN
program as described under "Use of Portfolio Navigator Program Required,"
above.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GBP PERCENTAGE AND ALP PERCENTAGE: We use two percentages (6% and 5%) to
calculate your GBP and ALP. The percentage used can vary as described below:
During the waiting period, 6% will be used to determine the amount payable to
beneficiaries under the RBA Payout Option described below. After the waiting
period, a comparison of your contract value and the WAB determines your GBP
Percentage and ALP Percentage, unless the percentage is fixed as described
below. On each valuation date, if the benefit determining percentage is less
than the 20% adjustment threshold, then 6% is used in calculating your GBP and
ALP; otherwise, 5% is used. Market volatility and returns, the deduction of fees
and the 20% credit could impact your benefit determining percentage. The benefit
determining percentage is calculated as follows but will not be less than zero:
1 - (A/B)
A = contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
When the first withdrawal in a contract year is taken, the GBP Percentage and
ALP Percentage will be set and fixed for the remainder of that contract year.
Beginning on the next rider anniversary, the GBP Percentage and ALP Percentage
can change on each valuation date as described above until a withdrawal is taken
in that contract year.
Under certain limited situations, your GBP Percentage and ALP Percentage will
not vary each contract year. They will be set at the earliest of (1), (2) or (3)
below and remain fixed for as long as the benefit is payable:
(1) when the RBA Payout Option is elected, or
(2) if the ALP is established, when your contract value on a rider anniversary
is less than two times the ALP (for the purpose of this calculation only,
the ALP is determined using 5%; the ALP Percentage used to determine your
ALP going forward will be either 6% or 5%), or
(3) when the contract value reduces to zero.
For certain periods of time at our discretion and on a non-discriminatory basis,
your GBP Percentage and ALP Percentage may be set by us to 6% if more favorable
to you.
WITHDRAWAL ADJUSTMENT BASE (WAB): One of the components used to determine GBP
Percentage and ALP Percentage. The maximum WAB is $5,000,000. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit,
THE WAB IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At Rider Effective Date -- the WAB is set equal to the initial purchase
payment.
When a subsequent purchase payment is made -- before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB will be
increased by the amount of each additional purchase payment.
--------------------------------------------------------------------------------
178 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
When a withdrawal is taken -- if the first withdrawal is taken during the
waiting period, the WAB will be set equal to zero until the end of the waiting
period.
Whenever a withdrawal is taken after the waiting period, the WAB will be reduced
by the amount in (A) unless the withdrawal is an excess withdrawal for the
lifetime benefit (or the basic benefit if the ALP is not established) when it
will be set equal to the amount in (B).
(A) The WAB is reduced by an amount as calculated below:
A X B
----- where:
C
A = the amount the contract value is reduced by the withdrawal
B = WAB on the date of (but prior to) the withdrawal
C = the contract value on the date of (but prior to) the withdrawal.
(B) If the ALP is not established and the current withdrawal exceeds the RBP,
the WAB will be reset to the GBA immediately following excess withdrawal
processing.
If the ALP is established and the current withdrawal exceeds the RALP, the WAB
will be reset to the ALP divided by the current ALP Percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above). In this
calculation, we use the ALP immediately following excess withdrawal processing.
On rider anniversaries -- unless you decline a rider fee increase, the WAB
will be increased to the contract value on each rider anniversary, if the
contract value is greater, except as follows:
(A) If a withdrawal is taken during the waiting period, the WAB will be
increased to the contract value on each rider anniversary beginning at the
end of the waiting period, if the contract value is greater.
(B) If you decline a rider fee increase and a withdrawal is taken during the
waiting period, the WAB will be reset to the lesser of (1) the GBA at the
time of the first withdrawal, plus any additional purchase payments since
the time of the first withdrawal, minus all withdrawals, or (2) the
contract value.
Upon certain changes to your PN program investment option as described under
"Use of Portfolio Navigator Program Required," above.
On the later of the third rider anniversary or the rider anniversary when the
ALP is established -- unless you decline a rider fee increase, if the ELB is
greater than zero, the WAB will be increased by an amount as calculated below,
but not less than zero.
(A) The ELB, minus
(B) the greater of:
i) your contract value, or
ii) the ALP before the ELB is applied, divided by the ALP Percentage (if
the ALP is established) or the total RBA (if the ALP is established
on the third rider anniversary).
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic benefit. After the waiting period the annual
withdrawal amount guaranteed under the rider can vary each contract year. At any
point in time, each payment's GBP is the lesser of (a) and (b) where (a) is the
GBA for that payment multiplied by the current GBP percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above) and (b) is
the RBA for that payment. The total GBP is the sum of the GBPs for each purchase
payment.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic benefit. At any point in time,
the total RBP is the sum of the RBPs for each purchase payment.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
During the waiting period -- the RBP will be zero.
At the beginning of any contract year after the waiting period and when the
GBP Percentage changes -- the RBP for each purchase payment is set equal to
that purchase payment's GBP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment has its own RBP equal to the purchase payment,
multiplied by the GBP Percentage.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 179
When you make any withdrawal after the waiting period -- the total RBP is
reset to equal the total RBP immediately prior to the withdrawal less the
amount of the withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in the excess withdrawal processing, the applicable RBP will not yet
reflect the amount of the current withdrawal.
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): The ALP is the lifetime benefit amount available
for withdrawals in each contract year after the waiting period until the later
of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
benefit is not in effect and the ALP is zero.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the covered person has already reached age 65.
(b) the rider anniversary following the date the covered person reaches age
65,
- if during the waiting period and no prior withdrawal has been taken; or
- if after the waiting period.
(c) the rider anniversary following the end of the waiting period if the
covered person is age 65 before the end of the waiting period and a prior
withdrawal had been taken.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
JOINT LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
--------------------------------------------------------------------------------
180 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
For (b), (c) and (d) above, if the date described occurs during the waiting
period and a prior withdrawal had been taken, we use the rider anniversary
following the end of the waiting period to establish the ALP.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
Whenever the ALP Percentage changes --
(a) If the ALP Percentage is changing from 6% to 5%, the ALP is reset to the
ALP multiplied by 5%, divided by 6%.
(b) If the ALP Percentage is changing from 5% to 6%, the ALP is reset to the
ALP multiplied by 6%, divided by 5%.
When you make an additional purchase payment -- Before a withdrawal is taken
in the waiting period and at any time after the waiting period, each
additional purchase payment increases the ALP by the amount of the purchase
payment, multiplied by the ALP Percentage.
When you make a withdrawal:
(a) During the waiting period, the ALP, if established, will be set equal to
zero until the end of the waiting period.
(b) After the waiting period, if the amount withdrawn is:
(i) less than or equal to the RALP, the ALP is unchanged.
(ii) greater than the RALP, ALP EXCESS WITHDRAWAL PROCESSING will occur.
If you withdraw less than the ALP in a contract year, there is no carry over
to the next contract year.
On the rider anniversary at the end of the waiting period -- If you took a
withdrawal during the waiting period, the ALP is set equal to the contract
value multiplied by the ALP Percentage if the covered person (JOINT LIFE:
younger covered spouse) has reached age 65.
At step ups -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
Upon certain changes to your PN program investment option under the PN program
as described under "Use of Portfolio Navigator Program Required," above.
20% RIDER CREDIT
If you do not make a withdrawal during the first three rider years and you don't
decline a rider fee increase, then a 20% rider credit may increase your ALP.
This credit is 20% of purchase payments received in the first 180 days that the
rider is in effect and is used to establish the enhanced lifetime base. The
enhanced lifetime base is an amount that may be used to increase the ALP. The
20% rider credit does not increase the basic benefit or the contract value.
Because step ups may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (ELB)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not decline a rider fee increase and you do not make a
withdrawal during the first three rider years, then the enhanced lifetime base
will be the sum of all purchase payments received during the first three rider
years plus the 20% rider credit. If you make a withdrawal during the first three
rider years or decline a rider fee increase, then the 20% rider credit does not
apply and the enhanced lifetime base will be established as zero and will always
be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the contract value (if your contract value is less), if you choose
an asset allocation model that is more aggressive than the target model while
you are in the withdrawal phase.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 181
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You decline a rider fee increase.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn, annuitized or payable as a death benefit.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE
If the ALP is already established, on the third rider anniversary, the ALP will
be increased to equal the enhanced lifetime base multiplied by the ALP
Percentage (either 5% or 6% as described under "GBP Percentage and ALP
Percentage" heading above), if this amount is greater than the current ALP.
Thereafter, the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or the ALP Percentage (either 5% or 6% as described under "GBP Percentage and
ALP Percentage" heading above) multiplied by the contract value immediately
following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime benefit. Prior to
establishment of the ALP, the lifetime benefit is not in effect and the RALP is
zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period -- the RALP will be zero.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals taken in the contract year but not less than zero.
At the beginning of each contract year after the waiting period and when the
ALP Percentage changes -- the RALP is set equal to the ALP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment increases the RALP by the purchase payment, if
applicable multiplied by the ALP Percentage (either 5% or 6% as described
under "GBP Percentage and ALP Percentage" heading above).
At step ups -- (see "Annual Step Up" headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When you make any withdrawal after the waiting period -- the RALP equals the
RALP immediately prior to the withdrawal less the amount of the withdrawal but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available
for future withdrawals. When determining if a withdrawal will result in excess
withdrawal processing, the applicable RALP will not yet reflect the amount of
the current withdrawal.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the benefit amount will not be subject to excess withdrawal processing
provided that the following conditions are met:
The withdrawal is after the waiting period;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. Any withdrawal during the waiting
period will reset the basic benefit and lifetime benefit at the end of the
waiting period. After the waiting period, withdrawal amounts greater than the
RALP or RBP that do not meet the conditions above will result in excess
withdrawal processing. The amount in excess of the RBP and/or RALP that is not
subject to excess withdrawal processing will be recalculated if the RALP and RBP
change due to GBP Percentage and ALP Percentage changes. See Appendix E for
additional information.
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the benefit values may be available. A step up does not create contract value,
guarantee the performance of any investment option, or provide a benefit that
can be withdrawn
--------------------------------------------------------------------------------
182 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
in a lump sum or paid upon death. Rather, a step up determines the current
values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment
period or increase the allowable payment. If there have been multiple payments
and the GBA increases due to the step up, the individual GBAs, RBAs, GBPs, and
RBPs will be combined.
The annual step up may be available as described below, subject to the maximum
GBA, RBA and ALP and subject to the following rules:
You have not declined a rider fee increase.
If you take any withdrawals during the waiting period the annual step up will
not be available until the rider anniversary following the end of the waiting
period.
On any rider anniversary where your contract value is greater than the RBA or,
your contract value multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above) is greater
than the ALP, if established, the annual step up will be applied to your
contract on the rider anniversary.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period, the RBP will not be affected by the step up.
(b) After the waiting period, the RBP will be reset to the increased GBP.
The ALP will be increased to the contract value on the rider anniversary
multiplied by the ALP Percentage (either 5% or 6% as described under "GBP
Percentage and ALP Percentage" heading above), if greater than the current
ALP.
The RALP will be reset as follows:
(a) During the waiting period, the RALP will not be affected by the step up.
(b) After the waiting period, the RALP will be reset to the increased ALP.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource 20 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
20 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that a) the RBP will be calculated as the GBP after
the step-up less all prior withdrawals taken during the current contract year,
but not less than zero, and b) the RALP will be calculated as the ALP after the
step-up less all prior withdrawals taken during the current contract year, but
not less than zero. The spousal continuation step-up is processed on the
valuation date spousal continuation is effective.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be taken from the variable subaccounts, guarantee period
accounts (where available), the one-year fixed account (if applicable) and the
DCA fixed account in the same proportion as your interest in each bears to the
contract value. You cannot specify from which accounts the withdrawal is to be
taken.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero, you
will be paid in the following scenarios:
1) The ALP has not yet been established, the total RBA is greater than zero and
the contract value is reduced to zero as a result of fees or charges or a
withdrawal that is less than or equal to the RBP. In this scenario, you can
choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 183
JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established, the total RBA is greater than zero and the
contract value reduces to zero as a result of fees or charges, or a
withdrawal that is less than or equal to both the RBP and the RALP. In this
scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero.
JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in monthly installments. If the
monthly payment is less than $100, we have the right to change the frequency
but no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate;
In determining the remaining schedule of GBPs, the current GBP is fixed for as
long as payments are made.
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero; and
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource 20 rider and the contract will terminate under either of the
following two scenarios:
If the ALP is established and the RBA is zero, and if the contract value falls
to zero as a result of a withdrawal that is greater than the RALP. This is
full withdrawal of the contract value.
If the ALP is not established and the RBA is zero, and if the contract value
falls to zero as a result of fees, charges or a withdrawal.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the RBA payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract which terminates the rider.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
--------------------------------------------------------------------------------
184 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the RBA payout option available under this rider, or 3)
continue the contract under the spousal continuation provision of the contract.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
REMAINING BENEFIT AMOUNT (RBA) PAYOUT OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource 20 rider after
the waiting period.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid will not exceed the current total
RBA at the time you begin this fixed annuity payout option. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequently
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary (see
"The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary when the death
benefit is payable. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource 20 rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
2. SINGLE LIFE: After the death benefit is payable, continuation of the contract
will terminate the rider.
3. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
4. Annuity payouts under an annuity payout plan will terminate the rider.
5. You may terminate the rider if your annual rider fee after any fee increase
is more than 0.25 percentage points higher than your fee before the increase
(See "Charges -- SecureSource 20 rider fee").
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 185
6. When the RBA and contract value is reduced to zero and either the withdrawal
is taken when the ALP is not established or an excess withdrawal of the RALP
is taken, the rider will terminate.
7. Termination of the contract for any reason will terminate the rider.
8. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
For an example, see Appendix D.
--------------------------------------------------------------------------------
186 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX O: SECURESOURCE STAGES RIDER DISCLOSURE
SECURESOURCE STAGES RIDERS
(NOT AVAILABLE FOR CONTRACT OPTION C)
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary gains. The SecureSource Stages
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw income over your lifetime.
This benefit is intended for assets you plan to hold and let accumulate for at
least three years. Your benefits under the rider can be reduced if any of the
following occurs:
If you take any withdrawals during the 3-year waiting period, your benefits
will be set to zero until the end of the waiting period when they will be re-
established based on your contract value at that time;
If you take a withdrawal after the waiting period and if you withdraw more
than the allowed withdrawal amount in a contract year, or you take withdrawals
before the lifetime benefit is available;
If you take a withdrawal and later choose to allocate your contract value to a
model portfolio that is more aggressive than the target model;
If the contract value is 20% or more below purchase payments increased by any
step ups or rider credits and adjusted for withdrawals (see withdrawal
adjustment base described below).
The SecureSource Stages rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year that the lifetime benefit is available. The lifetime benefit
amount can vary based on your attained age and based on the relationship of your
contract value to the withdrawal adjustment base. Each contract year after the
waiting period, the percentage used to determine the benefit amount is set when
the first withdrawal is taken and fixed for the remainder of that year.
At any time after the waiting period, as long as your total withdrawals during
the current year do not exceed the lifetime benefit amount, you will not be
assessed a surrender charge and no market value adjustment will be applied. If
you withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and any applicable market value adjustment. At any time, you
may withdraw any amount up to your entire surrender value, subject to excess
withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages riders available under your contract:
SecureSource Stages - Single Life
SecureSource Stages - Joint Life
The information in this section applies to both SecureSource Stages riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages -- Single Life rider covers one person. The SecureSource
Stages -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource Stages -- Single Life rider or the
SecureSource Stages -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource Stages rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if you purchase a
contract with application signed on or after Nov. 30, 2009; and
SINGLE LIFE: you are 80 or younger on the date the contract is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource Stages riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 187
The SecureSource Stages rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
SINGLE LIFE: death (see "At Death" heading below).
JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages rider are:
AGE BANDS: Each age band is associated with a set of lifetime payment
percentages. The covered person (JOINT LIFE: the younger covered spouse) must be
at least the youngest age shown in the first age band for the annual lifetime
payment to be established. After the annual lifetime payment is established,
other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
the younger covered spouse) has reached the youngest age in the first age band.
When the ALP is available, the annual withdrawal amount guaranteed by the rider
can vary each contract year.
ANNUAL STEP-UP: an increase in the benefit base or the principal back guarantee
and a possible increase in the lifetime payment percentage that is available
each rider anniversary if your contract value increases, subject to certain
conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken after the waiting period and before
the annual lifetime payment is established, or (2) a withdrawal that is greater
than the remaining annual lifetime payment when the annual lifetime payment is
available.
EXCESS WITHDRAWAL PROCESSING: after the waiting period, a reduction in benefits
if a withdrawal is taken before the annual lifetime payment is established or if
a withdrawal exceeds the remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. Whenever the annual lifetime payment is
available, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten rider anniversaries, based on a rider credit percentage of 8% in year
one and 6% for years two through ten, as long as no withdrawals have been taken
since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and withdrawals in the waiting period may
reduce or eliminate the benefit of any rider credits. Rider credits may result
in higher rider charges that may exceed the benefit from the credit.
WAITING PERIOD: the period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage. The WAB cannot be withdrawn or annuitized and is
not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
--------------------------------------------------------------------------------
188 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be reestablished based on your contract value at that time. Although your
benefits will be set to zero until the end of waiting period, we will deduct
rider fees based on the anniversary contract value for the remainder of the
waiting period. Any withdrawal request within the 3-year waiting period must
be submitted in writing. In addition, any withdrawals in the first 10 years
will terminate the rider credits. Also, after the waiting period if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the regular
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate purchase payments to the Special DCA
fixed account, when available, and we will make monthly transfers into the
investment option you have chosen. You may make two elective investment option
changes per contract year; we reserve the right to limit elective investment
option changes if required to comply with the written instructions of a fund
(see "Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in the static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model portfolio changes per contract
year. The target investment option is currently the Moderate investment
option. We reserve the right to change the target investment option to an
investment option that is more aggressive than the target investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, you will be in the
accumulation phase again. If this is done after the waiting period, your rider
benefit will be reset as follows: the BB, PBG and WAB will be reset to the
contract value, if less than their current amount; and the ALP and RALP, if
available, will be recalculated. You may request to change your investment
option by written request on an authorized form or by another method agreed to
by us.
NON-CANCELABLE: Once elected, the SecureSource Stages rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
fee will continue to be deducted until the contract or rider is terminated or
the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of
nonnatural or revocable trust ownership). The rider will terminate at the
death of the contract owner because the original covered spouse will be unable
to elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of
the trust must be the annuitant and the beneficiary must either be the
annuitant's spouse or a trust that names the annuitant's spouse
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 189
as the sole primary beneficiary. You are responsible for establishing
ownership arrangements that will allow for spousal continuation.
If you select the SecureSource Stages -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawal of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person (e.g., an irrevocable trust or corporation) or a revocable
trust, the covered spouses are the annuitant and the legally married spouse of
the annuitant. The covered spouses lives are used to determine when the annual
lifetime payment is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
younger covered spouses) has reached age 50. When the ALP is established and at
all times thereafter, the ALP is equal to the BB multiplied by the lifetime
payment percentage. Anytime the lifetime payment percentage or BB changes as
described below, the ALP will be recalculated. When the ALP is available, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
--------------------------------------------------------------------------------
190 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50. The ALP will be available on later of the rider anniversary
after the waiting period, or the date the covered person's attained age equals
age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
The ALP will be available on later of the rider anniversary after the waiting
period, or the date the ALP is established.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the remaining annual lifetime payment
guaranteed for withdrawal after any withdrawals are made. The RALP is
established at the same time as the ALP. The RALP will be zero during the
waiting period. After the waiting period, the RALP equals the ALP less all
withdrawals in the current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band for the lifetime payment percentage
used to calculate the initial ALP is the percentage for the covered person's
attained age (JOINT LIFE: younger covered spouses attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouses subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouses attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any annual
rider fee increase or if a withdrawal has been taken since the ALP was made
available, then the lifetime payment percentage will not change on subsequent
birthdays.)
Upon annual step-ups (see "Annual step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was available and no annual rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether Percentage A or Percentage B is used for each
applicable age band:
During the waiting period, percentage A will be used to determine the amount
payable to beneficiaries under the principal back guarantee (PBG).
After the waiting period, a comparison of your contract value and the withdrawal
adjustment base (WAB) determines whether percentage A or percentage B is used to
calculate the ALP unless the percentage is fixed as described below.
On each valuation date, if the benefit determining percentage is less than the
20% adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 191
1 - (A/B) where:
A = Contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
After the ALP is available, the first withdrawal taken in each contract year
will set and fix the lifetime payment percentage for the remainder of the
contract year. Beginning on the next rider anniversary, the lifetime payment
percentage can change on each valuation day as described above until a
withdrawal is taken in that contract year.
Under certain limited situations, your Lifetime Payment Percentage will not vary
each contract year. Percentage A or percentage B will be determined at the
earliest of (1), (2) or (3) below and remain fixed for as long as the benefit is
payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum benefit base (BB), credit base (CB), withdrawal adjustment
base (WAB) and PBG amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: Before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB, CB
(unless it has been permanently set to zero), BB and PBG will be increased by
the amount of each additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits. If the first withdrawal is taken during the
waiting period, the WAB, BB and PBG will be set equal to zero until the end of
the waiting period.
Whenever a withdrawal is taken after the waiting period:
(a) the WAB will be reduced by the "adjustment for withdrawal," as defined
below.
(b) if the ALP is established and the withdrawal is less than or equal to
the RALP, the BB does not change and the PBG is reduced by the amount of
the withdrawal, but it will not be less than zero.
(c) if the ALP is not established, excess withdrawal processing will occur
as follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not
be less than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the
withdrawal and further reduced by an amount calculated as follows, but it
will not be less than zero:
A = the amount of the withdrawal minus the RALP
B = the PBG minus the RALP on the date of (but prior to) the
withdrawal
C = the contract value on the date of (but prior to) the withdrawal
minus the RALP
--------------------------------------------------------------------------------
192 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
The BB will be reduced by an amount as calculated below:
D = the amount of the withdrawal minus the RALP
E = the BB on the date of (but prior to) the withdrawal
F = the contract value on the date of (but prior to) the withdrawal
minus the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is
reduced by a withdrawal in the same proportion as the contract value
is reduced, the proportional amount deducted is the "adjustment for
withdrawal." The "adjustment for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PGB (as applicable) on the date of (but prior to)
the withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
On the rider anniversary following the waiting period: If a withdrawal was
taken during the waiting period and you did not decline any annual rider fee
increase as described in the rider charges provision, the BB, WAB and PBG are
reset to the contract value. If a withdrawal was taken during the waiting
period and you declined any annual rider fee increase, the BB and PBG are
reset to the lesser of (1) the BB or PBG (as applicable) at the time of the
first withdrawal, plus any additional purchase payments since the time of the
first withdrawal, minus all withdrawals, or (2) the contract value. The WAB
will be reset to the BB.
The WAB on rider anniversaries: Unless you decline any annual rider fee
increase or take a withdrawal during the waiting period, the WAB (after any
rider credit is added) will be increased to the contract value, if the
contract value is greater. If a withdrawal was taken during the waiting
period, the WAB will be increased to the contract value, if the contract value
is greater, starting on the rider anniversary following the waiting period.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
annual rider fee increase, a rider credit may be available for the first ten
rider anniversaries. On the first rider anniversary, the rider credit equals the
credit base (CB) 180 days following the rider effective date multiplied by 8%.
On any subsequent rider credit anniversaries, the rider credit equals the CB as
of the prior rider anniversary multiplied by 6%. On the first rider anniversary
the BB and WAB will be set to the greater of the current BB, or the BB 180 days
following the contract date increased by the rider credit and any additional
purchase payments since 180 days following the rider effective date. On any
subsequent rider credit anniversaries the BB and WAB will be set to the greater
of the current BB, or the BB on the prior rider anniversary increased by the
rider credit and any additional purchase payments since the prior rider
anniversary. If the CB is greater than zero, the CB will be permanently reset to
zero on the 10(th) rider anniversary after any adjustment to the WAB and BB, and
there will be no additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you take any withdrawals during the waiting period, the
annual step-up will not be available until the 3(rd) rider anniversary. If you
decline any annual rider fee increase, future annual step-ups will no longer be
available.
The annual step-up will be executed on any rider anniversary where the contract
value is greater than the PBG or the BB after any rider credit is added. If an
annual step-up is executed, the PBG, BB and lifetime payment percentage will be
adjusted as follows: The PBG will be increased to the contract value, if the
contract value is greater. The BB (after any rider credit is added) will be
increased to the contract value, if the contract value is greater. If the
covered person's attained age (Joint Life: younger covered spouses attained age)
on the rider anniversary is in a higher age band and (1) there is an increase to
BB due to a step-up or (2) the BB is at the maximum of $10,000,000 so there was
no step-up of the BB, then the higher age band will be used to determine the
appropriate lifetime payment percentage, regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 193
your RMD that exceeds the benefit amount will not be subject to excess
withdrawal processing provided that the following conditions are met:
The withdrawal is after the waiting period;
The annual lifetime payment is available;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. A withdrawal during the waiting period
will reset the benefit base, the withdrawal adjustment base and the principal
back guarantee to the contract value at the end of the waiting period. After the
waiting period, a withdrawal taken before the annual lifetime payment is
established or withdrawing amounts greater than the remaining annual lifetime
payment that do not meet these conditions will result in excess withdrawal
processing. The amount in excess of the RALP that is not subject to excess
withdrawal processing will be recalculated if the ALP changes due to lifetime
payment percentage changes. See Appendix E for additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
Stages -- Joint Life rider also continues. The surviving covered spouse can name
a new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Rider Anniversary Processing -- Annual Step-Up" heading above)
also apply to the spousal continuation step-up. The WAB will be increased to the
contract value if the contract value is greater. The spousal continuation step-
up is processed on the valuation date spousal continuation is effective.
RULES FOR SURRENDER: Minimum account values following a surrender no longer
apply to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
--------------------------------------------------------------------------------
194 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
elect to take the death benefit under the terms of the contract, or
elect to take the principal back guarantee available under this rider, or
continue the contract and the SecureSource Stages rider under the spousal
continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are equal
to the PBG on the date of death.
If the PBG is greater than zero and the ALP is not established, the BB on the
date of death multiplied by the lifetime payment percentage used for the
youngest age of the covered spouses in the first age band shown on the
contract data page will be paid annually until total payments to the
beneficiary are equal to the PBG on the date of death.
In either of the above cases:
After the date of death, there will be no additional rider credits or annual
step-ups.
The lifetime payment percentage used will be set as of the date of death.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
On the date of death (JOINT LIFE: remaining covered spouse's date of death), if
the CB is greater than zero, the CB will be permanently reset to zero, and there
will be no additional rider credits.
If the PBG equals zero, the benefit terminates. No further payments are made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: You can choose one of the payout options available under the
contract or an alternative fixed annuity payout option available under the
SecureSource Stages rider. Under the rider's payout option, the minimum amount
payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages rider cannot be terminated either by you or us except as
follows:
SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
SINGLE LIFE: after the death benefit is payable, the rider will terminate.
SINGLE LIFE: spousal continuation will terminate the rider.
JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a beneficiary
of a participant in an employer sponsored retirement plan, the rider will
terminate.
On the annuitization start date, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 195
- You may terminate the rider if your annual rider fee would increase more
than 0.25 percentage points (See "Charges -- SecureSource Stages rider fee")
When the contract value is reduced to zero and either the withdrawal taken
when the annual lifetime payment is not established or a withdrawal in excess
of the remaining annual lifetime payment is taken, the rider will terminate.
Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
--------------------------------------------------------------------------------
196 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX P: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit
value at beginning
of period $1.09 $1.00 $0.82 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.04 $1.09 $1.00 $0.82 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 2 2 2 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit
value at beginning
of period $1.60 $1.37 $0.91 $1.76 $1.50 $1.40 $1.38 $1.33 $0.94 $1.00
Accumulation unit
value at end of
period $1.20 $1.60 $1.37 $0.91 $1.76 $1.50 $1.40 $1.38 $1.33 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 108 107 100 100 107 16 16 16 15 --
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.14 $0.96 $1.65 $1.60 $1.39 $1.35 $1.24 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 56 61 84 154 167 189 109 52 8
-------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $0.93 $1.17 $1.15 $0.87 $1.89 $1.82 $1.37 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,923 8,703 28,798 37,213 21,915 15,378 8,725 1,580 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 $1.00 -- --
Accumulation unit
value at end of
period $1.34 $1.22 $1.18 $1.09 $1.13 $1.05 $1.05 $1.05 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,705 12,467 14,455 14,852 23,568 25,472 20,290 3,919 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INTERNATIONAL, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.40 $1.26 $0.96 $1.77 $1.53 $1.24 $1.12 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.40 $1.26 $0.96 $1.77 $1.53 $1.24 $1.12 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 7 7 5 -- -- -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.85 $0.67 $0.90 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.97 $0.99 $0.85 $0.67 $0.90 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 6 9 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.03 $1.04 $0.91 $0.69 $1.20 $1.01 $1.06 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,210 5,777 7,197 7,837 8,361 23,813 6,935 1,154 -- --
-------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.14 $1.15 $1.03 $0.88 $1.22 $1.31 $1.12 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57 76 102 77 74 88 26 18 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.03 $1.03 $1.00 $0.97 $0.96 $0.97 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,164 3,587 19,621 8,230 5,476 2,192 1,151 399 76 --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (03/01/2002)
Accumulation unit
value at beginning
of period $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01 $1.00
Accumulation unit
value at end of
period $1.32 $1.26 $1.18 $1.05 $1.14 $1.10 $1.07 $1.07 $1.04 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,083 4,009 84,971 77,286 67,959 33,990 1,077 842 152 40
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86 $1.08
Accumulation unit
value at end of
period $1.52 $1.63 $1.42 $1.13 $1.94 $1.83 $1.55 $1.39 $1.20 $0.86
Number of
accumulation units
outstanding at end
of period (000
omitted) 8,456 10,953 63,435 55,414 35,371 27,624 9,764 608 392 325
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 197
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.67 $0.64 $0.56 $0.46 $0.81 $0.80 $0.70 $0.67 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,129 9,784 12,306 14,085 14,409 15,807 17,584 7,616 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.96 $2.52 $2.14 $1.25 $2.75 $2.02 $1.54 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,530 2,741 12,170 16,976 10,106 9,010 5,172 1,070 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.15 $1.12 $1.07 $1.09 $1.02 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.25 $1.15 $1.12 $1.07 $1.09 $1.02 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,043 2,737 67,428 34,578 35,149 26,599 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.23 $1.11 $0.79 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.28 $1.23 $1.11 $0.79 $1.07 $1.07 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,446 2,071 2,632 3,351 4,145 9,940 -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83 $0.90
Accumulation unit
value at end of
period $1.61 $1.55 $1.39 $0.92 $1.25 $1.25 $1.14 $1.12 $1.02 $0.83
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,679 2,244 4,591 5,601 6,703 8,935 4,144 855 325 80
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.55 $1.48 $1.33 $0.95 $1.19 $1.18 $1.11 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,002 1,436 41,498 25,442 20,776 8,355 8 -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.42 $1.27 $1.01 $1.73 $1.56 $1.28 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $1.22 $1.42 $1.27 $1.01 $1.73 $1.56 $1.28 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 13 13 13 20 20 20 16 1 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 $1.00 -- --
Accumulation unit
value at end of
period $1.02 $1.07 $0.93 $0.69 $1.27 $1.25 $1.14 $1.07 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 231 331 809 5,059 3,798 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.83 $0.67 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.95 $0.99 $0.83 $0.67 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,550 1,822 76,608 52,069 30,376 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.87 $0.78 $0.57 $1.13 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.72 $0.87 $0.78 $0.57 $1.13 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 44 70 20 17 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit
value at beginning
of period $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02 $1.00
Accumulation unit
value at end of
period $1.41 $1.69 $1.36 $0.85 $1.56 $1.40 $1.42 $1.31 $1.22 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 314 406 643 597 708 735 335 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.90 $0.74 $0.54 $1.00 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.81 $0.90 $0.74 $0.54 $1.00 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 174 171 136 136 136 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 $1.00 -- --
Accumulation unit
value at end of
period $1.12 $1.13 $1.00 $0.81 $1.30 $1.26 $1.11 $1.08 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 255 408 405 374 367 227 227 174 -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $0.96 $0.77 $1.29 $1.32 $1.13 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.09 $1.13 $0.96 $0.77 $1.29 $1.32 $1.13 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 3 2 3 3 -- -- --
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14 $1.10
Accumulation unit
value at end of
period $1.20 $1.20 $1.19 $1.14 $1.19 $1.15 $1.13 $1.13 $1.14 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,096 2,681 13,727 7,345 6,207 5,084 3,085 1,544 1,019 864
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
198 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.47 $1.18 $0.96 $1.36 $1.42 $1.21 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.35 $1.47 $1.18 $0.96 $1.36 $1.42 $1.21 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 802 962 40,544 28,150 20,212 23 4 2 -- --
-------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.97 $0.84 $0.72 $1.10 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.83 $0.97 $0.84 $0.72 $1.10 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 395 456 200 140 135 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.24 $0.99 $0.75 $1.28 $1.28 $1.21 $1.13 $1.00 -- --
Accumulation unit
value at end of
period $1.22 $1.24 $0.99 $0.75 $1.28 $1.28 $1.21 $1.13 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 13 19 21 20 19 22 15 13 -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.24 $1.37 $1.07 $0.70 $1.20 $1.07 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,280 1,660 2,334 3,051 3,154 7,113 2,763 500 -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.27 $1.18 $1.05 $0.87 $1.26 $1.20 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 9 14 1 1 1 1 -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.82 $0.76 $0.62 $1.09 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.68 $0.82 $0.76 $0.62 $1.09 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 18 19 17 18 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $0.99 $1.25 $1.22 $0.95 $1.54 $1.51 $1.25 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 14 63 66 115 87 57 9 -- --
-------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.07 $1.00 $0.70 $0.98 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.07 $1.00 $0.70 $0.98 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 986 1,158 31,381 22,672 16,330 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit
value at beginning
of period $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97 $1.00
Accumulation unit
value at end of
period $1.65 $1.73 $1.50 $1.13 $2.00 $1.74 $1.58 $1.38 $1.22 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 10,705 13,957 27,907 47,719 43,300 45,089 16,531 3,067 152 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (03/01/2002)
Accumulation unit
value at beginning
of period $1.03 $0.84 $0.67 $1.29 $1.04 $0.99 $0.96 $0.94 $0.73 $1.00
Accumulation unit
value at end of
period $1.01 $1.03 $0.84 $0.67 $1.29 $1.04 $0.99 $0.96 $0.94 $0.73
Number of
accumulation units
outstanding at end
of period (000
omitted) 107 128 125 129 305 368 324 327 68 --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.30 $1.23 $1.17 $1.03 $1.08 $1.06 $1.03 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,787 6,648 45,428 40,566 40,253 12,953 8,188 1,336 -- --
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94 $1.06
Accumulation unit
value at end of
period $2.05 $2.34 $1.85 $1.35 $2.27 $2.00 $1.81 $1.56 $1.27 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,684 2,096 12,835 18,330 11,091 7,570 3,100 1,208 722 290
-------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.05 $1.30 $1.17 $0.94 $1.71 $1.49 $1.28 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,997 2,249 4,907 4,814 4,416 4,843 4,036 1,573 -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96 $0.98
Accumulation unit
value at end of
period $1.69 $1.68 $1.52 $1.14 $1.65 $1.61 $1.39 $1.39 $1.24 $0.96
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,164 1,832 2,044 2,501 3,051 2,743 2,554 2,119 1,118 777
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.01 $0.88 $1.22 $1.28 $1.11 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.20 $1.01 $0.88 $1.22 $1.28 $1.11 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 110 113 134 142 160 63 38 14 -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 199
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35 $0.50
Accumulation unit
value at end of
period $0.59 $0.63 $0.50 $0.36 $0.63 $0.57 $0.54 $0.52 $0.48 $0.35
Number of
accumulation units
outstanding at end
of period (000
omitted) 487 738 838 1,058 1,427 1,612 1,719 1,992 1,273 1,008
-------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01 $1.17
Accumulation unit
value at end of
period $1.45 $1.49 $1.36 $1.10 $1.78 $1.75 $1.50 $1.38 $1.25 $1.01
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,054 1,353 1,660 1,878 2,787 9,197 2,844 3,112 870 324
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.79 $1.83 $1.63 $1.40 $1.34 $1.23 $1.11 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,899 4,938 34,264 32,433 35,814 23,082 7,734 1,493 -- --
-------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.12 $1.06 $0.82 $1.45 $1.44 $1.20 $1.12 $1.00 -- --
Accumulation unit
value at end of
period $1.02 $1.12 $1.06 $0.82 $1.45 $1.44 $1.20 $1.12 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 165 269 256 311 510 376 226 177 -- --
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46 $1.56
Accumulation unit
value at end of
period $2.68 $2.91 $2.37 $1.81 $2.93 $2.88 $2.53 $2.28 $1.84 $1.46
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,277 2,833 10,008 11,967 11,638 9,377 4,128 1,284 550 386
-------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61 $0.79
Accumulation unit
value at end of
period $0.82 $0.80 $0.72 $0.61 $0.98 $1.02 $0.92 $0.87 $0.77 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 266 322 468 492 587 636 956 816 519 391
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit
value at beginning
of period $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79 $1.00
Accumulation unit
value at end of
period $0.88 $0.97 $0.86 $0.72 $1.28 $1.16 $1.12 $1.05 $1.00 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 349 380 4,126 3,856 4,110 3,472 324 329 238 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II
Shares.
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit
value at beginning
of period $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94 $1.00
Accumulation unit
value at end of
period $1.45 $1.60 $1.37 $0.98 $1.89 $1.74 $1.52 $1.42 $1.25 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 86 97 110 133 147 153 163 29 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.93 $0.90 $0.72 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.95 $0.93 $0.90 $0.72 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 27 29 14 17 9 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.81 $0.61 $1.04 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.82 $0.89 $0.81 $0.61 $1.04 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,321 1,471 61,756 25,377 13,924 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.19 $0.93 $1.33 $1.24 $1.14 $1.08 $1.00 -- --
Accumulation unit
value at end of
period $1.22 $1.33 $1.19 $0.93 $1.33 $1.24 $1.14 $1.08 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 342 426 560 664 808 912 1,051 427 -- --
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit
value at beginning
of period $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98 $1.00
Accumulation unit
value at end of
period $1.42 $1.48 $1.30 $1.03 $1.63 $1.70 $1.49 $1.45 $1.26 $0.98
Number of
accumulation units
outstanding at end
of period (000
omitted) 12,380 16,064 35,637 43,373 36,774 36,888 18,912 3,700 73 --
-------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (07/31/2002)
Accumulation unit
value at beginning
of period $1.12 $1.07 $0.74 $1.56 $1.56 $1.41 $1.36 $1.24 $0.95 $1.00
Accumulation unit
value at end of
period $1.07 $1.12 $1.07 $0.74 $1.56 $1.56 $1.41 $1.36 $1.24 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,475 1,830 2,251 2,882 2,554 2,791 3,249 1,479 220 70
-------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.94 $0.83 $0.62 $1.05 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.87 $0.94 $0.83 $0.62 $1.05 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,385 1,565 65,361 54,012 36,050 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
200 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.04 $0.84 $0.60 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.03 $1.04 $0.84 $0.60 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 66 80 45 27 10 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $1.07 $0.78 $1.27 $1.16 $1.10 $1.07 $1.00 -- --
Accumulation unit
value at end of
period $1.17 $1.18 $1.07 $0.78 $1.27 $1.16 $1.10 $1.07 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 11 11 11 11 11 11 11 11 -- --
-------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit
value at beginning
of period $1.47 $1.10 $0.69 $1.16 $1.15 $1.04 $1.00 $0.96 $0.73 $1.00
Accumulation unit
value at end of
period $1.29 $1.47 $1.10 $0.69 $1.16 $1.15 $1.04 $1.00 $0.96 $0.73
Number of
accumulation units
outstanding at end
of period (000
omitted) 92 92 96 101 141 155 155 138 107 1
-------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit
value at beginning
of period $1.24 $1.15 $0.99 $1.30 $1.28 $1.16 $1.15 $1.06 $0.93 $1.00
Accumulation unit
value at end of
period $1.24 $1.24 $1.15 $0.99 $1.30 $1.28 $1.16 $1.15 $1.06 $0.93
Number of
accumulation units
outstanding at end
of period (000
omitted) 513 617 632 661 1,039 1,095 1,130 1,184 348 7
-------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit
value at beginning
of period $2.38 $2.13 $1.63 $2.67 $2.13 $1.65 $1.44 $1.13 $0.85 $1.00
Accumulation unit
value at end of
period $2.49 $2.38 $2.13 $1.63 $2.67 $2.13 $1.65 $1.44 $1.13 $0.85
Number of
accumulation units
outstanding at end
of period (000
omitted) 37 43 56 66 103 85 72 63 37 9
-------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.68 $0.77 $0.64 $0.46 $0.85 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 296 333 14,104 18,345 7,208 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.18 $0.91 $0.59 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.18 $0.91 $0.59 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 19 10 9 8 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 $1.00 -- --
Accumulation unit
value at end of
period $1.77 $1.70 $1.34 $1.06 $1.74 $2.14 $1.58 $1.37 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 199 289 498 554 553 510 443 177 -- --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit
value at beginning
of period $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97 $1.00
Accumulation unit
value at end of
period $1.25 $1.28 $1.20 $0.84 $1.58 $1.41 $1.33 $1.29 $1.24 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,237 5,659 6,442 7,744 7,383 8,562 6,720 1,419 14 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77 $1.00
Accumulation unit
value at end of
period $1.40 $1.56 $1.37 $1.00 $1.71 $1.64 $1.42 $1.27 $1.08 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 320 469 582 612 831 683 680 562 136 --
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03 $1.00
Accumulation unit
value at end of
period $1.58 $1.60 $1.41 $1.21 $1.44 $1.34 $1.27 $1.26 $1.18 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 5,377 6,880 57,951 47,806 44,474 21,466 9,445 2,076 137 5
-------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit
value at beginning
of period $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95 $1.00
Accumulation unit
value at end of
period $1.77 $1.85 $1.53 $1.14 $1.86 $1.92 $1.70 $1.58 $1.35 $0.95
Number of
accumulation units
outstanding at end
of period (000
omitted) 160 185 206 207 221 168 168 143 64 18
-------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.13 $1.02 $0.85 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.13 $1.13 $1.02 $0.85 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,040 1,090 33,919 46,677 37,481 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84 $1.00
Accumulation unit
value at end of
period $1.11 $1.15 $1.14 $0.92 $1.13 $1.15 $1.14 $1.02 $0.97 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 23 97 123 136 162 175 177 188 73
-------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47 $0.58
Accumulation unit
value at end of
period $0.60 $0.74 $0.68 $0.56 $1.01 $0.95 $0.75 $0.68 $0.60 $0.47
Number of
accumulation units
outstanding at end
of period (000
omitted) 526 877 955 1,134 1,511 1,624 1,716 1,786 1,760 1,350
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 201
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 84 125 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 $1.00 -- --
Accumulation unit
value at end of
period $1.10 $1.18 $0.95 $0.73 $1.23 $1.44 $1.25 $1.18 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 285 299 325 340 355 5,948 89 5 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,578 3,678 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 57,497 68,262 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,700 2,476 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53,602 58,932 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.84 $0.77 $0.60 $0.99 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.80 $0.84 $0.77 $0.60 $0.99 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,741 2,012 81,300 45,483 28,284 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.19 $1.29 $1.08 $0.80 $1.29 $1.24 $1.08 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 7 7 7 7 8 8 2 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 36,336 32,170 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 458,939 516,525 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28,278 25,057 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 213,018 254,807 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.06 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 9,842 6,739 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 69,228 81,004 -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.50 $1.60 $1.31 $0.98 $1.45 $1.55 $1.31 $1.26 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,522 5,828 9,670 11,364 11,900 10,097 9,125 1,935 72 20
-------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
202 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.70% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.14 $1.74 $1.18 $2.21 $1.94 $1.44 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $1.80 $2.14 $1.74 $1.18 $2.21 $1.94 $1.44 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,072 2,430 14,141 19,452 10,278 8,406 4,181 858 -- --
-------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 $1.00 -- --
Accumulation unit
value at end of
period $1.32 $1.39 $1.15 $0.82 $1.39 $1.34 $1.26 $1.15 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,139 4,208 17,593 17,008 13,828 7,563 5,332 946 -- --
-------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009
-------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (11/30/2009)
Accumulation unit value at beginning of period $1.20 $1.04 $1.00
Accumulation unit value at end of period $0.90 $1.20 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.02 $1.00
Accumulation unit value at end of period $1.16 $1.12 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (11/30/2009)
Accumulation unit value at beginning of period $1.03 $1.01 $1.00
Accumulation unit value at end of period $0.81 $1.03 $1.01
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.22 $1.05 $1.00
Accumulation unit value at end of period $1.18 $1.22 $1.05
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.03 $1.00
Accumulation unit value at end of period $1.15 $1.17 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.03 $1.00
Accumulation unit value at end of period $1.12 $1.14 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $0.98 $1.00 $1.00
Accumulation unit value at end of period $0.96 $0.98 $1.00
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.04 $0.99 $1.00
Accumulation unit value at end of period $1.09 $1.04 $0.99
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.03 $1.00
Accumulation unit value at end of period $1.09 $1.17 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.02 $1.00
Accumulation unit value at end of period $1.21 $1.17 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.22 $1.04 $1.00
Accumulation unit value at end of period $0.94 $1.22 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.00 $0.98 $1.00
Accumulation unit value at end of period $1.08 $1.00 $0.98
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 203
VARIABLE ACCOUNT CHARGES OF 2.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.11 $1.02 $1.00
Accumulation unit value at end of period $1.16 $1.11 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.02 $1.00
Accumulation unit value at end of period $1.18 $1.14 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.02 $1.00
Accumulation unit value at end of period $1.17 $1.13 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.02 $1.00
Accumulation unit value at end of period $0.97 $1.13 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.19 $1.04 $1.00
Accumulation unit value at end of period $1.13 $1.19 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (11/30/2009)
Accumulation unit value at beginning of period $1.21 $1.01 $1.00
Accumulation unit value at end of period $1.15 $1.21 $1.01
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.00 $1.00
Accumulation unit value at end of period $0.92 $1.12 $1.00
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.26 $1.05 $1.00
Accumulation unit value at end of period $1.13 $1.26 $1.05
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.15 $1.02 $1.00
Accumulation unit value at end of period $1.14 $1.15 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.00 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.00 $0.99
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (11/30/2009)
Accumulation unit value at beginning of period $1.31 $1.06 $1.00
Accumulation unit value at end of period $1.21 $1.31 $1.06
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.03 $1.00
Accumulation unit value at end of period $1.00 $1.17 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.09 $1.02 $1.00
Accumulation unit value at end of period $0.91 $1.09 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.03 $1.02 $1.00
Accumulation unit value at end of period $0.82 $1.03 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (11/30/2009)
Accumulation unit value at beginning of period $1.09 $1.02 $1.00
Accumulation unit value at end of period $1.09 $1.09 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
204 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009
-------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.19 $1.04 $1.00
Accumulation unit value at end of period $1.13 $1.19 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.04 $0.99 $1.00
Accumulation unit value at end of period $1.09 $1.04 $0.99
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.28 $1.02 $1.00
Accumulation unit value at end of period $1.11 $1.28 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.01 $1.00
Accumulation unit value at end of period $0.90 $1.12 $1.01
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.14 $1.04 $1.00
Accumulation unit value at end of period $1.15 $1.14 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.00 $1.00
Accumulation unit value at end of period $1.09 $1.12 $1.00
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (11/30/2009)
Accumulation unit value at beginning of period $1.07 $1.02 $1.00
Accumulation unit value at end of period $0.98 $1.07 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.29 $1.05 $1.00
Accumulation unit value at end of period $1.18 $1.29 $1.05
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.02 $1.00
Accumulation unit value at end of period $1.14 $1.12 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (11/30/2009)
Accumulation unit value at beginning of period $1.16 $1.03 $1.00
Accumulation unit value at end of period $1.05 $1.16 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco
Van Kampen V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco
Van Kampen V.I. Capital Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I.
American Franchise Fund, Series II Shares.
-------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (11/30/2009)
Accumulation unit value at beginning of period $1.22 $1.06 $1.00
Accumulation unit value at end of period $1.11 $1.22 $1.06
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco
Van Kampen V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.07 $1.04 $1.00
Accumulation unit value at end of period $1.09 $1.07 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.13 $1.03 $1.00
Accumulation unit value at end of period $1.03 $1.13 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.15 $1.02 $1.00
Accumulation unit value at end of period $1.10 $1.15 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 205
VARIABLE ACCOUNT CHARGES OF 2.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009
-------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.16 $1.04 $1.00
Accumulation unit value at end of period $1.07 $1.16 $1.04
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (11/30/2009)
Accumulation unit value at beginning of period $1.31 $1.07 $1.00
Accumulation unit value at end of period $1.30 $1.31 $1.07
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (11/30/2009)
Accumulation unit value at beginning of period $1.08 $1.01 $1.00
Accumulation unit value at end of period $1.07 $1.08 $1.01
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (11/30/2009)
Accumulation unit value at beginning of period $1.17 $1.05 $1.00
Accumulation unit value at end of period $1.22 $1.17 $1.05
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.23 $1.03 $1.00
Accumulation unit value at end of period $1.08 $1.23 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.33 $1.03 $1.00
Accumulation unit value at end of period $1.21 $1.33 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.05 $1.00
Accumulation unit value at end of period $1.08 $1.12 $1.05
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.16 $1.02 $1.00
Accumulation unit value at end of period $1.03 $1.16 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.00 $1.00
Accumulation unit value at end of period $1.10 $1.12 $1.00
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (11/30/2009)
Accumulation unit value at beginning of period $1.27 $1.06 $1.00
Accumulation unit value at end of period $1.21 $1.27 $1.06
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (11/30/2009)
Accumulation unit value at beginning of period $1.10 $0.99 $1.00
Accumulation unit value at end of period $1.09 $1.10 $0.99
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 --
Accumulation unit value at end of period $1.05 $1.11 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.11 $1.00 --
Accumulation unit value at end of period $1.05 $1.11 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 --
Accumulation unit value at end of period $1.05 $1.04 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.04 $1.00 --
Accumulation unit value at end of period $1.05 $1.04 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
206 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.25% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.12 $1.02 $1.00
Accumulation unit value at end of period $1.05 $1.12 $1.02
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.27 $1.06 $1.00
Accumulation unit value at end of period $1.16 $1.27 $1.06
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.08 $1.00 --
Accumulation unit value at end of period $1.06 $1.08 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.08 $1.00 --
Accumulation unit value at end of period $1.06 $1.08 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 --
Accumulation unit value at end of period $1.06 $1.10 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.10 $1.00 --
Accumulation unit value at end of period $1.06 $1.10 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 --
Accumulation unit value at end of period $1.06 $1.06 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of period $1.06 $1.00 --
Accumulation unit value at end of period $1.06 $1.06 --
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (11/30/2009)
Accumulation unit value at beginning of period $1.30 $1.07 $1.00
Accumulation unit value at end of period $1.21 $1.30 $1.07
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (11/30/2009)
Accumulation unit value at beginning of period $1.25 $1.03 $1.00
Accumulation unit value at end of period $1.05 $1.25 $1.03
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
WANGER USA (11/30/2009)
Accumulation unit value at beginning of period $1.30 $1.08 $1.00
Accumulation unit value at end of period $1.23 $1.30 $1.08
Number of accumulation units outstanding at end of period (000 omitted) -- -- --
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS 207
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2009................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firm................................... p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
208 RIVERSOURCE FLEXCHOICE SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45307 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R) SIGNATURE ONE SELECT
VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The information in this
prospectus applies to both contracts unless stated otherwise.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
The contract provides for purchase payment credits. Expense charges from
contracts with purchase payment credits may be higher than charges for contracts
without such credits. The amount of the credit may be more than offset by
additional fees and charges associated with the credit. The credits may be
reversed. (See "Buying Your Contract -- Purchase Payment Credits").
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contracts and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
RiverSource Life offers other variable annuity contracts in addition to the
contracts described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, surrender
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and surrendering money from the contracts we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contracts described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contracts and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contracts described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contracts and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACTS IN BRIEF...................... 5
EXPENSE SUMMARY............................. 8
CONDENSED FINANCIAL INFORMATION............. 17
FINANCIAL STATEMENTS........................ 17
THE VARIABLE ACCOUNT AND THE FUNDS.......... 17
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 32
THE FIXED ACCOUNT........................... 33
BUYING YOUR CONTRACT........................ 36
CHARGES..................................... 42
VALUING YOUR INVESTMENT..................... 52
MAKING THE MOST OF YOUR CONTRACT............ 54
SURRENDERS.................................. 62
TSA -- SPECIAL PROVISIONS................... 63
CHANGING THE ANNUITANT...................... 63
CHANGING OWNERSHIP.......................... 64
BENEFITS IN CASE OF DEATH................... 65
OPTIONAL BENEFITS........................... 73
THE ANNUITY PAYOUT PERIOD................... 85
TAXES....................................... 87
VOTING RIGHTS............................... 91
SUBSTITUTION OF INVESTMENTS................. 91
ABOUT THE SERVICE PROVIDERS................. 92
ADDITIONAL INFORMATION...................... 93
APPENDICES TABLE OF CONTENTS AND
CROSS-REFERENCE TABLE..................... 95
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 96
APPENDIX B: EXAMPLE -- SURRENDER CHARGES.... 98
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 107
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES
OF RIDERS................................. 113
APPENDIX E: SECURESOURCE SERIES OF
RIDERS --
ADDITIONAL RMD DISCLOSURE................. 121
APPENDIX F: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 123
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 125
APPENDIX H: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED BEFORE
MAY 1, 2006............................... 127
APPENDIX I: GUARANTOR WITHDRAWAL
BENEFIT FOR LIFE RIDER DISCLOSURE......... 128
APPENDIX J: GUARANTOR WITHDRAWAL
BENEFIT RIDER DISCLOSURE.................. 140
APPENDIX K: INCOME ASSURER BENEFIT RIDERS... 148
APPENDIX L: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER
DISCLOSURE................................ 157
APPENDIX M: SECURESOURCE RIDER DISCLOSURE... 160
APPENDIX N: SECURESOURCE 20 RIDER
DISCLOSURE................................ 173
APPENDIX O: SECURESOURCE STAGES RIDER
DISCLOSURE................................ 187
APPENDIX P: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 197
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 207
--------------------------------------------------------------------------------
2 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount prior to the
application of amounts to an annuity payment plan.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITIZATION START DATE: The date when annuity payments begin according to the
applicable annuity payment plan (referred to as "Retirement date" in the
Original Contract). Throughout this prospectus when we use the term
"Annuitization start date," it includes the term "Retirement date."
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
death (Current Contract), or owner's or annuitant's death (Original Contract)
while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT (CURRENT CONTRACT): The person who becomes the annuitant
when the current annuitant dies prior to the annuitization start date. In the
case of joint ownership, one owner must also be the contingent annuitant.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the regular fixed account and
the Special DCA fixed account (Current Contract) or the one-year fixed account
and the DCA fixed account (Original Contract). Amounts you allocate to the fixed
account earn interest rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates
for guarantee periods we declare when you allocate purchase payments and any
purchase payment credits or transfer contract value to a GPA. These guaranteed
rates and periods of time may vary by state. Unless an exception applies,
transfers or surrenders from a GPA done more than 30 days before the end of the
guarantee period will receive a market value adjustment, which may result in a
gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is surrendered or transferred more than 30
days before the end of its guarantee period.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
OWNER (YOU, YOUR): The person or persons identified in the contract as owners(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. The owner or
any joint owner may be a nonnatural person (e.g. irrevocable trust or
corporation) or a revocable trust. In this case, the annuitant will be deemed to
be the owner for contract provisions that are based on the age or life of the
owner. When the contract is owned by a revocable trust, the annuitant selected
should be the grantor of the trust to qualify for income tax deferral. Any
contract provisions that are based on the age of the owner will be based on the
age of the oldest owner. Any ownership change, including continuation of the
contract by your spouse under the spousal continuation provision of the
contract, redefines "owner", "you" and "your".
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We
determine the credit percentage based on cumulative net payments (total payments
less surrenders). We apply the credit to your contract based on your current
payment.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Custodial and investment only plans under Section 401(a) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract (referred to as "Withdrawal value" in the Original
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or withdrawal request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract (referred to as "Surrender value" in the Current
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
--------------------------------------------------------------------------------
4 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACTS IN BRIEF
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The primary differences are
disclosed in the following sections: "Key Terms", "Expense Summary," "Buying
Your Contract", "Benefits in Case of Death", and "Optional Benefits."
PURPOSE: These contracts allow you to accumulate money for retirement or a
similar long-term goal. You do this by making one or more purchase payments. For
the Current Contract, you may allocate your purchase payments to the regular
fixed account, the Special DCA fixed account, GPAs and/or subaccounts of the
variable account under the contract. For the Original Contract, you may allocate
your purchase payments to the one-year fixed account (if part of your contract),
the DCA fixed account (if part of your contract), the GPAs and/or subaccounts of
the variable account under the contract. When you invest in the subaccounts of
the variable account, you risk losing amounts you invest. These accounts, in
turn, may earn returns that increase the value of the contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. You may be able to purchase an optional benefit
to reduce the investment risk you assume under the contract. Beginning at a
specified time in the future called the annuitization start date, these
contracts provide lifetime or other forms of payout of your contract value (less
any applicable premium tax and/or other charges).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
FREE LOOK PERIOD: You may return your contract to your investment professional
or to our corporate office within the time stated on the first page of your
contract and receive a full refund of the contract value, less any purchase
payment credits subject to reversal. (See "Buying Your Contract -- Purchase
Payment Credits"). We will not deduct any contract charges or fees. However, you
bear the investment risk from the time of purchase until you return the contract
and any positive or negative market value adjustment will apply; the refund
amount may be more or less than the payment you made. (EXCEPTION: If the law
requires, we will refund all of your purchase payments.)
ACCOUNTS: Generally, you may allocate purchase payments among the:
subaccounts of the variable account, each of which invests in a fund with a
particular investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at the annuitization start date will equal or exceed the total
purchase payments you allocate to the subaccounts. (See "The Variable Account
and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
for the Current Contract:
- regular fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on transfers from this account and may
be restrictions on the amount you can allocate to this account (see "Buying
Your Contract", "Transfer policies" and "The Regular Fixed Account").
- Special DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain
in this account. (See "Special DCA Fixed Account").
for the Original Contract:
- one-year fixed account, if part of your contract, which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract", "Transfer policies" and "The One-Year Fixed
Account").
- DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract
value can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until the
annuitization start date, and once per contract year among the subaccounts after
the annuitization start date. Transfers out of the GPAs done more than 30 days
before the end of the guarantee period will be subject to an MVA, unless an
exception applies. You may establish automated transfers among the accounts.
Transfers into the Special DCA fixed account (Current Contract) and DCA fixed
account (Original Contract) are not permitted. GPAs, the regular fixed account
(Current Contract) and the one-year fixed account (Original Contract) are
subject to special restrictions. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
SURRENDERS: You may surrender all or part of your contract value at any time
before the annuitization start date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and income taxes (including a
10% IRS penalty if you make surrenders prior to your reaching age 59 1/2) and
may have other tax consequences. If you have elected the SecureSource Stages
rider or the SecureSource 20 rider, please consider carefully when you take
withdrawals. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be reset based on your contract value at that time and you will no longer be
eligible to receive the 20% credit available under the SecureSource 20 rider or
any future rider credits under the SecureSource Stages. Certain other
restrictions may apply. (See "Surrenders").
OPTIONAL BENEFITS: You can buy optional benefits with your contract for an
additional charge if you meet certain criteria. We offer optional death benefits
and optional living benefits. Optional living benefits include: different
versions of the guaranteed minimum withdrawal benefits, which permit you to
withdraw a guaranteed amount from the contract over a period of time,
Accumulation Protector Benefit rider, which provides you with a guaranteed
contract value at the end of specified waiting period regardless of the
volatility inherent in the investments in the subaccounts, and Income Assurer
Benefit rider, which provides you with a guaranteed minimum income regardless of
the volatility inherent in the investments in the subaccounts . Guaranteed
minimum withdrawal benefits are SecureSource series riders, Guarantor Withdrawal
Benefit rider and Guarantor Withdrawal Benefit for Life rider. When used in this
prospectus, the term "SecureSource series" includes: the SecureSource Stages 2
riders, the SecureSource Stages riders, the SecureSource 20 riders and the
SecureSource riders, except where the SecureSource Stages 2 riders, the
SecureSource Stages riders, SecureSource 20 riders and SecureSource riders are
specifically referenced and distinguished from other riders in the SecureSource
series.
Optional living benefits require the use of a Portfolio Navigator program (PN
program) investment option which may limit transfers and allocations; may limit
the timing, amount and allocation of purchase payments; and may limit the amount
of surrenders that can be taken under the optional benefit during a contract
year. For more information on optional living benefits, please see "Optional
Benefits -- Optional Living Benefits". Optional benefits vary by state and may
have eligibility requirements.
We offer the following optional death benefits: MAV Death Benefit, 5%
Accumulation Death Benefit, Enhanced Death Benefit, Benefit Protector Death
Benefit rider and Benefit Protector Plus Death Benefit rider. Benefit Protector
Death Benefit rider and Benefit Protector Plus Death Benefit rider are intended
to provide an additional benefit to your beneficiary to help offset expenses
after your death such as funeral expenses or federal and state taxes.
BENEFITS IN CASE OF DEATH: For the Current Contract, if you die before the
annuitization start date, we will pay the beneficiary an amount based on the
applicable death benefit. For the Original Contract, if you or the annuitant die
before the annuitization start date, we will pay the beneficiary an amount based
on the applicable death benefit. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the annuitization start
date. You may choose from a variety of plans to make sure that payouts continue
as long as you like. If you buy a qualified annuity, the payout schedule must
meet IRS requirements. We can make payouts on a fixed or variable
--------------------------------------------------------------------------------
6 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
basis, or both. During the annuity payout period, your choices for subaccounts
may be limited. The GPAs, the Special DCA fixed account (Current Contract) and
the DCA fixed accounts (Original Contract) are not available after the
annuitization start date. (See "The Annuity Payout Period").
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A SURRENDER FROM THESE CONTRACTS. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAY PAY WHEN YOU MAKE A SURRENDER FROM ONE OF THESE CONTRACTS. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CURRENT CONTRACT:
(APPLICATIONS SIGNED ON OR AFTER NOV. 30, 2009, SUBJECT TO STATE AVAILABILITY)
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
CURRENT CONTRACT
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 8%
1 8
2 8
3 7
4 6
5 4
6 3
7 2
8 1
9 + 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
8 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE MAXIMUM: $50 CURRENT: $40
ANNUAL CONTRACT ADMINISTRATIVE CHARGE IF YOUR CONTRACT VALUE MAXIMUM: $20 CURRENT: $0
EQUALS OR EXCEEDS $50,000
CONTRACT ADMINISTRATIVE CHARGE AT FULL SURRENDER MAXIMUM: $50 CURRENT: $40
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE A DEATH BENEFIT GUARANTEE. THE COMBINATION OF DEATH BENEFIT IN
EFFECT AND THE CONTRACT YEAR YOU ARE IN DETERMINES THE MORTALITY AND EXPENSE
RISK FEES YOU PAY. THE TABLE BELOW SHOWS THE COMBINATIONS AVAILABLE TO YOU AND
THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE
MORTALITY AND EXPENSE RISK FEE.
UNTIL THE 9TH CONTRACT ANNIVERSARY
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.60% 0.15% 1.75%
ROPP Death Benefit 1.60 0.15 1.75
MAV Death Benefit 1.85 0.15 2.00
5% Accumulation Death Benefit 2.00 0.15 2.15
Enhanced Death Benefit 2.05 0.15 2.20
THE 9TH CONTRACT ANNIVERSARY AND AFTER
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.30% 0.15% 1.45%
ROPP Death Benefit 1.30 0.15 1.45
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROPP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may select one of the following optional living benefits if
available in your state. The optional living benefits require participation in
the PN program. The fees apply only if you elect one of these benefits.
SECURESOURCE STAGES 2(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
SECURESOURCE STAGES 2(SM) - JOINT LIFE RIDER FEE MAXIMUM: 2.25% CURRENT: 1.15%
(Charged annually on the contract anniversary as a percentage of contract value
or the total Benefit Base, whichever is greater.)
SECURESOURCE(R) STAGES - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) STAGES - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.35%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Benefit Base, whichever is greater.)
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
ORIGINAL CONTRACT:
(APPLICATIONS SIGNED PRIOR TO NOV. 30, 2009 OR IN STATES WHERE THE CURRENT
CONTRACT WAS NOT AVAILABLE)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE(1)
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 8%
1 8
2 8
3 8
4 7
5 6
6 6
7 4
8 2
9 + 0
(1) For the Original Contract in Alaska, Arizona, Colorado, Connecticut,
Florida, Georgia, Illinois, Michigan, Mississippi, New Jersey, Oregon,
Pennsylvania, Utah and Washington, the surrender charge schedule is modified
as follows: Years 1-3 - 8%; Year 4 - 7%; Year 5 - 6%; Year 6 - 4%; Year
7 - 3%; Year 8 - 2%; Year 9 - 1%; and Years 10+ - 0%.
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE AND AT FULL SURRENDER $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full surrender.)
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE ONE OF THE FOUR DEATH BENEFIT GUARANTEES. THE DEATH BENEFIT IN
EFFECT DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE SHOWS
THE DEATH BENEFIT GUARANTEES AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.60% 0.15% 1.75%
MAV Death Benefit 1.80 0.15 1.95
5% Accumulation Death Benefit 1.95 0.15 2.10
Enhanced Death Benefit 2.00 0.15 2.15
--------------------------------------------------------------------------------
10 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may select an optional death benefit in addition to the ROP and
MAV Death Benefits. The fees apply only if you select one of these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
The following optional living benefits, except as noted, are no longer available
for purchase. The fees apply only if you elected one of these benefits when you
purchased your contract. Each optional living benefit requires participation in
the PN program.
FOR APPLICATIONS SIGNED ON OR AFTER AUG. 10, 2009 BUT PRIOR TO NOV. 30, 2009,
SUBJECT TO STATE AVAILABILITY, OR IN STATES WHERE THE CURRENT CONTRACT WAS NOT
AVAILABLE:
SECURESOURCE(R) 20 - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.25%
SECURESOURCE(R) 20 - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
(As a percentage of the contract value charged annually on the contract
anniversary.)
FOR APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009, BUT PRIOR TO AUG. 10, 2009,
OR IN STATES WHERE THE CURRENT CONTRACT AND SECURESOURCE 20 WERE NOT AVAILABLE:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO JAN. 26, 2009:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.80%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contracts with applications signed prior to Jan. 25, 2009, the current
charge is 0.55%. For contract applications signed between Jan. 26, 2009 and
May 30, 2009, the current charge is 0.80%.
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(2)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(2)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(2)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(2) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP International, Class II 1.31 0.25 0.02 -- 1.58
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
--------------------------------------------------------------------------------
12 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50% 0.25% 0.31% --% 1.06%(4)
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75 0.25 0.11 -- 1.11
Service Shares
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Small Cap Value Fund - Class IB Shares 0.63% 0.25% 0.15% 0.11% 1.14%
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3), 0.925% for Columbia Variable Portfolio - Select Large-Cap Value
Fund (Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value
Fund (Class 2).
(2) Other expenses have been restated to reflect contractual changes to certain
other fees.
(3) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4) Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5) The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
--------------------------------------------------------------------------------
14 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
(9) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(11) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15) PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES,
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
SecureSourceStages 2 - Joint Life rider and the Benefit Protector Plus Death
Benefit(1),(4). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS*
$1,414 $2,778 $3,931 $6,554 $694 $2,055 $3,386 $6,554
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROPP Death Benefit and do not select any
optional benefits(3). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS*
$1,009 $1,601 $2,007 $2,924 $271 $828 $1,407 $2,924
* Reflects the reduction in the total variable account expense after the 9(th)
year.
ORIGINAL CONTRACT:(2)
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider or SecureSource 20 - Joint Life
rider and the Benefit Protector Plus Death Benefit.(3),(4) Although your actual
costs may be lower, based on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,425 $2,807 $4,069 $6,665 $705 $2,084 $3,433 $6,665
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits(3). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,009 $1,601 $2,107 $2,962 $271 $828 $1,407 $2,962
(1) In these examples, the contract administrative charge is $50.
(2) For the Original Contract in Alaska, Arizona, Colorado, Connecticut,
Florida, Georgia, Illinois, Michigan, Mississippi, New Jersey, Oregon,
Pennsylvania, Utah and Washington contract holders, your expenses would be
slightly lower due to the modified nine-year surrender charge schedule.
(3) In these examples, the contract administrative charge is $40.
(4) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
16 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix P.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
18 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PAYMENTS AND TRANSFERS TO
ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF
THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks capital growth. American Century Investment
International, Class Management, Inc.
II
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks long-term growth of Columbia Management
Portfolio - Select capital. Investment Advisers, LLC
Large-Cap Value Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks capital appreciation. The Dreyfus Corporation
Portfolios
Technology Growth
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Investors N Y Seeks capital appreciation. MFS(R) Investment Management
Growth Stock
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available for contracts in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time vary by state. The required
minimum investment in each GPA is $1,000. (Exception: if a PN program model
portfolio includes one or more GPAs, the required minimum investment does not
apply.) These accounts are not offered after the annuitization start date.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or surrender out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window, you may choose to start a new guarantee period of the same length,
transfer the contract value from the specified GPA to a GPA of another length,
transfer the contract value from the specified GPA to any of the subaccounts,
the regular fixed account (Current Contract) or the one-year fixed account
(Original Contract), or surrender the value from the specified GPA (all subject
to applicable surrender and transfer provisions). If we do not receive any
--------------------------------------------------------------------------------
32 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
instructions by the end of your guarantee period, our current practice is to
automatically transfer the contract value from the specified GPA into the
shortest GPA term offered in your state. If no GPAs are offered, we will
transfer the value to the regular fixed account (Current Contract) or the one-
year fixed account (Original Contract), if available. If the regular fixed
account (Current Contract) or the one-year fixed account (Original Contract) is
not available, we will transfer the value to the money market or cash management
variable subaccount we designate.
We guarantee the contract value allocated to the GPAs, including the interest
credited, if you do not make any transfers or surrenders from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you surrender or transfer contract value from a
GPA including surrenders under the SecureSource series of riders, the Guarantor
Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early surrenders." The application of an
MVA may result in either a gain or loss of principal.
For the Current Contract, the 30-day rule does not apply and no MVA will apply
to:
amounts surrendered under contract provisions that waive surrender charges for
Hospital or Nursing Home Confinement and Terminal Illness Disability
Diagnosis;
amounts transferred automatically under the PN program; and
amounts deducted for fees and charges.
Amounts we pay as death claims will not be reduced by any MVA.
For the Original Contract, the 30-day rule does not apply and no MVA will apply
to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts deducted for fees and charges; or
amounts we pay as death claims.
When you request an early surrender, we adjust the early surrender amount by an
MVA formula. The early surrender amount reflects the relationship between the
guaranteed interest rate you are earning in your current GPA and the interest
rate we are crediting on new GPAs that end at the same time as your current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the early surrender, the time remaining in your guarantee period
and your guaranteed interest rate. The MVA is negative, zero or positive
depending on how the guaranteed interest rate on your GPA compares to the
interest rate of a new GPA for the same number of years as the guarantee period
remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO CONTRACT APPLICATIONS SIGNED ON OR AFTER MAY 1,
2006 AND IF AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. For
the Current Contract, the fixed account includes the regular fixed account and
the Special DCA fixed account. For the Original Contract, the fixed account
includes the one-year fixed account and the DCA fixed account. We credit
interest on amounts you allocate to the fixed account at rates we determine from
time to time in our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns we earn on
our general account investments, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
on amounts invested in the fixed account may vary by state but will not be lower
than state law allows. We back the principal and interest guarantees relating to
the fixed account. These guarantees are based on the continued claims-paying
ability of RiverSource Life. You should be aware that our general account is
exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. You
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
should also be aware that we issue other types of insurance and financial
products as well, and we also pay our obligations under these products from
assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
THE REGULAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the regular fixed account. The value of the
regular fixed account increases as we credit interest to the regular fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the regular fixed
account is guaranteed for one year. Thereafter, we will change the rates from
time to time at our discretion, but your interest rate for each purchase payment
or transfer will never change more frequently than annually. There are
restrictions on transfers from this account and may be restrictions on the
amount you can allocate to this account (see "Making the Most of Your
Contract -- Transfer policies").
THE SPECIAL DCA FIXED ACCOUNT
You may allocate purchase payments to the Special DCA fixed account. You may not
transfer contract value to the Special DCA fixed account.
You may allocate your entire initial purchase payment to the Special DCA fixed
account for a term of six or twelve months. We reserve the right to offer
shorter or longer terms for the Special DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the Special DCA fixed account to the subaccounts or PN program investment
option you select monthly so that, at the end of the Special DCA fixed account
term, the balance of the Special DCA fixed account is zero. The first Special
DCA monthly transfer occurs one day after we receive your payment. You may not
use the regular fixed account or any GPA as a destination for the Special DCA
monthly transfer. (Exception: if a PN program is in effect, and the PN program
investment option you selected, if applicable, includes the regular fixed
account or any GPA, amounts will be transferred from the Special DCA fixed
account to the regular fixed account or GPA according to the allocation
percentage established for the PN program investment option you have selected.)
The value of the Special DCA fixed account increases when we credit interest to
the Special DCA fixed account, and decreases when we make monthly transfers from
the Special DCA fixed account. When you allocate a purchase payment to the
Special DCA fixed account, the interest rates applicable to that purchase
payment will be the rates in effect for the Special DCA fixed account term you
choose on the date we receive your purchase payment. The applicable interest
rate is guaranteed for the length of the term for the Special DCA fixed account
term you choose. We credit and compound interest daily based on a 365-day year
(366 in a leap year) so as to produce the annual effective rate which we
declare. We credit interest only on the declining balance of the Special DCA
fixed account; we do not credit interest on amounts that have been transferred
from the Special DCA fixed account. As a result, the net effective interest
rates we credit will be less than the declared annual effective rates.
Generally, we will credit the Special DCA fixed account with interest at the
same annual effective rate we apply to the regular fixed account on the date we
receive your purchase payment, regardless of the length of the term you select.
From time to time, we may credit interest to the Special DCA fixed account at
promotional rates that are higher than those we credit to the regular fixed
account. We reserve the right to declare different annual effective rates:
for the Special DCA fixed account and the regular fixed account; and
for the Special DCA fixed accounts with terms of differing length.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the Special DCA fixed account for a six month term;
the Special DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the regular fixed account,
the GPAs and/or the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the regular account and the GPAs.
--------------------------------------------------------------------------------
34 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
Once you establish a Special DCA fixed account, you cannot allocate additional
purchase payments to it. However, you may establish another Special DCA fixed
account and allocate new purchase payments to it.
If you participate in a PN program, and you change to a different PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from the Special DCA fixed account to your newly-elected PN
program investment option.
If your contract permits, and you discontinue your participation in a PN program
while a Special DCA fixed account term is in progress, we will allocate
transfers from your Special DCA fixed account for the remainder of the term to
the subaccounts in accordance with your current Special DCA fixed account
allocation instructions. If your current Special DCA fixed account allocation
instructions include a fund to which allocations are restricted and you do not
provide new instructions, we will transfer prorated amounts to the valid portion
of your allocation instruction.
You may discontinue any Special DCA fixed account before the end of its term by
giving us notice. If you do so, we will transfer the remaining balance of the
Special DCA fixed account to the PN program investment option in effect, or if
no PN program investment option is in effect, in accordance with your investment
instructions to us to the regular fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the regular fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the Special DCA fixed account does not guarantee that
any subaccount will gain in value nor will it protect against a decline in value
if market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account if part of your
contract. The value of the one-year fixed account increases as we credit
interest to the one-year fixed account. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit the one-year fixed account with the
current guaranteed annual rate that is in effect on the date we receive your
purchase payment or you transfer contract value to the one-year fixed account.
The interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. There are restrictions on the amount
you can allocate to the one-year fixed account as well as on transfers from this
account (see "Making the Most of Your Contract -- Transfer policies").
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The first DCA monthly transfer occurs one day after we receive your
payment.
The value of the DCA fixed account increases when we credit interest to the DCA
fixed account, and decreases when we make monthly transfers from the DCA fixed
account. When you allocate a purchase payment to the DCA fixed account, the
interest rates applicable to that purchase payment will be the rates in effect
for the DCA fixed account term you choose on the date we receive your purchase
payment. The applicable interest rate is guaranteed for the length of the term
for the DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the DCA fixed account; we do not credit interest on amounts that have
been transferred from the DCA fixed account. As a result, the net effective
interest rates we credit will be less than the declared annual effective rates.
Generally, we will credit the DCA fixed account with interest at the same annual
effective rate we apply to the one-year fixed account on the date we receive
your purchase payment, regardless of the length of the term you select. From
time to time, we may credit interest to the DCA fixed account at promotional
rates that are higher than those we credit to the one-year fixed account. We
reserve the right to declare different annual effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
for amounts in the DCA fixed account that are transferred to the one-year
fixed account;
for amounts in the DCA fixed account that are transferred to the GPAs;
for amounts in the DCA fixed account that are transferred to the subaccounts.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account for the remainder of the term in
accordance with your investment instructions to us to the one-year fixed
account, the GPAs and the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and the
GPAs, including but not limited to, any limitations described in this prospectus
on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may select a
qualified or nonqualified annuity. You can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. For the Current Contract, you can buy a
contract if you are 85 or younger. For the Original Contract, you can buy a
contract if you and the annuitant are age 85 or younger. (The age limit may be
younger for qualified annuities in some states.)
--------------------------------------------------------------------------------
36 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
When you apply, you may select (if available in your state):
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
GPAs, the regular fixed account, the Special DCA fixed account and/or
subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary; and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available in your state, you may also select one of the
following optional living benefits (both require the use of the PN program):
SecureSource Stages 2 rider; or
SecureSource Stages rider.
The Current Contract provides for allocation of purchase payments to the GPAs,
the regular fixed account, the Special DCA fixed account and/or the subaccounts
of the variable account subject to the $1,000 required minimum investment for
the GPAs. We currently allow you to allocate the total amount of purchase
payment to the regular fixed account. We reserve the right to limit purchase
payment allocations to the regular fixed account at any time on a non-
discriminatory basis with notification, subject to state restrictions. You
cannot allocate purchase payments to the fixed account for six months following
a partial surrender from the fixed account, a lump sum transfer from the regular
fixed account, or termination of automated transfers from the Special DCA fixed
account prior to the end of the Special DCA fixed account term.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
GPAs, the one-year fixed account if part of your contract, the DCA fixed
account if part of your contract and/or subaccounts in which you want to
invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available in your state, you could have also selected one of the
following optional living benefits (all require the use of the PN program):
SecureSource 20 riders;
SecureSource riders;
Accumulation Protector Benefit rider;
Income Assurer Benefit -- MAV rider;
Income Assurer Benefit -- 5% Accumulation Benefit Base rider; or
Income Assurer Benefit -- greater of MAV or 5% Accumulation Benefit Base
rider.
(1) There is no additional charge for this feature.
(2) Not available with 5% Accumulation or Enhanced Death Benefit.
The Original Contract provides for allocation of purchase payments to the GPAs,
the one-year fixed account (if part of your contract), the DCA fixed account (if
part of your contract) and/or to the subaccounts of the variable account in even
1%
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
increments subject to the $1,000 required minimum investment for the GPAs. The
amount of any purchase payment allocated to the one-year fixed account in total
cannot exceed 30% of the purchase payment. More than 30% of a purchase payment
may be so allocated if you establish an automated dollar-cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect. We reserve the right to further limit purchase payment
allocations to the one-year fixed account if the interest rate we are then
crediting on new purchase payments allocated to the one-year fixed account is
equal to the minimum interest rate stated in the contract.
FOR BOTH THE CURRENT CONTRACT AND THE ORIGINAL CONTRACT:
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $25,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the annuitization start date.
THE ANNUITIZATION START DATE
CURRENT CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments. If
your contract is annuitized, the contract goes into payout and only the annuity
payout provisions continue. Unless annuity payout Plan E is selected, you will
no longer have access to your contract value. This means that the death benefit
and any optional benefits you have elected will end. When we process your
application, we will establish the annuitization start date to be the maximum
age (or contract anniversary if applicable). You also can change the
annuitization start date, provided you send us written instructions at least 30
days before annuity payouts begin.
The annuitization start date must be:
no earlier than the 30th day after the contract's effective date; and no later
than
the owner's 95th birthday or the tenth contract anniversary, if later,
or such other date as agreed to by us.
Six months prior to your annuitization date, we will contact you with your
options including the option to postpone your annuitization start date to a
future date. You can also choose to delay the annuitization of your contract
beyond age 95 indefinitely, to the extent allowed by applicable tax laws.
If you do not make an election, annuity payouts using the contract's default
option of annuity payout Plan B - Life with 10 years certain will begin on the
annuitization start date and your monthly annuity payments will continue for as
long as the annuitant lives. If the annuitant does not survive 10 years,
beneficiaries will continue to receive payments until 10 years of payments have
been made. Some distributors require annuitization by age 95. In that case, the
option to continue to defer the annuitization start date after age 95 is not
available.
If you own a qualified annuity (for example, an IRA) and tax laws require that
you take distributions from your annuity prior to your new annuitization start
date, your contract will not be automatically annuitized. However, if you
choose, you can elect to request annuitization or take surrenders to meet your
required minimum distributions.
Please see "SecureSource Stages 2 -- Other Provisions" section regarding options
under this rider at the annuitization start date.
ORIGINAL CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments and you
will receive the first payment on the annuitization start date. The first
annuity payment will be made as provided by the annuity payment plan you select.
When we process your application, we will establish the annuitization start date
to be the maximum age (or contract anniversary if applicable). You also can
change the annuitization start date, provided you send us written instructions
at least 30 days before annuity payouts begin.
The annuitization start date must be:
the annuitant's 90th(1) birthday or the tenth contract anniversary, if
purchased after age 80(1),
--------------------------------------------------------------------------------
38 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
or such other date as agreed upon by us.
Prior to your annuitization start date, we will contact you with your options.
If you do not make an election, your annuitization start date will be deferred.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
annuitization start date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select an annuitization start date
that is later than April 1 of the year following the calendar year when they
reach age 70 1/2).
If you satisfy your required minimum distributions in the form of partial
surrenders from this contract, annuity payouts can start:
As late as the annuitant's 90th(1) birthday or the tenth contract anniversary,
if later, or a date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, will delay the
annuitization start date for these contracts.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the annuitization start date must be
no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
while the contract is in force and before the annuitization start date. If there
is more than one beneficiary, we will pay each beneficiary's designated share
when we receive their completed claim. A beneficiary will bear the investment
risk of the variable account until we receive the beneficiary's completed claim.
If there is no named beneficiary, the default provisions of your contract will
apply. (See "Benefits in Case of Death" for more about beneficiaries.)
If you select one of the SecureSource series - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
If we do not receive your initial purchase payment within 180 days from the
application signed date, we will consider your contract void from the start.
MINIMUM INITIAL PURCHASE PAYMENT
$25,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS (WITHOUT CORPORATE OFFICE APPROVAL)
- CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state
availability)
MAXIMUM TOTAL PURCHASE PAYMENTS* BASED ON YOUR AGE ON THE EFFECTIVE DATE OF
THE PAYMENT:
For the first year and
total:
through age 85 $1,000,000
age 86 or older $0
For each subsequent year:
through age 85 $100,000
age 86 or older $0
- ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
Additional purchase payment restrictions for contracts with the Guarantor
Withdrawal Benefit rider, Guarantor Withdrawal Benefit for Life rider, or
SecureSource riders
Effective Jan. 26, 2009, after initial purchase payments are received, limited
additional purchase payments are allowed for contracts with the Guarantor
Withdrawal Benefit rider, Guarantor Withdrawal Benefit for Life rider, or
SecureSource riders, subject to state restrictions. Initial purchase payments
are: 1) payments received with the application, and 2) Tax Free Exchanges,
rollovers, and transfers listed on the annuity application, paper work initiated
within 30 days from the application signed date and received within 180 days
from the application signed date.
For contracts issued in all states except those listed below, the only
additional purchase payments that will be allowed on/after Jan. 26, 2009 are the
maximum annual contribution permitted by the Code for qualified annuities.
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract with the Guarantor Withdrawal Benefit
rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource riders will
be limited to $100,000 for the life of your contract. The limit does not apply
to initial purchase payments,
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Feb. 27, 2012, no additional purchase payments are allowed for
contracts with SecureSource Stages 2 riders, SecureSource Stages riders and
SecureSource 20 riders subject to certain exceptions listed below.
Certain exceptions apply and the following additional purchase payments will be
allowed on or after Feb. 27, 2012:
a. Current tax year contributions for TSAs and Custodial and investment only
plans under Section 401(a) of the Code, up to the annual limit set by the
IRS.
b. Prior and current tax year contributions up to the annual limit set up by the
IRS for any Qualified Accounts except TSAs and 401(a)s. This annual limit
applies to IRAs, Roth IRAs and SEP plans.
We reserve the right to change these current rules any time, subject to state
restrictions.
The riders also prohibit additional purchase payments while the rider is
effective, if (1) you decline a rider fee increase, or (2) the Annual Lifetime
Payment (ALP) is established and your contract value on an anniversary is less
than four times the ALP. (For the purpose of this calculation only, the ALP is
determined using percentage B, as described under "Optional Living
Benefits -- SecureSource Stages 2 Riders, SecureSource Stages Riders and
SecureSource 20 Riders.")
Additional purchase payment restrictions for the Accumulation Protector Benefit
rider
Additional purchase payments are prohibited during the waiting period after the
first 180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
Subject to state restrictions, we reserve the right to change the above purchase
payment limitations, including making further restrictions, upon written notice.
* These limits apply in total to all RiverSource Life annuities you own unless
a higher maximum applies to your contract. We reserve the right to waive or
increase the maximum limit. For qualified annuities, the Code's limits on
annual contributions also apply. Additional purchase payments for inherited
IRA contracts cannot be made unless the payment is IRA money inherited from
the same decedent.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
--------------------------------------------------------------------------------
40 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with every payment you make to your
contract. We apply this credit immediately. We allocate the credit to your
investment allocations in the same proportions as your purchase payment. We
apply the credit as a percentage of your current payment based on the following
schedule:
CURRENT CONTRACT:
IF CUMULATIVE NET PAYMENTS*
MADE DURING THE LIFE OF THEN THE PURCHASE PAYMENT
THE CONTRACT EQUALS . . . CREDIT PERCENTAGE EQUALS . . .
less than $250,000 4%
$250,000 and over 5%
ORIGINAL CONTRACT:
IF CUMULATIVE NET PAYMENTS*
MADE DURING THE LIFE OF THEN THE PURCHASE PAYMENT
THE CONTRACT EQUALS . . . CREDIT PERCENTAGE EQUALS . . .
less than $100,000 4%
$100,000 to less than $250,000 5
$250,000 and over 6
* Cumulative net purchase payments are total purchase payments less the total
amount of partial surrenders.
For the Current Contract, if in the first year you make any additional payments
that cause the contract to become eligible for a higher percentage credit, we
will add credits to your prior payments (less total surrenders). For the
Original Contract, if you make any additional payments in any year that cause
the contract to become eligible for a higher percentage credit, we will add
credits to your prior payments (less total surrenders). We allocate credits
according to the purchase payment allocation on the date we add the credits to
the contract.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit, annuitization or surrender payment includes
purchase payment credits applied within twelve months preceding: (1) the date of
death that results in a death benefit payment under this contract; or (2) the
annuitization start date (for contracts with applications signed on or after May
1, 2006, and if available in your state); or (3) a request for surrender charge
waiver due to "Contingent events" (see "Charges -- Contingent events"), we will
assess a charge, similar to a surrender charge, equal to the amount of the
purchase payment credits. The amount we pay to you under these circumstances
will always equal or exceed your surrender value. The amount returned to you
under the free look provision also will not include any credits applied to your
contract.
This credit is available because of lower costs associated with larger sized
contracts and through revenue from a higher and longer surrender charge
schedule, a higher contract administrative charge and a higher mortality and
expense risk fee. In general, we do not profit from the higher charges assessed
to cover the cost of the purchase payment credit. We use all the revenue from
these higher charges to pay for the cost of the credits. However, we could
profit from the higher charges if market appreciation is higher than expected or
if contract owners hold their contracts for longer than expected.
Because of these higher charges, there may be circumstances where you may be
worse off for having received the credit than in other contracts. All things
being equal (such as guarantee availability or fund performance and
availability), this may occur if you hold your contract for 15 years or more.
You should consider these higher charges and other relevant factors before you
buy this contract or before you exchange a contract you currently own for this
contract.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, surrenders or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully surrendered. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
that applies to the fixed account. For the Current Contract, we reserve the
right to increase this charge after the first contract anniversary to a maximum
of $50.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary. For the Current Contract, we reserve the right to
charge up to $20 after the first contract anniversary for contracts with
contract value of $50,000 or more.
If you take a full surrender from your contract, we will deduct the charge at
the time of surrender regardless of the contract value. We cannot increase the
annual contract administrative charge for the Original Contract. This charge
does not apply to amounts applied to an annuity payment plan or to the death
benefit (other than when deducted from the Full Surrender Value component of the
death benefit for the Current Contract).
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
These fees are based on the death benefit guarantee in effect and the contract
year you are in.
MORTALITY AND
UNTIL THE 9TH CONTRACT ANNIVERSARY EXPENSE RISK FEE
CV Death Benefit* 1.60%
ROPP Death Benefit 1.60
MAV Death Benefit 1.85
5% Accumulation Death Benefit 2.00
Enhanced Death Benefit 2.05
MORTALITY AND
THE 9TH CONTRACT ANNIVERSARY AND AFTER EXPENSE RISK FEE
CV Death Benefit* 1.30%
ROPP Death Benefit 1.30
MAV Death Benefit 1.55
5% Accumulation Death Benefit 1.70
Enhanced Death Benefit 1.75
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
--------------------------------------------------------------------------------
42 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
These fees are based on the death benefit guarantee that applies to your
contract.
MORTALITY AND
EXPENSE RISK FEE
ROP Death Benefit 1.60%
MAV Death Benefit 1.80
5% Accumulation Death Benefit 1.95
Enhanced Death Benefit 2.00
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of annuitants live. If, as a group, owners or annuitants outlive
the life expectancy we assumed in our actuarial tables, then we must take money
from our general assets to meet our obligations. If, as a group, owners or
annuitants do not live as long as expected, we could profit from the mortality
risk fee. We deduct the mortality risk fee from the subaccounts during the
annuity payout period even if the annuity payout plan does not involve a life
contingency.
Expense risk arises because we cannot increase the contract administrative
charge for the Original Contract, we are limited on how much we can increase the
contract administrative charge for the Current Contract, and we cannot increase
the variable account administrative charge and these charges may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge will cover sales and distribution expenses.
SURRENDER CHARGE
If you surrender all or part of your contract value before the annuitization
start date, we may deduct a surrender charge. As described below, a surrender
charge applies to each purchase payment you make. The surrender charge lasts for
9 years from the date of each purchase payment. (See "Expense Summary.")
You may surrender an amount during any contract year without a surrender charge.
We call this amount the total free amount (FA for the Current Contract, TFA for
the Original Contract). Throughout this prospectus when we use the acronym FA,
it includes TFA. The FA varies depending on whether your contract includes one
of the SecureSource series of riders, the Guarantor Withdrawal Benefit for Life
rider or the Guarantor Withdrawal Benefit rider:
CURRENT CONTRACT WITHOUT SECURESOURCE STAGES RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year; or
current contract earnings.
During the first contract year, the FA is the greater of:
10% of all purchase payments and purchase payment credits applied prior to
your surrender request, less any amounts surrendered prior to your surrender
request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITHOUT SECURESOURCE 20 RIDER, SECURESOURCE RIDER, GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year; or
current contract earnings.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
CURRENT CONTRACT WITH SECURESOURCE STAGES RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Annual Lifetime Payment (this amount will be zero during the
waiting period).
During the first contract year, the FA is the greatest of:
10% of all purchase payments and purchase payment credits applied prior to
your surrender request, less any amounts surrendered prior to your surrender
request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITH SECURESOURCE 20 RIDER, SECURESOURCE RIDER OR GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment (for the SecureSource 20 rider, Remaining Benefit Payment and the
Remaining Annual Lifetime Payment are zero during the waiting period).
ORIGINAL CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and any purchase payment credit to
be the prior contract anniversary's contract value during the first contract
year.
Amounts surrendered in excess of the FA may be subject to a surrender charge as
described below.
A surrender charge will apply if the amount you surrender includes any of your
prior purchase payments that are still within their surrender charge schedule.
To determine whether your surrender includes any of your prior purchase payments
that are still within their surrender charge schedule, we surrender amounts from
your contract in the following order:
1. First, we surrender the FA. Contract earnings are surrendered first, followed
by purchase payments. We do not assess a surrender charge on the FA. We
surrender payments that are considered part of the FA on a first-in, first-
out (FIFO) basis for the Current Contract, and last-in, first-out (LIFO)
basis for the Original Contract.
2. Next, we surrender purchase payments received that are beyond the surrender
charge period shown in your contract. We surrender these payments on a FIFO
basis. We do not assess a surrender charge on these payments.
3. Finally, we surrender any additional purchase payments received that are
still within the surrender charge period shown in your contract. We surrender
these payments on a FIFO basis. We do assess a surrender charge on these
payments.
The amount of purchase payments surrendered is calculated using a prorated
formula based on the percentage of contract value being surrendered. As a
result, the amount of purchase payments surrendered may be greater than the
amount of contract value surrendered.
We determine your surrender charge by multiplying each of your payments
surrendered which could be subject to a surrender charge by the applicable
surrender charge percentage (see "Expense Summary"), and then adding the total
surrender charges.
For a partial surrender, we will determine the amount of contract value that
needs to be surrendered, which after any surrender charge and any positive or
negative market value adjustment, will equal the amount you request.
EXAMPLE: Each time you make a purchase payment under the contract, a surrender
charge schedule attaches to that purchase payment. The surrender charge
percentage for each purchase payment declines according to the surrender charge
schedule shown in your contract. (THE SURRENDER CHARGE PERCENTAGES FOR THE 9-
YEAR SURRENDER CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY".)
For example, during the first two years after a purchase payment is made, the
surrender charge percentage attached to that payment is 8%. At the beginning of
the tenth year after that purchase payment is made, and thereafter, there is no
longer a surrender charge as to that payment.
For an example, see Appendix B.
--------------------------------------------------------------------------------
44 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
WAIVER OF SURRENDER CHARGES
We do not assess surrender charges for:
surrenders each year that represent the total free amount for that year;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which surrender charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force. (Please note that, if you are buying a new contract with
inherited IRA money, we will not waive surrender charges for a five-year
distribution and, therefore, if that option is selected, you should choose a
surrender charge period that is no longer than the time remaining in the five-
year period.);
amounts applied to an annuity payment plan* (EXCEPTION: As described below, if
you select annuity payout Plan E, and choose later to surrender the value of
your remaining annuity payments, we will assess a surrender charge.)
surrenders made as a result of one of the "Contingent events"* described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions). For the Current Contract, waiver of surrender
charges for Contingent events will not apply to Tax Free Exchanges, rollovers
and transfers to another annuity contract;
amounts we refund to you during the free look period;* and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CURRENT CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you are confined to a hospital or nursing home and have
been for the prior 60 days or confinement began within 30 days following a 60
day confinement period. Such confinement must begin after the contract issue
date. Your contract will include this provision when you are under age 76 at
contract issue. You must provide us with a letter containing proof
satisfactory to us of the confinement as of the date you request the
surrender. We must receive your surrender request no later than 91 days after
your release from the hospital or nursing home. The amount surrendered must be
paid directly to you.
Surrenders you make if you are disabled with a medical condition and are
diagnosed in the second or later contract years with reasonable medical
certainty, that the disability will result in death within 12 months or less
from the date of the diagnosis. You must provide us with a licensed
physician's statement containing the terminal illness diagnosis, the expected
date of death and the date the terminal illness was initially diagnosed. The
amount surrendered must be paid directly to you.
ORIGINAL CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the surrender.
Surrenders you make if you or the annuitant are diagnosed in the second or
later contract years as disabled with a medical condition that with reasonable
medical certainty will result in death within 12 months or less from the date
of the diagnosis. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
BOTH CONTRACTS:
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax on the
annuitization start date, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full surrender
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
SECURESOURCE STAGES 2 RIDER CHARGE
We deduct an annual charge for this optional feature only if you select it as
follows:
SecureSource Stages 2 -- Single Life rider, 0.95%
SecureSource Stages 2 -- Joint Life rider, 1.15%
The charge is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages 2 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated or until the contract value reduces to zero. If the
contract or rider is terminated for any reason, we will deduct the charge,
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the SecureSource Stages 2 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each investment option. The SecureSource Stages 2 -- Single Life rider fee
will not exceed a maximum of 1.75%. The SecureSource Stages 2 -- Joint Life
rider fee will not exceed a maximum of 2.25%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iv) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(v) the ability to change your investment option to one that is more
aggressive than your current investment option. Any change to a less
aggressive investment option will further limit the investment
options available to the then current and less aggressive investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive investment option than your current investment option and if the
new investment option has a higher current annual rider fee. The annual rider
fees associated with the available investment option may change at our
discretion, however these changes will not apply to this rider unless you
change your current investment option to a more aggressive one. The new fee
will be in effect on the valuation date we receive your written request to
change your investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same investment option or move to a less
aggressive one. Also, this type of fee increase does not allow you to
terminate the rider.
If your rider fee increases, on the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different fees that were in effect that year, adjusted for the number of
calendar days each fee was in effect.
The fee does not apply after the annuitization start date.
--------------------------------------------------------------------------------
46 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
SECURESOURCE STAGES RIDER FEE
We deduct a charge for this optional feature only if you select it as follows:
SecureSource Stages - Single Life rider, 1.10%
SecureSource Stages - Joint Life rider, 1.35%
The fee is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge adjusted for
the number of calendar days coverage was in place since we last deducted the
charge.
Currently the SecureSource Stages rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program model portfolio or investment option. The SecureSource
Stages - Single Life rider fee will not exceed a maximum of 2.00%. The
SecureSource Stages - Joint Life rider fee will not exceed a maximum of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups, any ability to make additional purchase
payments,
(ii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iii) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(iv) the ability to change your PN program model portfolio or investment
option to one that is more aggressive than your current model
portfolio. Any change to a less aggressive PN program investment
option will further limit the PN program investment options available
to the then current and less aggressive PN program investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher that your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program model portfolio or investment option than your current
PN program investment option and if the new PN program investment option has
a higher current annual rider fee. The annual rider fees associated with the
available PN program model portfolios or investment options may change at our
discretion, however these changes will not apply to this rider unless you
change your current PN program investment option to a more aggressive one.
The new fee will be in effect on the valuation date we receive your written
request to change your PN program investment option. You cannot decline this
type of fee increase. To avoid it, you must stay in the same PN program
investment option or move to a less aggressive model. Also, this type of fee
increase does not allow you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider fee will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuitization start date.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
SECURESOURCE 20 RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource 20 - Single Life rider, 1.25%;
SecureSource 20 - Joint Life rider, 1.55%.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource 20 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee. If the RBA reduces to zero but the contract
value has not been depleted, you will continue to be charged.
Currently the SecureSource 20 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource 20 - Single Life rider
fee will not exceed a maximum charge of 2.00%. The SecureSource 20 - Joint Life
rider fee will not exceed a maximum charge of 2.50%.
--------------------------------------------------------------------------------
48 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any pending increase to the ALP due to the 20% credit on the later
of the third rider anniversary or the date the ALP is established,
and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current one. Any change to a less
aggressive PN program investment option will further limit the PN
program investment options available to the then current and less
aggressive PN program model portfolios or investment options.
(B) You can terminate this rider if your annual rider fee increase after any
increase is more than 0.25 percentage points higher than your fee before
the increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment options and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program model portfolios or investment options may change at our
discretion, however these changes will not apply to this rider unless you
change your current PN program investment option to a more aggressive one.
The new fee will be in effect on the valuation date we receive your written
request to change your PN program investment option. You cannot decline this
type of fee increase. To avoid it, you must stay in the same PN program
investment option or move to a less aggressive PN program investment option.
Also, this type of fee increase does not allow you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 0.80%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. We prorate the charge among the GPAs, the
one-year fixed account and the subaccounts. We will modify this prorated
approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or on the annuitization start date,
we will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee; or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
anniversary, we will calculate an average rider fee, for the preceding contract
year only, that reflects the various different charges that were in effect that
year, adjusted for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) For contract applications signed prior to Jan. 26, 2009, the current charge
is 0.55%. For contract applications signed between Jan. 26, 2009 and June 1,
2009, the current fee is 0.80%.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, or the contract value reduces to zero. If the contract is terminated
for any reason or on the annuitization start date, we will deduct the charge
from the proceeds payable, adjusted for the number of calendar days coverage was
in place since we last deducted the fee. If the RBA goes to zero but the
contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each investment option. The Guarantor Withdrawal Benefit for
Life rider fee will not exceed a maximum fee of 1.50%.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
(1) See disclosure in Appendix Appendix I.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B UNLESS OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or on the annuitization start date, we will deduct the
charge, adjusted for the number of calendar days coverage was in place since we
last deducted the fee. If the Remaining Benefit Amount (RBA) goes to zero but
the contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
--------------------------------------------------------------------------------
50 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) See disclosure in Appendix J.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or on
the annuitization start date, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix K.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year.
For the Original Contract, on the annuitization start date and if the contract
is terminated for any reason other than death, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
Current Contract: the sum of your purchase payments and any purchase payment
credits allocated to the regular fixed account and the Special DCA fixed
account, and transfer amounts to the regular fixed account (including any
positive or negative MVA on amounts transferred from the GPAs);
Original Contract: the sum of your purchase payments and any purchase payment
credits allocated to the one-year fixed account (if included) and the DCA
fixed account (if included), and transfer amounts to the one-year fixed
account (including any positive or negative MVA on amounts transferred from
the GPAs);
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
--------------------------------------------------------------------------------
52 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial surrender; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a surrender charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial surrenders;
surrender charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, for the
Original Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the one-year fixed account or one-year GPA to one or more subaccounts. Automated
transfers are not available for GPA terms of two or more years. You can also
obtain the benefits of dollar-cost averaging by setting up regular automatic SIP
payments or by establishing an interest sweep strategy. Interest sweeps are a
monthly transfer of the interest earned from the one-year fixed account or one-
year GPA into the subaccounts of your choice. If you participate in an interest
sweep strategy the interest you earn on the one-year fixed account or one-year
GPA will be less than the annual interest rate we apply because there will be no
compounding. For the Current Contract, you might transfer a set amount monthly
from a relatively conservative subaccount to a more aggressive one, or to
several others, or from the regular fixed account to one or more subaccounts.
You may not set up an automated transfer to or from the GPAs or set up an
automated transfer to the regular fixed account. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments.
The Current Contract does not allow an interest sweep strategy.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the Special DCA fixed account (Current Contract)
and the DCA fixed account (Original Contract). See the "Special DCA Fixed
Account", "DCA Fixed Account" and "Portfolio Navigator Program" sections in this
prospectus for details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing
--------------------------------------------------------------------------------
54 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
your contract value. You must allow 30 days for us to change any instructions
that currently are in place. For more information on asset rebalancing, contact
your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix H -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in a PN program, asset rebalancing is
available for use with the Special DCA fixed account (Current Contract) and the
DCA fixed account (Original Contract) (see "Special DCA Fixed Account" and "DCA
Fixed Account") only if your subaccount allocation for asset rebalancing is
exactly the same as your subaccount allocation for transfers from the Special
DCA fixed account and the DCA fixed account. If you change your subaccount
allocations under the asset rebalancing program or the Special DCA fixed account
and the DCA fixed account, we will automatically change the subaccount
allocations so they match. If you do not wish to have the subaccount allocation
be the same for the asset rebalancing program and the Special DCA fixed account
and the DCA fixed account, you must terminate the asset rebalancing program or
the Special DCA fixed account and the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
about the conflicts of interest to which Columbia Management Investment Advisers
and its affiliates are subject, see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the fund of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolios investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA fixed account
(Original Contract) or Special DCA fixed account (Current Contract), when
available (see "The Special DCA Fixed Account" and "DCA Fixed Account"), and you
are participating in the PN program, we will make monthly transfers in
accordance with your instructions from the DCA fixed account (Original Contract)
or Special DCA fixed account (Current Contract), into the investment option or
model portfolio you have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
--------------------------------------------------------------------------------
56 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM;
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full surrender. Surrender charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDERS : The
SecureSource series or the Guarantor Withdrawal Benefit for Life riders
require that your contract value be invested in one of the PN program
investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the SecureSource series rider or the
Guarantor Withdrawal Benefit for Life rider once you have selected it, you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE
SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY
IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full surrender if you do not
want to invest in any of the PN program investment options. Surrender charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM
(AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE
CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
For the Current Contract, you may transfer contract value from any one
subaccount, GPAs, the regular fixed account and the Special DCA fixed account to
another subaccount before the annuitization start date. For the Original
Contract, you may transfer contract value from any one subaccount, GPAs, the
one-year fixed account, or the DCA fixed account to another subaccount before
the annuitization start date. Certain restrictions apply to transfers involving
the GPAs, the regular fixed account and the one-year fixed account. You may not
transfer contract value to the Special DCA fixed account or the DCA fixed
account. You may not transfer contract value from the Special DCA fixed account
or the DCA fixed account except as part of automated monthly transfers.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period, unless an exception applies.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
CURRENT CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the regular fixed
account at any time. However, if you made a transfer from the regular fixed
account to the subaccounts or the GPAs, took a partial surrender from the
fixed account or terminated automated transfers from the Special DCA fixed
account, you may not make a transfer from any subaccount or GPA to the regular
fixed account for six months following that transfer, partial surrender or
termination.
You may transfer contract values from the regular fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the regular fixed account are not subject to an MVA. You may transfer the
entire contract value to the regular fixed account. Subject to state
restrictions, we reserve the right to limit transfers to the regular fixed
account at any time on a non-discriminatory basis with notification. Transfers
out of the regular fixed account, including automated transfers, are limited
to 30% of regular fixed account value at the beginning of the contract year(1)
or $10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the regular fixed
account. You should carefully consider whether the regular fixed account meets
your investment criteria before you invest. Subject to state restrictions, we
reserve the right to change the percentage allowed to be transferred from the
regular fixed account at any time on a non-discriminatory basis with
notification.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs or the
regular fixed account into the Special DCA fixed account. However, you may
transfer contract values as automated monthly transfers from the Special DCA
fixed account to the subaccounts or the PN program model portfolio or
investment option in effect. (See "Special DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and Special DCA fixed account.
(1) All purchase payments and purchase payment credits received into the regular
fixed account prior to your transfer request are considered your beginning
of contract year value during the first contract year.
ORIGINAL CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account if part of your contract, at any time. However, if you made a transfer
from the one-year fixed account to the subaccounts or the GPAs, you may not
make a transfer from any subaccount or GPA back to the one-year fixed account
for six months following that transfer.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to further limit transfers to or from the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain
--------------------------------------------------------------------------------
58 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
or loss of contract value, unless an exception applies (see "The Guarantee
Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values as automated monthly transfers from the DCA fixed account to
any of the investment options available under your contract, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPA, as described above. (See "DCA Fixed
Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and DCA fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or surrender to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
--------------------------------------------------------------------------------
60 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire subaccount balance**
ORIGINAL CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $500 or entire account balance
ALL CONTRACTS
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of
the distribution.
** The contract value after a partial surrender must be at least $500.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
Your investment professional can help you set up automated transfers among your
subaccounts, regular fixed account (Current Contract), the one-year fixed
account (Original Contract) or GPAs or automated partial surrenders from the
GPAs, regular fixed account, one-year fixed account, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract) or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account (Original Contact only) to
any one of the subaccounts may not exceed an amount that, if continued, would
deplete the one-year fixed account within 12 months.
Automated transfers from the regular fixed account (Current Contract only) are
limited to 30% of the regular fixed account values at the beginning of the
contract year or $10,000, whichever is greater.
Automated surrenders may be restricted by applicable law under some contracts.
You may not make additional purchase payments if automated partial surrenders
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a Special DCA fixed account (Current
Contract) or DCA fixed account (Original Contract) (see "Special DCA Fixed
Account", "Fixed Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
If you have one of the SecureSource series of riders, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, you may set
up automated partial surrenders up to the benefit amount available for
withdrawal under the rider.
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $50
ORIGINAL CONTRACT:
Transfers or surrenders: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $250 or entire contract balance
ORIGINAL CONTRACT:
Transfers or surrenders: $500 or entire account balance
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
MAXIMUM AMOUNT
CURRENT CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $100,000
ORIGINAL CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone surrender within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and surrenders are automatically available. You may request
that telephone transfers and surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before the
annuitization start date by sending us a written request or calling us. If we
receive your surrender request in good order at our corporate office before the
close of business, we will process your surrender using the accumulation unit
value we calculate on the valuation date we received your surrender request. If
we receive your surrender request at our corporate office at or after the close
of business, we will process your surrender using the accumulation unit value we
calculate on the next valuation date after we received your surrender request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, surrender charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make surrenders after the
annuitization start date except under Variable Annuity Payout Plan E. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Any partial surrenders you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected one of the SecureSource
series of riders, the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider and your partial surrenders in any contract
year exceed the permitted surrender amount under the terms of the rider, your
benefits under the rider may be reduced (see "Optional Benefits"). The first
partial surrender request during the first contract year, for the SecureSource
Stages 2 rider and any partial surrender request that reverses previous step-ups
during the 3-year waiting period or exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement. This form shows the
projected effect of the surrender on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you.
In addition, surrenders you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
SURRENDER POLICIES
CURRENT CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
Special DCA fixed account and/or the regular fixed account in the same
proportion as your value in each account correlates to your total contract
value, unless requested otherwise(1). The minimum contract value after partial
surrender is $500.
ORIGINAL CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
DCA fixed account and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1)
After executing a partial surrender, the value in the one-year fixed account and
each GPA and subaccount must be either zero or at least $50.
(1) If you elected one of the SecureSource series of riders, you do not have the
option to request from which account to surrender.
--------------------------------------------------------------------------------
62 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING THE ANNUITANT
For the Current Contract, if you have a nonqualified annuity and are a natural
person (excluding a revocable trust), you may change the annuitant or contingent
annuitant if the request is made prior to the annuitization start date and while
the existing annuitant or contingent annuitant is living. The change will become
binding on us when we receive it. If you and the annuitant are not the same
person and the annuitant dies before the annuitization start date, the owner
becomes the annuitant unless a
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
contingent annuitant has been previously selected. You may not change the
annuitant if you have a qualified annuity or there is non-natural or revocable
trust ownership.
For the Original Contract, annuitant changes are not allowed.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office. We
will honor any change of ownership request received in good order that we
believe is authentic and we will use reasonable procedures to confirm
authenticity. If we follow these procedures, we will not take any responsibility
for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders and
any owner was not an owner before the change, all owners (including any prior
owner who is still an owner after the ownership change) (along with the
annuitant for the Original Contract) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract.
If you have an Income Assurer Benefit rider and/or the Benefit Protector Plus
rider, the riders will terminate upon transfer of ownership of the annuity
contract.
For the Original Contract, our current administrative practice is that if you
have the Benefit Protector rider, the owner can choose to terminate the Benefit
Protector rider during the 30-day window following the effective date of the
ownership change.
For the Current Contract, if you have the Benefit Protector rider, if any owner
is older than age 75 immediately following the ownership change, the rider will
terminate upon change of ownership. If all owners are younger than age 76, the
rider continues unless the owner chooses to terminate it during the 30-day
window following the effective date of the ownership change. The Benefit
Protector death benefit values may be reset (see "Optional Death
Benefits - Benefit Protector Death Benefit Rider").
For the Current Contract, the death benefit may change due to a change of
ownership. If any owner is older than age 85 immediately following the ownership
change, the MAV Death Benefit, 5% Accumulation Death Benefit and EDB will
terminate, the ROPP Death Benefit will be unavailable, and the Contract Value
Death Benefit will apply. If any owner is older than age 79 but all owners are
younger than age 86, the MAV Death Benefit, the 5% Accumulation Death Benefit,
and the EDB will terminate and the ROPP Death Benefit will apply. If all owners
are age 79 or younger, the ROPP Death Benefit, MAV Death Benefit, 5%
Accumulation Death Benefit or EDB will continue. The ROPP Death Benefit, MAV
Death Benefit, 5% Accumulation Death Benefit and EDB values may be reset (see
"Benefits in the Case of Death"). If the death benefit that applies to your
contract changes due to an ownership change, the mortality and expense risk fee
may change as well (see "Charges - Mortality and Expense Risk Fee").
The SecureSource series - Joint Life rider, if selected, only allows transfer of
the ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force,
subject to state restrictions. For the SecureSource Stages 2 - Joint Life rider,
if ownership is transferred from a covered spouse to their revocable trust(s),
the annuitant must be one of the covered spouses. The Accumulation Protector
Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for
Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of
ownership of the annuity contract and the values may be reset. For SecureSource
rider and Guarantor Withdrawal Benefit for Life rider, any ownership change that
impacts the guarantees provided will not be considered in good order until we
receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the ownership change on the rider benefits or a verbal acknowledgement
that you understand and accept the impacts that have been explained to you. For
the Secure Source Stages 2 - Single Life riders, Secure Source 20 - Single Life
and SecureSource Stages - Single Life riders, an ownership change that results
in different covered person will terminate the rider, subject to state
restrictions. (See "Optional Benefits.")
--------------------------------------------------------------------------------
64 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
BENEFITS IN CASE OF DEATH
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
We will pay the death benefit, less any purchase payment credits subject to
reversal, to your beneficiary upon your death if you die before the
annuitization start date while this contract is in force. If a contract has more
than one person as the owner, we will pay the benefits upon the first to die of
any owner. The basic death benefit available under your contract at contract
issue is the ROPP Death Benefit. In addition to the ROPP Death Benefit, we also
offer the following optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if you are age 79 or younger at contract
issue, you can elect any one of the above optional death benefits. If you are
age 80 or older at contract issue, the ROPP Death Benefit will apply.
Once you elect a death benefit, you cannot change it; however the death benefit
that applies to your contract may change due to an ownership change (see
"Changing Ownership") or continuation of the contract by the spouse under the
spousal continuation provision.
We show the death benefit that applies to your contract at issue on your
contract's data page. The death benefit determines the mortality and expense
risk fee that is assessed against the subaccounts. (See "Charges -- Mortality
and Expense Risk Fee.")
We will base the benefit paid on the death benefit coverage in effect on the
date of your death.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROPP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the
partial surrender.
DB = the applicable ROPP value or MAV on the date of (but prior to) the
partial surrender
CV = contract value on the date of (but prior to) the partial surrender.
COVERED LIFE CHANGE: is either continuation of the contract by a spouse under
the spousal continuation provision, or an ownership change where any owner after
the ownership change was not an owner prior to the change.
CONTRACT VALUE DEATH BENEFIT (CV DEATH BENEFIT): is the death benefit available
if any owner after an ownership change or spouse who continues the contract
under the spousal continuation provision is over age 85 and therefore cannot
qualify for the ROPP death benefit. Under this benefit, we will pay the
beneficiary the greater of:
- the Full Surrender Value, or
- the contract value after any rider charges have been deducted.
FULL SURRENDER VALUE: is the contract value immediately prior to the surrender
(immediately prior to payment of a death claim for death benefits) less:
any surrender charge,
pro rata rider charges,
the contract charge,
any purchase payment credits subject to reversal, and
plus:
any positive or negative market value adjustment.
RETURN OF PURCHASE PAYMENTS (ROPP) DEATH BENEFIT
The ROPP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, and purchase payment
credits, adjusted for surrenders. If you die before the annuitization start date
and while this contract is in force, the death benefit will be the greatest of:
1. the contract value after any rider charges have been deducted,
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
2. the ROPP Value, or
3. the Full Surrender Value.
ROPP VALUE: is the total purchase payments and any purchase payment credits on
the contract issue date. Additional purchase payments and purchase payment
credits will be added to the ROPP value. Adjusted partial surrenders will be
subtracted from the ROPP value.
After a covered life change for a spouse who continues the contract and is age
85 or younger, we reset the ROPP value to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value). If the spouse who continues
the contract is age 86 or older, the ROPP Death Benefit will terminate and he or
she will be eligible for the CV death benefit.
After a covered life change other than for the spouse who continues the
contract, if the prior owner and current owners are eligible for the ROPP death
benefit we reset the ROPP value on the valuation date we receive your request
for the ownership change to the contract value after any rider charges have been
deducted, if the contract value is less.
If the prior owner was not eligible for the ROPP but all current owners are
eligible, we reset the ROPP value to the contract value after any rider charges
have been deducted on the valuation date we receive your request for the
ownership change.
IF AVAILABLE IN YOUR STATE AND YOU ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU
MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE
YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE
THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR CERTAIN OLDER
ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 80. BE SURE TO
DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS
ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you die while the contract is in force
and before the annuitization start date, the death benefit will be the greatest
of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV; or
4. the Full Surrender Value as described above.
The MAV equals the ROPP value prior to the first contract anniversary. Every
contract anniversary prior to the earlier of your 81st birthday or your death,
we compare the MAV to the current contract value and we reset the MAV to the
higher amount. The MAV is increased by any additional purchase payments and any
purchase payment credits and reduced by adjusted partial surrenders.
After a covered life change for a spouse who is age 79 or younger and continues
the contract, we reset the MAV to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value).
After a covered life change other than for a spouse who continues the contract,
if all owners are under age 80, we reset the MAV on the valuation date we
receive your request for the ownership change to the lesser of these two values:
(a) the contract value after any rider charges have been deducted, or
(b) the MAV on that date, but prior to the reset.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the MAV. If your spouse is
over age 79 but younger than age 86 when the contract was continued, he or she
will be eligible for the ROPP death benefit. If your spouse is age 86 or older
when the contract was continued, he or she will be eligible for the CV death
benefit.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you die while the contract is
in force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
--------------------------------------------------------------------------------
66 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
2. the ROPP value as described above;
3. the 5% accumulation death benefit floor;
4. the Full Surrender Value as described above.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% ACCUMULATION DEATH BENEFIT FLOOR: is equal to the sum of:
1. the contract value in the Excluded Accounts (currently, regular fixed account
and GPAs), if any, and
2. the variable account floor.
PROTECTED ACCOUNT BASE (PAB) AND EXCLUDED ACCOUNT BASE (EAB): Adjustments to
variable account floor require tracking amounts representing purchase payments,
not previously surrendered, that are allocated or transferred to the Protected
Accounts (currently, subaccounts and the Special DCA fixed account) and Excluded
Accounts.
- PAB equals amounts representing purchase payments and any purchase payment
credits, not previously surrendered or transferred, that are in the
Protected Accounts.
- EAB equals amounts representing purchase payments and any purchase payment
credits, not previously surrendered or transferred, that are in the Excluded
Accounts.
VARIABLE ACCOUNT FLOOR: Variable account floor is PAB increased on contract
anniversaries prior to the earlier of your 81st birthday or your death.
NET TRANSFER: If multiple transfers are made on the same valuation day, they are
combined to determine the net amount of contract value being transferred between
the Protected Accounts and Excluded Accounts. This net transfer amount is used
to adjust the EAB, PAB and variable account floor values.
ESTABLISHMENT OF VARIABLE ACCOUNT FLOOR, PAB AND EAB
On the contract date, 1) variable account floor and PAB are established as your
initial purchase payment plus any purchase payment credit allocated to the
Protected Accounts; and 2) EAB is established as your initial purchase payment
plus any purchase payment credit allocated to the Excluded Accounts.
ADJUSTMENTS TO VARIABLE ACCOUNT FLOOR, PAB AND EAB
Variable account floor, PAB and EAB are adjusted by the following:
1. When an additional purchase payment is made;
(A) any payment and any purchase payment credit you allocate to the Protected
Accounts are added to PAB and to variable account floor, and
(B) any payment and any purchase payment credit you allocate to the excluded
accounts are added to EAB.
2. When transfers are made to the Protected Accounts from the Excluded Accounts,
we increase PAB and variable account floor, and we reduce EAB.
The amount we deduct from EAB and add to PAB and to variable account floor is
calculated for each net transfer using the following formula:
A = the amount the contract value in the Excluded Accounts is reduced by the
net transfer
B = EAB on the date of (but prior to) the transfer
C = the contract value in the Excluded Accounts on the date of (but prior to)
the transfer.
3. When partial surrenders are made from the Excluded Accounts, we reduce EAB by
the same amount as calculated above for transfers from the Excluded Accounts,
using surrender amounts in place of transfer amounts. Partial surrenders from
Excluded Accounts do not increase PAB.
4. When transfers are made to the Excluded Accounts from the Protected Accounts,
we reduce PAB and variable account floor, and increase EAB.
The amounts we deduct from PAB and variable account floor are calculated for
each net transfer using the following formula:
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
A = the amount the contract value in the Protected Accounts is reduced by the
net transfer
B = the applicable PAB or variable account floor on the date of (but prior
to) the transfer
C = the contract value in the Protected Accounts on the date of (but prior
to) the transfer.
The amount we subtract from PAB is added to EAB.
5. When partial surrenders are made from the Protected Accounts, we reduce PAB
and variable account floor by the same amount as calculated above for
transfers from the Protected Accounts, using surrender amounts in place of
transfer amounts. Partial surrenders from Protected Accounts do not increase
EAB.
6. After a covered life change for a spouse who continues the contract, variable
account floor and PAB are reset to the contract value in the Protected
Accounts on the date of continuation. EAB is reset to the contract value in
the Excluded Accounts on the date of continuation. The contract value is
after any rider charges have been deducted and after any increase to the
contract value due to the death benefit that would otherwise have been paid
(without regard to the Full Surrender Value).
7. After a covered life change other than for a spouse who continues the
contract, variable account floor, PAB and EAB are reset on the valuation date
we receive your written request for the covered life change if all owners are
eligible for the 5% Accumulation Death Benefit.
Variable account floor and PAB are reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Protected Accounts on that date, and
B = Variable account floor on that date (but prior to the reset).
EAB is reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Excluded Accounts on that date, and
B = EAB on that date (but prior to the reset).
8. On a contract anniversary when variable account floor is greater than zero:
(A) On the first contract anniversary, we increase variable account floor by
an amount equal to 5%, multiplied by variable account floor as of 60 days
after the contract date.
(B) On each subsequent contract anniversary prior to the earlier of your 81st
birthday or your death, we increase variable account floor by 5%,
multiplied by the prior contract anniversary's variable account floor.
(C) Any variable account floor increase on contract anniversaries does not
increase PAB or EAB.
For contracts issued in New Jersey and Washington state, the cap on the variable
account floor is 200% of PAB.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the 5% Accumulation Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you die while the contract is in
force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV as described above;
4. the 5% accumulation death benefit floor as described above; or
5. the Full Surrender Value as described above.
If your spouse chooses to continue the contract under spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the Enhanced Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
For an example of how each death benefit is calculated, see Appendix C.
--------------------------------------------------------------------------------
68 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
We will pay the death benefit, less any purchase payment credits subject to
reversal, to your beneficiary upon the earlier of your death or the annuitant's
death. If a contract has more than one person as the owner or annuitant, we will
pay the benefits upon the first to die of any owner or the annuitant. The basic
death benefit available under your contract at contract issue is the ROP Death
Benefit. In addition to the ROP Death Benefit, we also offer the following
optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
We will base the benefit paid on the death benefit coverage you chose when you
purchased the contract.
HERE ARE SOME TERMS USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the partial
surrender.
DB = the applicable ROP value or MAV on the date of (but prior to) the partial
surrender.
CV = contract value on the date of (but prior to) the partial surrender.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for surrenders. If you or the annuitant die before the
annuitization start date and while this contract is in force, the death benefit
will be the greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR CERTAIN OLDER ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE
LIMITED AFTER AGE 80. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL
WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract
anniversary. On the first contract anniversary, we set the MAV as the greater of
these two values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial surrenders.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before the annuitization start date, the
death benefit will be the greatest of these three values, minus any applicable
rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the 5% variable account floor.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81 or after the earlier of your or the annuitant's
death.
PST X VAF
---------
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL SURRENDERS = SAV
PST = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial surrender or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
surrender.
SAV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer or partial surrender.
The amount of purchase payments and any purchase payment credits surrendered or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current surrender or
transfer; and
(b) is the ratio of the amount of contract value transferred or surrendered from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current surrender or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
surrendered or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders;
3. the MAV on the date of death as described above; or
4. the 5% variable account floor as described above.
--------------------------------------------------------------------------------
70 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE THE ANNUITIZATION START DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value). To do this your spouse must, on the date our death claim
requirements are fulfilled, give us written instructions to continue the
contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse will be subject to all limitations
and/or restrictions of those features or riders just as if they were purchasing
a new contract and the values may be reset. (see "Optional Benefits" and
"Benefits in the Case of Death"). If the death benefit applicable to the
contract changes due to spousal continuation, the mortality and expense risk fee
may change as well (see "Charges -- Mortality and Expense Risk Fee").
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
FOR THE ORIGINAL CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid. To do this your spouse
must, on the date our death claim requirements are fulfilled, give us written
instructions to continue the contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse and the new annuitant (if applicable)
will be subject to all limitations and/or restrictions of those features or
riders just as if they were purchasing a new contract and the values may be
reset. (See "Optional Benefits" and "Optional Death Benefits".)
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid (without
regard to the Full Surrender Value). To do this your spouse must, on the date
our death claim requirements are fulfilled, give us written instructions to
continue the contract as owner. There will be no surrender charges on the
contract from that point forward unless additional purchase payments are made.
If you elected any optional contract features or riders, your spouse will be
subject to all limitations and/or restrictions of those features or riders
just as
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
if they were purchasing a new contract and the values may be reset (see
"Optional Benefits", "Optional Death Benefits" and "Benefits in the Case of
Death"). If the death benefit applicable to the contract changes due to
spousal continuation, the mortality and expense risk fee may change as well
(see "Charges -- Mortality and Expense Risk Fee"). If your spouse is the sole
beneficiary and elects to treat the contract his/her own as an inherited IRA,
the SecureSource Stages rider will terminate.
If you purchased this contract as an inherited IRA and your spouse is the sole
beneficiary, he or she can elect to continue this contract as an inherited
IRA.
If you purchased this contract as an inherited IRA and your spouse is not the
sole beneficiary, he or she can elect an alternative payment plan for their
share of the death benefit and all optional death benefits and living benefits
will terminate. Your spouse must follow the schedule of minimum surrenders
established based on your life expectancy.
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
FOR THE ORIGINAL CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid. To do
this your spouse must, on the date our death claim requirements are fulfilled,
give us written instructions to continue the contract as owner. There will be
no surrender charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to
all limitations and/or restrictions of those features or riders just as if
they were purchasing a new contract and the values may be reset. (See
"Optional Benefits" and "Optional Death Benefits".)
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
--------------------------------------------------------------------------------
72 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
SECURESOURCE STAGES 2 RIDERS
The SecureSource Stages 2 rider is an optional benefit that you can add to your
contract for an additional charge. This benefit is intended to provide to you,
after the lifetime benefit is established, a specified withdrawal amount
annually for life, even if your contract value is zero, subject to the terms and
provisions described in this section. Additionally, this benefit offers a credit
feature to help in low or poor performing markets and a step up feature to lock
in contract anniversary gains.
The SecureSource Stages 2 rider may be appropriate for you if you intend to make
periodic withdrawals from your annuity contract after the waiting period and
wish to ensure that market performance will not adversely affect your ability to
withdraw income over your lifetime. This rider may not be appropriate for you if
you do not intend to limit withdrawals to the amount allowed in order to receive
the full benefits of the rider.
Your benefits under the rider can be reduced if any of the following occurs:
- If you take any withdrawals during the 1-year waiting period, the lifetime
benefit amount will be determined using percentage B for the appropriate age
band as long as rider benefits are payable;
- If you withdraw more than the allowed withdrawal amount in a contract year,
or you take withdrawals before the lifetime benefit is available;
- If you take a withdrawal and later choose to allocate your contract value to
a fund of funds that is more aggressive than the target fund;
- If the contract value is 20% or more below purchase payments increased by
any contract anniversary gains or rider credits and adjusted for withdrawals
(see withdrawal adjustment base described below).
The SecureSource Stages 2 rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year after the lifetime benefit is established. Your age at the time of
the first withdrawal will determine the age band for as long as benefits are
payable except as described in the lifetime payment percentage provision.
As long as your total withdrawals during the current year do not exceed the
lifetime benefit amount, you will not be assessed a surrender charge. If you
withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and benefits will be reduced in accordance with excess
withdrawal processing. At any time, you may withdraw any amount up to your
entire surrender value, subject to excess withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
AVAILABILITY
There are two optional SecureSource Stages 2 riders available under your
contract:
- SecureSource Stages 2 -- Single Life
- SecureSource Stages 2 -- Joint Life
The information in this section applies to both SecureSource Stages 2 riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages 2 -- Single Life rider covers one person. The
SecureSource Stages 2 -- Joint Life Rider covers two spouses jointly who are
named at contract issue. You may elect only the SecureSource Stages 2 -- Single
Life rider or the SecureSource Stages 2 -- Joint Life rider, not both, and you
may not switch riders later. You must elect the rider when you purchase your
contract. The rider effective date will be the contract issue date.
The SecureSource Stages 2 rider is an optional benefit that you may select for
an additional annual charge if:
- SINGLE LIFE: you are 85 or younger on the date the contract is issued; or
- JOINT LIFE: you and your spouse are 85 or younger on the date the contract
is issued.
The SecureSource Stages 2 riders are not available under an inherited qualified
annuity.
The SecureSource Stages 2 rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
- SINGLE LIFE: death (see "At Death" heading below).
- JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages 2 rider are:
AGE BANDS: Each age band is associated with a two lifetime payment percentages.
The covered person (JOINT LIFE: the younger covered spouse) must be at least the
youngest age shown in the first age band for the annual lifetime payment to be
established. After the annual lifetime payment is established, in addition to
your age, other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: the younger covered spouse)
has reached the youngest age in the first age band. After the waiting period,
the annual withdrawal amount guaranteed by the rider can vary each contract
year.
ANNUAL STEP-UP: an increase in the benefit base and/or the principal back
guarantee and a possible increase in the lifetime payment percentage that is
available each rider anniversary if your contract value increases, subject to
certain conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken before the annual lifetime payment is
established, or (2) a withdrawal that is greater than the remaining annual
lifetime payment after the annual lifetime payment is established.
EXCESS WITHDRAWAL PROCESSING: a reduction in benefits if a withdrawal is taken
before the annual lifetime payment is established or if a withdrawal exceeds the
remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band. The
difference between percentage A and percentage B is referred to as the income
bonus. Percentage B is referred to as the minimum lifetime payment percentage.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you take withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. After the annual lifetime payment is
established, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
--------------------------------------------------------------------------------
74 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten contract anniversaries based on a rider credit percentage of 8% for
the first anniversary and 6% thereafter, as long as no withdrawals have been
taken since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and excess withdrawals may reduce or eliminate
the benefit of any rider credits. Rider credits may result in higher rider
charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
limiting benefits under the rider. If you take any withdrawals during the
waiting period, the lifetime benefit amount will be determined using percentage
B, the minimum lifetime payment percentage, for the appropriate age band and
percentage A, and therefore the income bonus, will not be available as long as
rider benefits are payable. The waiting period starts on the rider effective
date and ends on the day prior to the first anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage after the waiting period. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES 2 RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages 2 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 1-year waiting period, the
lifetime benefit amount will be determined using percentage B for the
appropriate age band and percentage A, and therefore the income bonus, will
not be available as long as rider benefits are payable. Any withdrawals in the
first 10 years will terminate any remaining rider credits. Also, if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider will be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must elect one of the
investment options under the PN program. This requirement limits your choice
of investment options. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option classification as shown in your contract if your
current investment option is more aggressive than the target investment option
classification. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option is currently the Moderate investment option. We reserve the
right to change the target investment option to an investment option
classification that is more aggressive than the Moderate investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset, you are in a
withdrawal phase. During withdrawal phases you may request to change your
investment option to the target investment option or any investment option
that is more conservative than the target investment option without a benefit
reset as described below. If you are in a withdrawal phase
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, you will be in the
accumulation phase again and your rider benefit will be reset as follows:
1. the BB, PBG and WAB will be reset to the contract value, if less than
their current amount; and
2. the ALP and RALP, if available, will be recalculated. You may request to
change your investment option by written request on an authorized form or
by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource Stages 2 rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
charge will continue to be deducted until the contract or rider is terminated
or the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages 2 -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages 2 -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of nonnatural
or revocable trust ownership). The rider will terminate at the death of the
contract owner because the original covered spouse will be unable to elect the
spousal continuation provision of the contract (see "Joint Life only: Covered
Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of the
trust must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource Stages 2 -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period the lifetime benefit amount will be determined using
percentage B for as long as rider benefits are payable. While the rider
permits certain excess withdrawals to be taken for the purpose of satisfying
RMD requirements for your contract alone without reducing future benefits
guaranteed under the rider, there can be no guarantee that changes in the
federal income tax law after the effective date of the rider will not require
a larger RMD to be taken, in which case, future guaranteed withdrawals under
the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse
--------------------------------------------------------------------------------
76 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
beneficiaries. In some circumstances, these required distributions could
substantially reduce or eliminate the value of the rider. See
"Taxes -- Other -- Spousal status."
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person or a revocable trust, the covered spouses are the annuitant
and the legally married spouse of the annuitant. The covered spouses lives are
used to determine when the annual lifetime payment is established, and the
duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading
below). The covered spouses are established on the rider effective date and
cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: younger covered spouses) has
reached age 50. When the ALP is established and at all times thereafter, the ALP
is equal to the BB multiplied by the lifetime payment percentage. Anytime the
lifetime payment percentage or BB changes as described below, the ALP will be
recalculated. After the waiting period and when the ALP is established, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the annual lifetime payment guaranteed
for withdrawal for the remainder of the contract year. The RALP is established
at the same time as the ALP. The RALP equals the ALP less all withdrawals in the
current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band used to calculate the initial ALP is
the percentage for the covered person's attained age (JOINT LIFE: younger
covered spouse's attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouse's subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouse's attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any rider
fee increase or if a withdrawal has been taken since the ALP was established,
then the lifetime payment percentage will not change on subsequent birthdays.)
Upon annual step-ups (see "Annual Step ups" below).
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was established and no rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether percentage A or percentage B is used for each
applicable age band:
During the waiting period, percentage B will be used. If you take a withdrawal
in the waiting period, percentage B will be used and the income bonus will not
be available for as long as rider benefits are payable.
If no withdrawal is taken during the waiting period, after the waiting period a
comparison of your contract value and the withdrawal adjustment base (WAB)
determines whether percentage A or percentage B is used to calculate the ALP
unless the percentage is fixed as described below. Market volatility, a
prolonged flat, low or down market, rider credits, and the deduction of charges
all impact whether you are eligible for percentage A or percentage B. On each
valuation date, if the benefit determining percentage is less than the 20%
adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (a/b) where:
a = Contract value at the end of the prior valuation period
b = WAB at the end of the prior valuation period
After the ALP is established and after the waiting period, the first withdrawal
taken in each contract year will set and fix the lifetime payment percentage for
the remainder of the contract year. Beginning on the next rider anniversary, the
lifetime payment percentage can change on each valuation day as described above
until a withdrawal is taken in that contract year.
However, at the earliest of (1), (2) or (3) below Percentage A and Percentage B
will be set and remain fixed as long as the benefit is payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values
(benefit base (BB), credit base (CB) and withdrawal adjustment base (WAB)) and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: If the WAB and CB are greater
than zero, the WAB and CB will be increased by the amount of each additional
purchase payment. The BB and PBG will be increased by the amount of each
additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits.
When a withdrawal is taken:
(a) If the first withdrawal is taken during the waiting period, the WAB will
be permanently reset to zero. If the first withdrawal is taken after the
waiting period, the WAB will be reduced by the "adjustment for
withdrawal," as defined below.
(b) If the ALP is established and the withdrawal is less than or equal to the
RALP, the BB does not change and the PBG is reduced by the amount of the
withdrawal, but it will not be less than zero.
(c) If the ALP is not established, excess withdrawal processing will occur as
follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
--------------------------------------------------------------------------------
78 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not be less
than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the withdrawal and
further reduced by an amount calculated as follows, but it will not be
less than zero:
a = the amount of the withdrawal minus the RALP
b = the PBG minus the RALP on the date of (but prior to) the withdrawal
c = the contract value on the date of (but prior to) the withdrawal minus
the RALP
The BB will be reduced by an amount as calculated below:
d = the amount of the withdrawal minus the RALP
e = the BB on the date of (but prior to) the withdrawal
f = the contract value on the date of (but prior to) the withdrawal minus
the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is reduced by a
withdrawal in the same proportion as the contract value is reduced, the
proportional amount deducted is the "adjustment for withdrawal." The "adjustment
for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PBG (as applicable) on the date of (but prior to) the
withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
THE WAB ON RIDER ANNIVERSARIES: Unless the WAB is permanently reset to zero or
you decline any rider fee increase, the WAB (after any rider credit is added)
will be increased to the contract value, if the contract value is greater.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
rider fee increase, rider credits are available for the first ten contract
anniversaries. On the first anniversary, the rider credit equals the credit
base (CB) 180 days following the rider effective date multiplied by 8%. On any
subsequent anniversaries, the rider credit equals the CB as of the prior rider
anniversary multiplied by 6%. On the first anniversary the BB and WAB will be
set to the greater of the current BB, or the BB 180 days following the
contract date increased by the rider credit and any additional purchase
payments since 180 days following the rider effective date. On any subsequent
rider credit dates the BB and WAB will be set to the greater of the current
BB, or the BB on the prior anniversary increased by the rider credit and any
additional purchase payments since the prior anniversary. If the CB is greater
than zero, the CB will be permanently reset to zero on the 10th rider
anniversary after any adjustment to the WAB and BB, and there will be no
additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you decline any rider fee increase, future annual step-
ups will no longer be available.
The annual step-up will be executed on any rider anniversary where the
contract value is greater than the PBG or the BB after any rider credit is
added. If an annual step-up is executed, the PBG, BB and lifetime payment
percentage will be adjusted as follows: The PBG will be increased to the
contract value, if the contract value is greater. The BB (after any rider
credit is added) will be increased to the contract value, if the contract
value is greater. If the covered person's attained age (Joint Life: younger
covered spouses attained age) on the rider anniversary is in a higher age band
and (1) there is an increase to BB due to a step-up or (2) the BB is at the
maximum of $10,000,000 so there was no step-up of the BB, then the higher age
band will be used to determine the appropriate lifetime payment percentage,
regardless of any prior withdrawals.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of your RMD that exceeds the benefit amount will not be subject to
excess withdrawal processing provided that the following conditions are met:
- The annual lifetime payment is established;
- The RMD is for your contract alone;
- The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
- The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on
the contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. If any withdrawal is taken in the
waiting period, including RMDs, Percentage B for the applicable age band will be
used as long as rider benefits are payable. Any withdrawals taken before the
annual lifetime payment is established or withdrawing amounts greater than the
remaining annual lifetime payment that do not meet these conditions will result
in excess withdrawal processing. The amount in excess of the RALP that is not
subject to excess withdrawal processing will be recalculated if the ALP changes
due to lifetime payment percentage changes. See Appendix E for additional
information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages 2 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource Stages
2 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
Unless you decline a rider fee increase, at the time of spousal continuation, a
step-up may be available. All annual step-up rules (see "Rider Anniversary
Processing -- Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that the RALP will be reduced for any prior
withdrawals in that contract year. The WAB, if greater than zero, will be
increased to the contract value if the contract value is greater. The spousal
continuation step-up is processed on the valuation date spousal continuation is
effective.
RULES FOR SURRENDER: Minimum contract values following surrender no longer apply
to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that contract year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
--------------------------------------------------------------------------------
80 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
- elect to take the death benefit under the terms of the contract, or
- elect to take the principal back guarantee available under this rider, or
- continue the contract and the SecureSource Stages 2 -- Joint Life rider
under the spousal continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
1. If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are
equal to the PBG on the date of death.
2. If the PBG is greater than zero and the ALP is not established, the BB on
the date of death multiplied by the lifetime payment percentage used for
the youngest age of the covered spouses in the first age band will be paid
annually until total payments to the beneficiary are equal to the PBG on
the date of death.
In either of the above cases:
- After the date of death, there will be no additional rider credits or annual
step-ups.
- The lifetime payment percentage used will be set as of the date of death.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
3. On the date of death (JOINT LIFE: remaining covered spouse's date of
death), if the CB is greater than zero, the CB will be permanently reset to
zero, and there will be no additional rider credits.
4. If the PBG equals zero, the benefit terminates. No further payments are
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: If your annuitization start date is the maximum
annuitization start date, you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the SecureSource Stages 2 rider. Under the rider's payout option, the minimum
amount payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages 2 rider cannot be terminated either by you or us except
as follows:
- SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
- SINGLE LIFE: after the death benefit is payable, the rider will terminate.
- SINGLE LIFE: spousal continuation will terminate the rider.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
- JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a
beneficiary of a participant in an employer sponsored retirement plan, the
rider will terminate.
- On the annuitization start date, the rider will terminate.
- You may terminate the rider if your annual rider fee after any increase is
more than 0.25 percentage points higher than your fee before the increase.
(see "Charges -- SecureSource Stages 2 rider charge").
- When the contract value is zero and either the annual lifetime payment is
not established or a withdrawal in excess of the remaining annual lifetime
payment is taken, the rider will terminate.
- Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE JULY 19, 2010)
If you bought a contract before July 19, 2010 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
------------------------------------------------------------------------------------------------------------------------
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
------------------------------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider B") Appendix J
------------------------------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider A") Appendix J
2006
------------------------------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit for Life Appendix I
------------------------------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix K
------------------------------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 Accumulation Protector Benefit Appendix L
------------------------------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 SecureSource Rider Appendix M
------------------------------------------------------------------------------------------------------------------------
Before July 19, 2010 SecureSource Stages Rider Appendix N
------------------------------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
OPTIONAL ADDITIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you (Current Contract) or you or the annuitant (Original Contract)
are 70 or older at the rider effective date, The Benefit Protector does not
provide any additional benefit before the first rider anniversary.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector to your contract. You must elect the
Benefit Protector at the time you purchase your contract and your rider
effective date will be the contract issue date. You may not select this rider if
you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you (Current Contract) or you or the
annuitant (Original Contract) die after the first rider anniversary, but before
the annuitization start date, and while this contract is in force, we will pay
the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you (Current Contract) or you and the
annuitant (Original Contract) were under age 70 on the rider effective date;
or
--------------------------------------------------------------------------------
82 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
- 15% of your earnings at death if you (Current Contract) or you or the
annuitant (Original Contract) were 70 or older on the rider effective date.
For the Current Contract, if this rider is effective after the contract date or
if there has been a covered life change, remaining purchase payment is
established or set as the contract value on the rider effective date or, if
later, the date of the most recent covered life change. Thereafter, remaining
purchase payments is increased by the amount of each additional purchase payment
and adjusted for each partial surrender.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
remaining purchase payments (also referred to as purchase payments not
previously surrendered under the Original Contract). Partial surrenders will
come from any earnings before reducing purchase payments in the contract. The
earnings at death may not be less than zero and may not be more than 250% of the
purchase payments not previously surrendered that are one or more years old.
Note: Purchase payments not previously surrendered is calculated differently and
is not the same value as purchase payments not previously surrendered used in
the surrender charge calculation.
TERMINATING THE BENEFIT PROTECTOR
CURRENT CONTRACT:
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider within 30 days after any rider anniversary
beginning with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
Your spouse may terminate the rider within 30 days following the effective
date of the spousal continuation if your spouse is age 75 or younger.
A new owner may terminate the rider within 30 days following the effective
date of an ownership change if the new owner is age 75 or younger.
The rider will terminate for a spousal continuation or ownership change if the
spouse or new owner is age 76 or older at the time of the change.
The rider will terminate after the death benefit is payable, unless the spouse
continues the contract under spousal continuation provision.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
ORIGINAL CONTRACT:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
Our current administrative practice allows a new owner or your spouse to
terminate the rider within 30 days following the effective date of the
ownership change or spousal continuation.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the annuitization
start date, your spouse may keep the contract as owner. For Current Contract,
your spouse will be subject to all the limitations and restrictions of the rider
just as if they were purchasing a new contract and the age of the new spouse at
the time of the change will be used to determine the earnings at death
percentage going forward. If your spouse does not qualify for the rider on the
basis of age we will terminate the rider. If they do qualify for the rider on
the basis of age we will set the contract value equal to the death benefit that
would otherwise have been paid (without regard to the Full Surrender Value) and
we will substitute this new contract value on the date of death for "remaining
purchase payments" used in calculating earnings at death.
For Current Contract, after a covered life change other than a spouse that
continues the contract, the new owner will be subject to all the limitations and
restrictions of the rider just as if they were purchasing a new contract and the
age of the new owner at the time of the change will be used to determine the
earnings at death percentage going forward. If the new owner does not qualify
for the rider on the basis of age we will terminate the rider. If they do
qualify for the rider on the basis of age we will substitute the contract value
on the date of the ownership changes for remaining purchase payments used in
calculating earnings at death.
For an example, see Appendix F.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
annual charge (see "Charges"). The Benefit Protector Plus provides reduced
benefits if you (Current Contract), or you or the annuitant (Original Contract)
are 70 or older at the rider effective date. It does not provide any additional
benefit before the first rider anniversary and it does not provide any benefit
beyond what is offered under the Benefit Protector rider during the second rider
year. Be sure to discuss with your investment professional whether or not the
Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector Plus to your contract. You must elect
the Benefit Protector Plus at the time you purchase your contract and your rider
effective date will be the contract issue date. This rider is only available for
transfers, exchanges or rollovers. If this is a non-qualified annuity,
transfers, exchanges or rollovers must be from another annuity or life insurance
policy. You may not select this rider if you select the Benefit Protector Rider,
5% Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you (Current Contract), or you or
the annuitant (Original Contract) die after the first rider anniversary, but
before the annuitization start date, and while this contract is in force, we
will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously surrendered as follows:
PERCENTAGE IF YOU (CURRENT CONTRACT) PERCENTAGE IF YOU (CURRENT CONTRACT)
RIDER YEAR WHEN DEATH OR YOU AND THE ANNUITANT (ORIGINAL CONTRACT) ARE OR YOU OR THE ANNUITANT (ORIGINAL CONTRACT) ARE
OCCURS; UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU (CURRENT CONTACT) OR YOU AND THE
ANNUITANT (ORIGINAL CONTRACT) ARE UNDER
RIDER YEAR WHEN DEATH OCCURS; AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase
payment*)
Five or more 40% x (earnings at death + 50% of initial purchase
payment*)
IF YOU (CURRENT CONTRACT) OR YOU OR THE
ANNUITANT (ORIGINAL CONTRACT) ARE AGE 70
RIDER YEAR WHEN DEATH OCCURS; OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase
payment*)
Five or more 15% x (earnings at death + 50% of initial purchase
payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously surrendered.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract, on
the annuitization start date, or when the death benefit is payable.
The rider will terminate if there is an ownership change.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value for the Current Contract). We will then terminate the
Benefit Protector Plus (see "Benefits in Case of Death").
For an example, see Appendix G.
--------------------------------------------------------------------------------
84 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting on the annuitization start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements. We do not deduct any surrender charges under the
payout plans listed below, except under annuity payout Plan E. (See
"Charges -- Surrender charge under Annuity Payout Plan E").
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your annuitization
start date after any rider charges have been deducted, plus any positive or
negative MVA less any purchase payment credits subject to reversal and less any
applicable premium tax. Additionally, we currently allow you to use part of the
amount available to purchase payouts, leaving any remaining contract value to
accumulate on a tax-deferred basis. If you select a variable annuity payout, we
reserve the right to limit the number of subaccounts in which you may invest.
The GPAs and the Special DCA fixed account (Current Contract) and the DCA fixed
account (Original Contract) are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate.
For information with respect to transfers between accounts after annuity payouts
begin, (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the annuitization start
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% Table A in the contract. The assumed investment rate affects
both the amount of the first payout and the extent to which subsequent payouts
increase or decrease. For example, annuity payouts will increase if the
investment return is above the assumed investment rate and payouts will decrease
if the return is below the assumed investment rate. Using a 5% assumed interest
rate results in a higher initial payout, but later payouts will increase more
slowly when annuity unit values rise and decrease more rapidly when they
decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before the annuitization start date. Generally, you may select one of
the Plans A through E below or another plan agreed to by us. Some of the annuity
payout plans may not be available if you have selected the Income Assurer
Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
annuitization start date. If the annuitant outlives the elected guaranteed
payout period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
payouts for at least the number of months determined by dividing the amount
applied under this option by the first monthly payout, whether or not the
annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of payout that would have been made 7 days prior
to the date we determine the present value. The discount rate we use in the
calculation is 5.71% for the assumed investment return of 3.5% and 6.67% for
the assumed investment return of 5.0%. (See "Charges -- Surrender charge under
Annuity Payout Plan E.") You can also take a portion of the discounted value
once a year. If you do so, your monthly payouts will be reduced by the
proportion of your surrender to the full discounted value. A 10% IRS penalty
tax could apply if you take a surrender. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix I: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix J: Guarantor Withdrawal Benefit Rider"). The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in the
frequency that you elect. The frequencies will be among those offered by us at
the time but will be no less frequent than annually. If, at the death of the
owner, total payouts have been made for less than the RBA, the remaining
payouts will be paid to the beneficiary.
REMAINING BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH
THE SECURESOURCE 20 RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource 20 Riders"). The amount paid in the current contract
year will be reduced for any prior withdrawals in that year. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequent
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you have the responsibility for electing a payout plan under
your contract that complies with applicable law. Your contract describes your
payout plan options. The options will meet certain IRS regulations governing
RMDs if the payout plan meets the incidental distribution benefit requirements,
if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
--------------------------------------------------------------------------------
86 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
For qualified and nonqualified contracts with the SecureSource Stages rider, on
the annuitization start date you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the rider. Under the rider's payout option, the minimum amount payable shown in
Table B will not apply, and you will receive the ALP provided by this rider
until the later of the death of covered person (JOINT LIFE: both covered
spouses) or depletion of the PBG. If you choose to receive the ALP, the amount
payable each year will be equal to the ALP on the annuitization start date. The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually. If You choose to
receive the ALP rather than a payout option available under the contract, all
other contract features, rider features and charges terminate after the
annuitization start date except for the principal back guarantee. You must
select a payout plan as of the annuitization start date set forth in your
contract.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitization start date. If you do
not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time amounts are applied to an annuity payout plan. If
the calculations show that monthly payouts would be less than $20, we have the
right to pay the amount that would otherwise have been applied to a plan to the
owner in a lump sum or to change the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you (Current Contract), or you or the
annuitant (Original Contract) die after annuity payouts begin, we will pay any
amount payable to the beneficiary as provided in the annuity payout plan in
effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike surrenders described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
SURRENDERS: Generally, if you surrender all or part of your nonqualified annuity
before the annuitization start date, including surrenders under any optional
withdrawal benefit rider, your surrender will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for surrenders of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
surrender, including surrenders under any optional withdrawal benefit rider, we
may deduct federal, and in some cases state withholding against the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
tax return. As long as you have provided us with a valid Social Security Number
or Taxpayer Identification Number, and you have a valid U.S. address, you may be
able to elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Annuitization Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a surrender for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity or qualified long-term care insurance contract, or for an endowment
contract under which payments will begin no later than payments would have begun
under the contract exchanged, (3) the exchange of an annuity contract for
another annuity or for a qualified long-term care insurance contract, and (4)
the exchange of a qualified long-term care insurance contract for a qualified
long-term care insurance contract. However, if the life insurance policy has an
outstanding loan, there may be tax consequences. Depending on the issue date of
your original policy or contract, there may be tax or other benefits that are
given up to gain the benefits of the new policy or contract. Consider whether
the features and benefits of the new policy or contract outweigh any tax or
other benefits of the old contract.
--------------------------------------------------------------------------------
88 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
SURRENDERS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire surrender will generally be includable as ordinary income and
is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
SURRENDERS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required surrenders called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a surrender, including surrenders
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
instead of receiving the distribution check, you elect to have the distribution
rolled over directly to an IRA or another eligible plan. Payments made to a
surviving spouse instead of being directly rolled over to an IRA are also
subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Annuitization Start Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
surrenders from your contract. However, the IRS may determine that these charges
should be treated as partial surrenders subject to taxation to the extent of any
gain as well as the 10% tax penalty for surrenders before the age of 59 1/2, if
applicable.
We reserve the right to report charges for these riders as partial surrenders if
we, as a withholding and reporting agent, believe that we are required to report
them. In addition, we will report any benefits attributable to these riders on
your death (Current Contract), or your or the annuitant's death (Original
Contract) as an annuity death benefit distribution, not as proceeds from life
insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of
--------------------------------------------------------------------------------
90 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
the contract. We reserve the right to amend the contract to reflect any
clarifications that may be needed or are appropriate to maintain such
qualification or to conform the contract to any applicable changes in the tax
qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
The contract is offered to customers of various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any legal responsibility
to pay amounts that are owed under the contract. The obligations and
guarantees under the contract are our sole responsibility.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 7.5% each time a purchase
payment is made. We may also pay ongoing trail commissions of up to 1.25% of
the contract value. We do not pay or withhold payment of trail commissions
based on which investment options you select.
We may pay selling firms an additional sales commission of up to 1% of
purchase payments for a period of time we select. For example, we may offer to
pay an additional sales commission to get selling firms to market a new or
enhanced contract or to increase sales during the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
--------------------------------------------------------------------------------
92 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
94 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 96 p. 32
Appendix B: Example -- Surrender Charges p. 98 Charges -- Surrender Charges p. 43
Appendix C: Example -- Death Benefits p. 107 Benefits in Case of Death p. 65
Appendix D: Example -- SecureSource Optional Benefits -- Optional Living
series of riders p. 113 Benefits p. 73
Appendix E: SecureSource series of Optional Benefits -- Optional Living
riders -- Additional RMD Disclosure p. 121 Benefits p. 73
Appendix F: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 123 Death Benefit Rider p. 82
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 125 Plus Death Benefit Rider p. 83
Appendix H: Asset Allocation Program for N/A
Contracts with Applications Signed
Before May 1, 2006 p. 127
Appendix I: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 128
Appendix J: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 140
Appendix K: Income Assurer Benefit N/A
Riders p. 148
Appendix L: Example -- Accumulation N/A
Protector Benefit Rider Disclosure p. 157
Appendix M: SecureSource Rider N/A
Disclosure p. 160
Appendix N: SecureSource 20 Rider N/A
Disclosure p. 173
Appendix O: SecureSource Stages Rider N/A
Disclosure p. 187
Appendix P: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 197 (Unaudited) p. 17
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract), regular fixed account
(Current Contract), and one-year fixed account (Original Contract) and the fees
and charges that apply to your contract.
The examples of death benefits and optional riders in appendices include a
partial surrender to illustrate the effect of a partial surrender on the
particular benefit. These examples are intended to show how the optional riders
operate, and do not take into account whether the rider is part of a qualified
contract. Qualified contracts are subject to required minimum distributions at
certain ages which may require you to take partial surrenders from the contract
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you
are considering the addition of certain death benefits and/or optional riders to
a qualified contract, you should consult your tax advisor prior to making a
purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early surrenders."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a surrender from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
surrender new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY SURRENDER AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or surrendered.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 surrender from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 3.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 2.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
96 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, the surrender charge will apply. (See "Charges -- Surrender
Charge.") We do not apply MVAs to the amounts we deduct for surrender charges,
so we would deduct the surrender charge from your early surrender after we
applied the MVA. Also note that when you request an early surrender, we
surrender an amount from your GPA that will give you the net amount you
requested after we apply the MVA and any applicable surrender charge, unless you
request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDIX B: EXAMPLE -- SURRENDER CHARGES
EXAMPLE -- SURRENDER CHARGES
We determine your surrender charge by multiplying the amount of each purchase
payment surrendered which could be subject to a surrender charge by the
applicable surrender charge percentage, and then totaling the surrender charges.
We calculate the amount of purchase payments surrendered (PPS) as:
Current Contract:
PPS = PPSC + PPF
PPSC = purchase payments surrendered that could be subject to a surrender charge
= (PS - FA) / (CV - FA) x (PP - PPF)
PPF = purchase payments surrendered that are not subject to a surrender charge
= FA - contract earnings, but not less than zero
PP = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
PS = amount the contract value is reduced by the surrender
FA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
CV = contract value prior to the surrender
Original Contract:
PPS = XSF + (ACV - XSF) / (CV - TFA) x (PPNPS - XSF)
XSF = 10% of prior anniversary's contract value - contract earnings, but not less
than zero
ACV = amount the contract value is reduced by the surrender - contract earnings,
but not less than zero
TFA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
PPNPS = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
CV = contract value prior to the surrender
When determining the surrender charge, contract earnings are defined as the
contract value, including any positive or negative MVA on amounts being
surrendered, less purchase payments not previously surrendered. We determine
current contract earnings by looking at the entire contract value, not the
earnings of any particular subaccount, GPA, the regular fixed account (Current
Contract), the one-year fixed account (Original Contract), the Special DCA fixed
account (Current Contract) or the DCA fixed account (Original Contract). If the
contract value is less than purchase payments received and not previously
surrendered, then contract earnings are zero.
The examples below show how the surrender charge for a full and partial
surrender is calculated for a contract with a nine-year surrender charge
schedule. Each example illustrates the amount of the surrender charge for both a
contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
98 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
FULL SURRENDER CHARGE CALCULATION -- NINE-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
nine-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $2,000
purchase payment credit;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PP): 50.000.00 50.000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS: 60,000.00 40,000.00
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS - FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 60,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $56,460.00 $36,754.00
--------------------------------------------------------------------------------
100 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
PARTIAL SURRENDER CHARGE CALCULATION -- NINE-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
nine-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $2,000
purchase payment credit;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PP): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS (determined by iterative process described
above): 15,376.34 16,062.31
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS - FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 15,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,376.34 19,375.80
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,376.34 19,375.80
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 5,376.34 15,175.80
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,376.34 16,062.31
SURRENDER CHARGE: (376.34) (1,062.31)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
102 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
FULL SURRENDER CHARGE CALCULATION -- NINE-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
nine-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $2,000
purchase payment credit;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 8.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) X (PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 8.0% x 8.0%
---------- ----------
surrender charge: 4,000.00 3,664.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (4,000.00) (3,664.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $55,960.00 $36,296.00
--------------------------------------------------------------------------------
104 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
PARTIAL SURRENDER CHARGE CALCULATION -- NINE-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
nine-year (from the date of EACH purchase payment) surrender charge schedule and
the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $2,000
purchase payment credit;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 8.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
-------------------------------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): $60,000.00 $40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 15,434.78 16,231.37
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,434.78 16,231.37
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - T-
FA) X (PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,434.78 16,231.37
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,434.78 19,592.09
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,434.78 19,592.09
less XSF: 0.00 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 5,434.78 15,392.09
multiplied by the surrender charge rate: x 8.0% x 8.0%
---------- ----------
surrender charge: 434.78 1,231.37
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,434.78 16,231.37
SURRENDER CHARGE: (434.78) (1,231.37)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
106 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- DEATH BENEFITS
CURRENT CONTRACT:
EXAMPLE -- ROPP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $1,000 to the contract; and
on the first contract anniversary, you make an additional payment of $20,000.
We add a purchase payment credit of $800; and
During the second contract year, the contract value is $42,000 and you take a
$5,000 partial surrender (including surrender charges); and
During the third contract year, the contract value is $40,000.
WE CALCULATE THE ROPP DEATH BENEFIT, AS FOLLOWS:
Contract value at death: $40,000.00
----------
Purchase payments, plus credits minus adjusted partial surrenders:
Total purchase payments: $45,000.00
plus purchase payment credits: +1,800.00
minus adjusted partial surrenders calculated as:
$5,000 x $46,800
---------------- = -5,571.43
$42,000
----------
for a death benefit of: $41,228.57
----------
THE ROPP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$41,228.57
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $1,000 to your contract; and
on the first contract anniversary the contract value grows to $29,000; and
During the second contract year the contract value falls to $27,000, at which
point you take a $1,500 partial surrender (including surrender charges),
leaving a contract value of $25,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $25,500.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $26,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,444.44
$27,000
----------
for a death benefit of: $24,555.56
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $29,000.00
plus purchase payments and purchase payment credits
made since the prior anniversary:
minus adjusted partial surrenders, calculated as: +0.00
$1,500 x $29,000
---------------- = -1,611.11
$27,000
----------
for a death benefit of: $27,388.89
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,388.89
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a purchase
payment credit of $1,000 to your contract. You allocate $5,000 to the regular
fixed account and $21,000 to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments and purchase payment credits: $26,000.00
minus the death benefit adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,604.94
$24,300
----------
for a death benefit of: $24,395.06
----------
3. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $21,000 = $22,050.00
plus amounts allocated to the subaccounts since that anniversary:
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as: +0.00
$1,500 x $22,050
---------------- = -1,740.79
$19,000
----------
variable account floor benefit: $20,309.21
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $25,609.21
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $25,609.21
--------------------------------------------------------------------------------
108 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a $1,000
purchase payment credit with $5,000 allocated to the regular fixed account and
$21,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS AND PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments: $26,000.00
minus the death benefit adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- =
$24,300 -1,604.94
----------
for a death benefit of: $24,395.06
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $26,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $26,000
---------------- =
$24,300 -1,604.94
----------
for a MAV Death Benefit of: $24,395.06
----------
4. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $22,050.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $22,050
---------------- =
$19,000 -1,740.79
----------
variable account floor benefit: $20,309.21
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $25,609.21
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES,
WHICH IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $25,609.21
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
ORIGINAL CONTRACT:
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $1,000 to the contract; and
on the first contract anniversary, you make an additional payment of $20,000.
We add a purchase payment credit of $800; and
During the second contract year, the contract value is $42,000 and you take a
$5,000 partial surrender (including surrender charges); and
During the third contract year, the contract value is $40,000.
WE CALCULATE THE ROP DEATH BENEFIT, AS FOLLOWS:
Contract value at death: $40,000.00
----------
Purchase payments, plus credits minus adjusted partial surrenders:
Total purchase payments: $45,000.00
plus purchase payment credits: +1,800.00
minus adjusted partial surrenders calculated as:
$5,000 x $46,800
---------------- = -5,571.43
$42,000
----------
for a death benefit of: $41,228.57
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$41,228.57
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $1,000 to your contract; and
on the first contract anniversary the contract value grows to $29,000; and
During the second contract year the contract value falls to $27,000, at which
point you take a $1,500 partial surrender (including surrender charges),
leaving a contract value of $25,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $25,500.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $26,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,444.44
$27,000
----------
for a death benefit of: $24,555.56
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $29,000.00
plus purchase payments and purchase payment credits
made since the prior anniversary:
minus adjusted partial surrenders, calculated as: +0.00
$1,500 x $29,000
---------------- = -1,611.11
$27,000
----------
for a death benefit of: $27,388.89
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,388.89
--------------------------------------------------------------------------------
110 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a purchase
payment credit of $1,000 to your contract. You allocate $5,000 to the one-year
fixed account and $21,000 to the subaccounts; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial surrender, (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $26,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,604.94
$24,300
----------
for a death benefit of: $24,395.06
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor the first contract anniversary, calculated as:
1.05 x $21,000 = $22,050.00
plus purchase payments and purchase payment credits allocated to the
subaccounts
since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $22,050
---------------- = -1,740.79
$19,000
----------
variable account floor benefit: $20,309.21
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $25,609.21
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES,
WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $25,609.21
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a $1,000
purchase payment credit with $5,000 allocated to the one-year fixed account
and $21,000 allocated to the subaccounts; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 partial surrender (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS AND PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments: $26,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,604.94
$24,300
----------
for a return of purchase payments death benefit of: $24,395.06
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $26,000.00
plus purchase payments and credits made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $26,000
---------------- = -1,604.94
$24,300
----------
for a MAV Death Benefit of: $24,395.06
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor the first contract anniversary, calculated as:
1.05 x $21,000 = $22,050.00
plus purchase payments and purchase payment credit amounts allocated to
the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $22,050
---------------- = -1,740.79
$19,000
----------
variable account floor benefit: $20,309.21
plus the one-year fixed account value: +5,300.00
5% variable account floor (value of the one-year fixed account and the
variable account floor): $25,609.21
----------
EDB, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH IS THE 5%
VARIABLE ACCOUNT FLOOR: $25,609.21
--------------------------------------------------------------------------------
112 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES OF RIDERS
EXAMPLE: SECURESOURCE STAGES 2 RIDERS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate investment option at issue.
LIFET-
IME
HYPOTHETICAL PAYME-
CONTRACT ASSUMED BENEFIT NT
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PERCE-
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP NT
At
Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $4,000 $4,000(1) 4%
1 0 0 98,000 108,000 108,000 9.3% 108,000 5,400 5,400(2) 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 5,700 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 125,134(5) 117,000 23.1% 118,877(5) 6,257(5) 0 5%
8 0 0 80,000 125,134 117,000 31.6% 118,877 6,257 6,257 5%
9 0 0 95,000 125,134 117,000 18.8% 118,877 7,508(4) 7,508(4) 6%(4)
(1) The ALP and RALP are based on percentage B until the end of the 1-year
waiting period.
(2) Since no withdrawal was taken, at the end of the 1-year waiting period, the
ALP and RALP are recalculated based on percentage A.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The Lifetime Payment Percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Lifetime Benefit Description - Determination of
Adjustment of Benefit Values".
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
EXAMPLE: SECURESOURCE STAGES
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT LIFETIME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $5,000 $ 0(1) 5%
1 0 0 98,000 108,000 108,000 9.3% 100,000 5,400 0 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 0 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000(2) 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 117,000(5) 117,000 23.1% 108,000(5) 5,850(5) 0 5%
8 0 0 80,000 117,000 117,000 31.6% 108,000 5,850 5,850 5%
9 0 0 95,000 117,000 117,000 18.8% 108,000 7,020(4) 7,020(4) 6%(4)
(1) The RALP is zero until the end of the 3-Year waiting period.
(2) At the end of the 3-Year waiting period, the RALP is set equal to the ALP.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Determination of Adjustment of Benefit Values" in
the "Lifetime Benefit Description".
--------------------------------------------------------------------------------
114 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE 20
EXAMPLE #1: LIFETIME BENEFIT NOT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER
ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS SURRENDERS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 NA NA
1 0 0 98,000 100,000 2.0% 100,000 100,000 6,000 0 NA NA
2 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 NA NA
3 0 0 125,000 125,000 0.0% 125,000 125,000 7,500 7,500 NA NA
3.5 0 6,000 111,000 118,590 6.4% 125,000 119,000 7,500 1,500 NA NA
4 0 0 104,000 118,590 12.3% 125,000 119,000 7,500 7,500 7,140(1) 7,140(1)
5 0 0 90,000 118,590 24.1% 125,000 119,000 6,250(2) 6,250(2) 5,950(2) 5,950(2)
6 0 0 95,000 118,590 19.9% 125,000 119,000 7,500 7,500 7,140 7,140
6.5 0 7,500 87,500 87,500(3) 0.0% 125,000 111,500 7,500 0 5,250(3) 0
7 0 0 90,000 90,000 0.0% 125,000 111,500 7,500 7,500 5,400 5,400
7.5 0 10,000 70,000 70,000(4) 0.0% 70,000(4) 70,000(4) 4,200(4) 0 4,200(4) 0
8 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
(1) The ALP and RALP are established on the contract anniversary following the
date the covered person (younger Covered Spouse for Joint) reaches age 65 as
the greater of the ELB or the RBA, times the ALP percentage.
(2) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(3) The $7,500 withdrawal is greater than the $7,140 RALP allowed under the
lifetime benefit and therefore excess withdrawal processing is applied to
the ALP, resetting the ALP to the lesser of the prior ALP or the ALP
percentage times the contract value following the withdrawal. The WAB is
reset to the ALP after the reset divided by the current ALP percentage. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(4) The $10,000 withdrawal is greater than both the $7,500 RBP allowed under the
basic benefit and the $5,400 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
less than 20%, so the ALP percentage and GBP percentage are set at 6% for
the remainder of the contract year.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
EXAMPLE #2: LIFETIME BENEFIT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 65.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue. On the 7th
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS SURRENDERS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 $6,000 $ 0
1 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 6,300 0
2 0 0 110,000 110,000 0.0% 110,000 110,000 6,600 0 6,600 0
3 0 0 110,000 120,000 8.3% 110,000 110,000 6,600 6,600(1) 7,200 7,200(1)
3.5 0 6,000 104,000 113,455 8.3% 110,000 104,000 6,600 600 7,200 1,200
4 0 0 100,000 113,455 11.9% 110,000 104,000 6,600 6,600 7,200 7,200
4.5 0 7,000 90,000 105,267 14.5% 90,000 90,000 5,400(2) 5,400(2) 7,200 200
5 0 0 80,000 105,267 24.0% 90,000 90,000 4,500(3) 4,500(3) 6,000(3) 6,000(3)
5.5 0 10,000 70,000 70,000(4) 0.0% 70,000 70,000 3,500(4) 3,500(4) 3,500(4) 3,500(4)
6 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
7 0 0 70,000 70,000(5) 0.0% 70,000(5) 70,000(5) 4,200(5) 4,200(5) 4,200(5) 4,200(5)
(1) At the end of the 3-Year waiting period, the RBP and RALP are set equal to
the GBP and ALP, respectively. The 20% rider credit is applied to the
lifetime benefit.
(2) The $7,000 withdrawal is greater than the $6,600 RBP allowed under the basic
benefit and therefore excess withdrawal processing is applied to the basic
benefit. The GBA is reset to the lesser of the prior GBA or the contract
value following the withdrawal. The RBA is reset to the lesser of the prior
RBA less the withdrawal or the contract value following the withdrawal. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(3) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(4) The $10,000 withdrawal is greater than both the $4,500 RBP allowed under the
basic benefit and the $6,000 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
greater than or equal to 20%, so the ALP percentage and GBP percentage are
set at 5% for the remainder of the contract year.
(5) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or the ALP percentage times the contract value. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. Any future
withdrawals will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
--------------------------------------------------------------------------------
116 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $96,153.85 and receive a purchase
payment credit of $3,846.15, and make no additional payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate PN program investment
option if you are invested more aggressively than the Moderate PN program
investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $96,154 and receive a purchase
payment credit of $3,846.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
118 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $96,154 and receive a purchase
payment credit of $3,846.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive
investment option. The target PN program investment option under the contract
is the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate PN program investment option if you are
invested more aggressively than the Moderate PN program investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $96,154 and receive a purchase
payment credit of $3,846.
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the Waiting Period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
120 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: SECURESOURCE SERIES OF RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
SecureSource series of riders to satisfy the RMD rules under 401(a)(9) of the
Code without application of the excess withdrawal processing described in the
rider. We reserve the right to modify this administrative practice at any time
upon 30 days' written notice to you.
For SecureSource Stages and SecureSource 20 riders, owners subject to annual RMD
rules under Section 401(a)(9) of the Code, withdrawing from this contract during
the waiting period to satisfy these rules will set your benefits to zero and you
will not receive any future rider credit.
Amounts you withdraw from this contract (for SecureSource Stages and
SecureSource 20 riders, amounts you withdraw from this contract after the
waiting period) to satisfy these rules are not subject to excess withdrawal
processing under the terms of the rider subject to the following rules and our
current administrative practice:
For SecureSource and SecureSource 20 riders:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year*,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource series of riders.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current contract year,*
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year*.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
series of riders.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
For SecureSource Stages and SecureSource Stages 2 riders:
(1) Each calendar year, if your ALERMDA is greater than the ALP,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the ALP.
- The LABA will be reduced by the total of the amount that each withdrawal
in the current calendar year exceeds the RALP at the time of each
withdrawal, but shall not be reduced to less than zero.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
Stages and SecureSource Stages 2.
* For SecureSource 20 riders, adjusted for any subsequent changes between 5%
and 6% as described under "GBP Percentage and ALP Percentage".
The ALERMDA is:
(1) determined by us each calendar year (for SecureSource Stages and
SecureSource 20 riders, starting with the calendar year in which the waiting
period ends);
(2) based on your initial purchase payment and not the entire interest value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource Series
rider is attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your rider within the
SecureSource series of riders may not be sufficient to satisfy the requirements
under the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your available
RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP
as described under the excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing one of the SecureSource series of riders.
--------------------------------------------------------------------------------
122 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR(R)
ASSUMPTIONS FOR THE CURRENT CONTRACT:
You purchase the contract with a payment of $100,000 and you are under age 70;
and
we add a $4,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $106,000. The
MAV Death Benefit equals the contract value less any purchase payment
credits added in the last 12 months, or $102,000. You have not reached the
first contract anniversary so the Benefit Protector does not provide any
additional benefit at this time.
ASSUMPTIONS FOR THE ORIGINAL CONTRACT:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
we add a $5,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $106,000.
The MAV Death Benefit equals the contract value less any purchase
payment credits added in the last 12 months, or $101,000. You have
not reached the first contract anniversary so the Benefit Protector
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
The MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV Death Benefit minus remaining purchase payments for
the Current Contract or MAV Death Benefit minus payments not
previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
The MAV Death Benefit: $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 8% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to an 8%
surrender charge because your payment is in the third year of the
surrender charge schedule, so we will surrender $39,500
($36,340 + $3,160 in surrender charges) from your contract value.
Altogether, we will surrender $50,000 and pay you $46,840. We
calculate purchase payments not previously surrendered as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
surrender is contract earnings). The death benefit equals:
The MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old. The death benefit equals:
The MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 123
During the tenth contract year you make an additional purchase
payment of $50,000 and we add a purchase payment credit of $2,500.
Your new contract value is now $252,500. The new purchase payment is
less than one year old and so it has no effect on the Benefit
Protector value. The death benefit equals:
The MAV Death Benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$252,500 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
The MAV Death Benefit (contract value): $252,500
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV Death Benefit minus payments not previously
surrendered):
0.40 x ($252,500 - $105,000) = +59,000
--------
Total death benefit of: $311,500
--------------------------------------------------------------------------------
124 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR(R) PLUS
ASSUMPTIONS FOR THE CURRENT CONTRACT:
You purchase the contract with a payment of $100,000 and you are under age 70;
and
we add a $4,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $106,000. The
MAV Death Benefit equals the contract value, less any purchase payment
credits added to the contract in the last 12 months, or $102,000. You have
not reached the first contract anniversary so the Benefit Protector Plus
does not provide any additional benefit at this time.
ASSUMPTIONS FOR THE ORIGINAL CONTRACT:
You purchase the contract with a payment of $100,000 and you and the annuitant
are under age 70; and
we add a $5,000 purchase payment credit to your contract. You select the MAV
Death Benefit.
During the first contract year the contract value grows to $106,000.
The MAV Death Benefit equals the contract value, less any purchase
payment credits added to the contract in the last 12 months, or
$101,000. You have not reached the first contract anniversary so the
Benefit Protector Plus does not provide any additional benefit at
this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any additional benefit
beyond what is provided by the Benefit Protector at this time. The
death benefit equals:
The MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus remaining purchase
payments for the Current Contract or MAV Death Benefit minus
payments not previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
The MAV Death Benefit: $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 8% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to an 8%
surrender charge because your payment is in its third year of the
surrender charge schedule, so we will surrender $39,500 ($36,340 +
$3,160 in surrender charges) from your contract value. Altogether,
we will surrender $50,000 and pay you $46,840. We calculate purchase
payments not previously surrendered as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial surrender is contract
earnings). The death benefit equals:
The MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 125
On the third contract anniversary the contract value falls $40,000.
The death benefit equals the previous death benefit. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
The MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000 and we add a purchase payment credit of $2,500.
Your new contract value is now $252,500. The new purchase payment is
less than one year old and so it has no effect on the Benefit
Protector Plus value. The death benefit equals:
The MAV Death Benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$252,500 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
The MAV Death Benefit (contract value): $252,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously surrendered):
0.40 x ($252,500 - $105,000) = +59,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $322,500
--------------------------------------------------------------------------------
126 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts, any GPAs that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts, any GPAs according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs that make up the
model portfolio you selected and the allocation percentages to those
subaccounts, any GPAs will not change unless we adjust the composition of the
model portfolio to reflect the liquidation, substitution or merger of an
underlying fund, a change of investment objective by an underlying fund or when
an underlying fund stops selling its shares to the variable account. We reserve
the right to change the terms and conditions of the asset allocation program
upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 127
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
you purchase your contract with application signed on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the annuitization start
date (see "Buying Your Contract -- The Annuitization Start Date"). Before the
annuitization start date, you have the right to surrender some or all of your
contract value, less applicable administrative, surrender and rider charges
imposed under the contract at the time of the withdrawal (see "Making the Most
of Your Contract -- Surrenders"). Because your contract value will fluctuate
depending on the performance of the underlying funds in which the subaccounts
invest, the contract itself does not guarantee that you will be able to take a
certain withdrawal amount each year before the annuitization start date, nor
does it guarantee the length of time over which such withdrawals can be made
before the annuitization start date.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
128 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any partial withdrawals
you take under the contract will reduce the value of the death benefits (see
"Benefits in Case of Death"). Upon full withdrawal of the contract, you will
receive the remaining contract value less any applicable charges (see "Making
the Most of Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your PN program investment option, the rider charge may
change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant except as otherwise provided below (see "At Death" heading
below). Therefore, if there are multiple contract owners or the annuitant
is not an owner, the rider may terminate or the lifetime withdrawal
benefit may be reduced. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 129
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program.") You may
allocate purchase payments and any purchase payment credits to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen. Subject to state restrictions, we reserve
the right to limit the number of investment options from which you can select
based on the dollar amount of purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or after the annuitization start date.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable to the extent
of earnings. Withdrawals before age 59 1/2 may also incur a 10% IRS early
withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
130 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The ALERMDA is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any surrender charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment plus any
purchase payment credits.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment plus any purchase
payment credits.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 131
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credits. The step up reversal
will only happen once during the waiting period, when the first partial
withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credits.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment plus any purchase payment credits).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credits. The step up reversal
will only happen once during the waiting period, when the first partial
withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase
--------------------------------------------------------------------------------
132 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
payment has its own GBP, which is equal to the lesser of that payment's RBA or
7% of that payment's GBA, and the total GBP is the sum of the individual GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount plus any purchase
payment credits.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment plus any purchase payment credits. Each
payment's GBP will be reset to 7% of that purchase payment. The step up
reversal will only happen once during the waiting period, when the first
partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment plus any purchase payment credits multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 133
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments plus any purchase
payment credits multiplied by 6%. The step up reversal will only happen once
during the waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. Please note that if the partial withdrawal is made
during the waiting period, the excess withdrawal processing are applied
AFTER any previously applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments plus any purchase payment
credits.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments plus
any purchase payment credits, multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS
--------------------------------------------------------------------------------
134 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
WITHDRAWAL PROCESSING IS APPLIED and the amount available for future partial
withdrawals for the remainder of the contract's life may be reduced by more
than the amount of withdrawal. When determining if a withdrawal will result in
excess withdrawal processing, the applicable RALP will not yet reflect the
amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 135
age 65 as the lesser of the RBA or the contract anniversary value, multiplied
by 6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero. We will notify you of this option. If
no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
--------------------------------------------------------------------------------
136 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments plus any purchase payments
credits multiplied by 6%. If the anniversary date occurs at any other time,
the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
plus any purchase payments credits multiplied by 6%. If the ownership change
date occurs at any other time, the RALP will be set equal to the ALP less all
prior withdrawals made in the current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments plus
any purchase payment credits multiplied by 6%. If the time period ends at any
other time, the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 137
be reset to the lesser of the ALP or total purchase payments plus any purchase
payments credits multiplied by 6%. If the ownership change date occurs at any
other time, the RALP will be reset to the ALP less all prior withdrawals made
in the current contract year but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
withdrawal Benefit for Life(R) rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a $96,154 purchase payment with a $3,846
purchase payment credit.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
--------------------------------------------------------------------------------
138 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a $96,154 purchase payment with a $3,846
purchase payment credit.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR WITHDRAWAL BENEFIT RIDER
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
RIDER A
you purchase(d) your contract with application signed on or after April 30,
2005 in those states where the SecureSource rider and/or the Guarantor
Withdrawal Benefit for Life rider are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
you purchased your contract with application signed prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a surrender
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
surrender charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial surrender that is subject to a withdrawal charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable surrender charge (see "Charges -- Surrender Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Surrenders").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuitization start date. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
140 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
I: Asset Allocation Program for Contracts Purchased Before May 1, 2006"),
however, you may elect to participate in the Portfolio Navigator program after
May 1, 2006. The PN program and the asset allocation program limit your choice
of subaccounts, one-year fixed account and GPAs (if available) to PN program
investment options you have selected. This means you will not be able to
allocate contract value to all of the subaccounts, GPAs or the one-year fixed
account that are available under the contract to contract owners who do not
elect this rider. You may allocate purchase payments and any purchase payment
credits to the DCA fixed account, when available, and we will make monthly
transfers into the investment option you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw in each contract year without incurring a
surrender charge (see "Charges -- Surrender Charge"). The FA may be greater
than GBP under this rider. Any amount you withdraw under the contract's FA
provision that exceeds the GBP is subject to the excess withdrawal processing
for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or after the
annuitization start date.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals are taxable to the extent
of earnings. Withdrawals before age 59 1/2 may also incur a 10% IRS early
withdrawal penalty.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules without applying excess
withdrawal processing under terms of the rider, subject to the following
rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). You should consult your
tax advisor before you select this optional rider if you have any questions
about the use of this rider in your tax situation;
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups:
--------------------------------------------------------------------------------
142 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or
--------------------------------------------------------------------------------
144 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP and RBP, and may extend the
payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 145
been paid; the GBA will be reset to the greater of the GBA on the valuation date
we receive the spouse' written request to continue the contract and the death
benefit that would otherwise have been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor(R) Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor(R)
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000; and
we add a purchase payment credit of $5,000 to your contract.
The Guaranteed Benefit Amount (GBA) equals your purchase payment
plus the purchase payment credit: $105,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $105,000 = $ 7,350
The Remaining Benefit Amount (RBA) equals your purchase payment plus
the purchase payment credit: $105,000
On the first contract year the contract value grows to $110,000. You
decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract anniversary you decide to take a partial
withdrawal of $7,700
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
--------------------------------------------------------------------------------
146 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
On the fourth contract anniversary you make an additional purchase
payment of $50,000. We add a purchase payment credit of $2,500 to
your contract. The new RBA for the contract is equal to your prior
RBA plus 100% of the additional purchase payment and purchase
payment credit:
$102,300 + $52,500 = $154,800
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment and purchase payment credit:
$110,000 + $52,500 = $162,500
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment and purchase payment credit:
$7,700 + $3,675 = $ 11,375
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eight contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 147
APPENDIX K : EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if your contract application is signed prior to May 1, 2007. These
riders are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits,
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial surrender (including any
withdrawal charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
--------------------------------------------------------------------------------
148 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
the annuitant on the annuitization start date must be between 50 to 86 years
old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full surrender from the
contract, or on the annuitization start date, or on the date that a death
benefit is payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 149
when a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit(R) - MAV is
the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial withdrawals. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus any purchase payment credits, less excluded
payments, less proportionate adjustments for partial surrenders; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, any credits, and partial
surrenders occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer
Benefit(R) 5% variable account floor is calculated differently and is not the
same value as the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial withdrawals and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and purchase payment
credits to or withdraw or transfer amounts from the protected investment
options, we adjust the variable account floor by adding the additional purchase
payment and any purchase payment credit and subtracting
--------------------------------------------------------------------------------
150 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
adjusted withdrawals and adjusted transfers. On each subsequent contract
anniversary after the first anniversary of the effective date of this rider,
prior to the earlier of your or the annuitant's 81st birthday, we increase the
variable account floor by adding the amount ("roll-up amount") equal to 5% of
the prior contract anniversary's variable account floor.
The amount of purchase payment and any purchase payment credits withdrawn from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being withdrawn or transferred on the date of but prior
to the current surrender or transfer; and
(b) is the ratio of the amount of the transfer or surrender to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current surrender or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted surrenders and adjusted transfers for the variable account floor are
equal to the amount of the withdrawal or transfer from the protected investment
options as long as the sum of the withdrawal and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current withdrawal or transfer from the protected investment options plus
the sum of all prior surrenders and transfers made from the protected investment
options in the current policy year exceeds the roll-up amount from the prior
contract anniversary we will calculate the adjusted surrender or adjusted
transfer for the variable account floor as the result of (a) plus [(b) times
(c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any withdrawals and transfers made from the protected investment options
in the current policy year but prior to the current withdrawal or
transfer. However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
surrender or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current surrender (including any
withdrawal charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current surrender or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to
the contract minus proportionate adjustments for partial surrenders;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders;
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 151
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to participate in the PN program. The
riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program investment options
include protected investment options and excluded investment options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and/or the one-year fixed account). Excluded Investment Options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base riders. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000 and we add a $5,000 purchase payment credit; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial surrenders or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED PURCHASE MAXIMUM GUARANTEED
CONTRACT CONTRACT PAYMENTS ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE AND CREDITS VALUE (MAV)(1) BASE - MAV(2)
----------------------------------------------------------------------------------
1 $113,000 $105,000 $113,000 $113,000
2 131,000 105,000 131,000 131,000
3 138,000 105,000 138,000 138,000
4 157,000 105,000 157,000 157,000
5 89,000 105,000 157,000 157,000
6 126,000 105,000 157,000 157,000
7 145,000 105,000 157,000 157,000
8 159,000 105,000 159,000 159,000
9 146,000 105,000 159,000 159,000
10 181,000 105,000 181,000 181,000
11 147,000 105,000 181,000 181,000
12 154,000 105,000 181,000 181,000
13 216,000 105,000 216,000 216,000
14 206,000 105,000 216,000 216,000
15 211,000 105,000 216,000 216,000
----------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be surrendered. The Guaranteed Income Benefit Base - MAV
does not create contract value or guarantee the performance of any
investment option.
--------------------------------------------------------------------------------
152 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $181,000 $ 803.64 $ 805.45 $181,000 $ 803.64
11 147,000 668.85 670.32 181,000 823.55
12 154,000 719.18 720.72 181,000 845.27
13 216,000 1,034.64 1,036.80 216,000 1,034.64
14 206,000 1,013.52 1,015.58 216,000 1,062.72
15 211,000 1,065.55 1,067.66 216,000 1,090.80
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 805.45
11 825.36
12 847.08
13 1,036.80
14 1,064.88
15 1,092.96
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN B - LIFE WITH IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) 10 YEARS CERTAIN(2) BENEFIT BASE SURVIVOR NO REFUND(2)
----------------------------------------------------------------------------------------------------------------------
10 $181,000 $655.22 $647.98 $181,000 $655.22
11 147,000 543.90 538.02 181,000 669.70
12 154,000 582.12 575.96 181,000 684.18
13 216,000 838.08 827.28 216,000 838.08
14 206,000 817.82 809.58 216,000 857.52
15 211,000 858.77 850.33 216,000 879.12
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $647.98
11 662.46
12 676.94
13 827.28
14 848.88
15 870.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 153
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED PURCHASE BENEFIT BASE -
CONTRACT CONTRACT PAYMENTS 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE AND CREDITS BENEFIT BASE(1) BENEFIT BASE(2)
------------------------------------------------------------------------------------
1 $113,000 $105,000 $110,250 $113,000
2 131,000 105,000 115,763 131,000
3 138,000 105,000 121,551 138,000
4 157,000 105,000 127,628 157,000
5 89,000 105,000 134,010 134,010
6 126,000 105,000 140,710 140,710
7 145,000 105,000 147,746 147,746
8 159,000 105,000 155,133 159,000
9 146,000 105,000 162,889 162,889
10 181,000 105,000 171,034 181,000
11 147,000 105,000 179,586 179,586
12 154,000 105,000 188,565 188,565
13 216,000 105,000 197,993 216,000
14 206,000 105,000 207,893 207,893
15 211,000 105,000 218,287 218,287
------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------
CONTRACT ASSUMED NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY CONTRACT PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------
10 $181,000 $ 803.64 $ 805.45 $181,000 $ 803.64
11 147,000 668.85 670.32 179,586 817.11
12 154,000 719.18 720.72 188,565 880.60
13 216,000 1,034.64 1,036.80 216,000 1,034.64
14 206,000 1,013.52 1,015.58 207,893 1,022.83
15 211,000 1,065.55 1,067.66 218,287 1,102.35
----------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 805.45
11 818.91
12 882.48
13 1,036.80
14 1,024.91
15 1,104.53
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
154 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN B - LIFE WITH IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) 10 YEARS CERTAIN(2) BENEFIT BASE SURVIVOR NO REFUND(2)
----------------------------------------------------------------------------------------------------------------------
10 $181,000 $655.22 $647.98 $181,000 $655.22
11 147,000 543.90 538.02 179,586 664.47
12 154,000 582.12 575.96 188,565 712.78
13 216,000 838.08 827.28 216,000 838.08
14 206,000 817.82 809.58 207,893 825.33
15 211,000 858.77 850.33 218,287 888.43
----------------------------------------------------------------------------------------------------------------------
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $647.98
11 657.28
12 705.23
13 827.28
14 817.02
15 879.70
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
PURCHASE MAXIMUM MAV OR 5%
CONTRACT ASSUMED PAYMENTS ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY CONTRACT VALUE AND CREDITS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
-------------------------------------------------------------------------------------------------------------
1 $113,000 $105,000 $113,000 $110,250 $113,000
2 131,000 105,000 131,000 115,763 131,000
3 138,000 105,000 138,000 121,551 138,000
4 157,000 105,000 157,000 127,628 157,000
5 89,000 105,000 157,000 134,010 157,000
6 126,000 105,000 157,000 140,710 157,000
7 145,000 105,000 157,000 147,746 157,000
8 159,000 105,000 159,000 155,133 159,000
9 146,000 105,000 159,000 162,889 162,889
10 181,000 105,000 181,000 171,034 181,000
11 147,000 105,000 181,000 179,586 181,000
12 154,000 105,000 181,000 188,565 188,565
13 216,000 105,000 216,000 197,993 216,000
14 206,000 105,000 216,000 207,893 216,000
15 211,000 105,000 216,000 218,287 218,287
-------------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 155
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $181,000 $ 803.64 $ 805.45 $181,000 $ 803.64
11 147,000 668.85 670.32 181,000 823.55
12 154,000 719.18 720.72 188,565 880.60
13 216,000 1,034.64 1,036.80 216,000 1,034.64
14 206,000 1,013.52 1,015.58 216,000 1,062.72
15 211,000 1,065.55 1,067.66 218,287 1,102.35
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 805.45
11 825.36
12 882.48
13 1,036.80
14 1,064.88
15 1,104.53
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $181,000 $655.22 $647.98 $181,000 $655.22
11 147,000 543.90 538.02 181,000 669.70
12 154,000 582.12 575.96 188,565 712.78
13 216,000 838.08 827.28 216,000 838.08
14 206,000 817.82 809.58 216,000 857.52
15 211,000 858.77 850.33 218,287 888.43
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $647.98
11 662.46
12 705.23
13 827.28
14 848.88
15 879.70
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
156 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX L: EXAMPLE -- ACCUMULATION PROTECTOR RIDER DISCLOSURE
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit that you may
select for an additional charge. The Accumulation Protector Benefit rider may
provide a guaranteed contract value at the end of the specified waiting period
on the benefit date, but not until then, under the following circumstances:
------------------------------------------------------------------------------------------------
THEN YOUR ACCUMULATION PROTECTOR BENEFIT RIDER
ON THE BENEFIT DATE, IF: BENEFIT IS:
------------------------------------------------------------------------------------------------
The Minimum Contract Accumulation Value The contract value is increased on the benefit
(defined below) as determined under the date to equal the Minimum Contract
Accumulation Protector Benefit rider is Accumulation Value as determined under the
greater than your contract value, Accumulation Protector Benefit rider on the
benefit date.
------------------------------------------------------------------------------------------------
The contract value is equal to or greater than Zero; in this case, the Accumulation Protector
the Minimum Contract Accumulation Value as Benefit rider ends without value and no
determined under the Accumulation Protector benefit is payable.
Benefit rider,
------------------------------------------------------------------------------------------------
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: If you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
If this rider is available in your state, you may elect the Accumulation
Protector Benefit rider at the time you purchase your contract and the rider
effective date will be the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further fees for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial surrenders or make a full surrender; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource, Guarantor Withdrawal Benefit for Life or the Guarantor Withdrawal
Benefit riders or any Income Assurer Benefit rider.
The Accumulation Protector Benefit rider may not be available in all states.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This limits your choice of investments. This means
you will not be able to allocate contract value to all of the subaccounts,
GPAs or the one-year fixed account that are available under the contract to
contract owners who do not elect this rider;
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider;
if you purchase this annuity as a qualified annuity, for example, an IRA, you
may need to take partial surrenders from your contract to satisfy the minimum
distribution requirements of the Code (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Partial surrenders, including
those used to satisfy RMDs, will reduce any potential benefit that the
Accumulation Protector Benefit rider provides. You should consult your tax
advisor if you have any questions about the use of this rider in your tax
situation;
if you think you may surrender all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the Elective Step Up Option (described below) or your
surviving spouse exercises the spousal continuation Elective Step Up
(described below); and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 157
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change PN program investment option to one that
causes the Accumulation Protector Benefit rider charge to increase (see
"Charges").
Be sure to discuss with your investment professional whether a Accumulation
Protector Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL SURRENDERS: The adjustment made for each partial
surrender from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial surrender to the contract value on the date of (but
immediately prior to) the partial surrender; and
(b) is the MCAV on the date of (but immediately prior to) the partial surrender.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your asset allocation model after we have exercised
our rights to increase the rider charge for new contract owners, or if you
change your PN program investment option after we have exercised our rights to
charge a separate charge for each investment option.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credit. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by adjustments for any partial
surrenders made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the elective step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The elective step up option is not available to non-spouse beneficiaries that
continue the contract during the waiting period.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
--------------------------------------------------------------------------------
158 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up. In addition, the waiting period will restart as of the most recent
contract anniversary.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full surrender; or
- annuitization begins; or
- the contract terminates as a result of the death benefit being paid.
- when a beneficiary elects an alternative payment plan which is an inherited
IRA.
The rider will terminate on the benefit date.
EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
THE EXAMPLE ASSUMES:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
PARTIAL MCAV HYPOTHETICAL
END OF SURRENDER ADJUSTMENT ACCUMULATION ASSUMED
CONTRACT (BEGINNING FOR PARTIAL BENEFIT CONTRACT
YEAR OF YEAR) SURRENDER MCAV AMOUNT VALUE
1 $ 0 $ 0 $100,000 $ 0 $112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 159
APPENDIX M: SECURESOURCE RIDER DISCLOSURE
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
--------------------------------------------------------------------------------
160 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any withdrawals you take
under the contract will reduce the value of the death benefits (see "Benefits in
Case of Death"). Upon full withdrawal of the contract, you will receive the
remaining contract value less any applicable charges (see "Making the Most of
Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 161
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate qualifying purchase payments and
purchase payment credits to the DCA fixed account, when available (see "DCA
Fixed Account"), and we will make monthly transfers into the investment option
you have chosen. You may make two elective investment option changes per
contract year; we reserve the right to limit elective investment option
changes if required to comply with the written instructions of a fund (see
"Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model changes per contract year and
will not cause your rider fee to increase. The target investment option is
currently the Moderate investment option. We reserve the right to change the
target investment option to an investment option that is more aggressive than
the current target investment option after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option investment
option that is more conservative than the target investment option without a
benefit reset as described below. If you are in a withdrawal phase and you
choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, your rider benefit will be reset
as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered spouse who is the owner of the contract (or
annuitant in the case of nonnatural ownership). The rider will terminate at
the
--------------------------------------------------------------------------------
162 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
death of the contract owner (or annuitant in the case of nonnatural ownership)
because the original spouse will be unable to elect the spousal continuation
provision of the contract (see "Joint Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Withdrawals in any contract year that exceed the guaranteed amount available
for withdrawal may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix E for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 163
interim value used to calculate the amount available for withdrawals each year
under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At
any time, the total GBA is the sum of the individual GBAs associated with each
purchase payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment plus any purchase payment credit).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credit. The step up reversal
will only happen once during the waiting period, when the first withdrawal is
made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
--------------------------------------------------------------------------------
164 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount plus any purchase
payment credit.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment plus any purchase payment credit. Each
payment's GBP will be reset to 7% of that purchase payment plus any purchase
payment credit. The step up reversal will only happen once during the waiting
period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the
lesser of that payment's RBA or 7% of that payment's GBA value, based on
the RBA and GBA after the withdrawal. If the withdrawal is made during
the waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment plus any purchase payment credit multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 165
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments plus any purchase
payment credits multiplied by 6%. The step up reversal will only happen once
during the waiting period, when the first withdrawal is made.
--------------------------------------------------------------------------------
166 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups and purchase
payment credits may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS PURCHASED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments plus any purchase payment
credits.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments plus
any purchase payment credits, multiplied by 6%.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 167
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount plus any purchase
payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix E for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
--------------------------------------------------------------------------------
168 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 169
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
--------------------------------------------------------------------------------
170 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments plus any purchase
payment credits multiplied by 6%. If the anniversary date occurs at any other
time, the RALP will be set equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments plus any
purchase payment credits multiplied by 6%. If the ownership change date occurs
at any other time, the RALP will be set to the ALP less all prior withdrawals
made in the current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments plus
any purchase payment credits multiplied by 6%. If the time period ends at any
other time, the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments plus any purchase payment credits
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be reset to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 171
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
172 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX N: SECURESOURCE 20 RIDER DISCLOSURE
SECURESOURCE 20 RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary values. The SecureSource 20
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw your principal over time. This benefit
is intended for assets you plan to hold and let accumulate for at least three
years. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be re-established based on your contract value at that time and you will not
receive 20% credit offered under this rider.
There are two optional SecureSource 20 riders available under your contract:
SecureSource 20 -- Single Life; or
SecureSource 20 -- Joint Life.
The information in this section applies to both Secure Source 20 riders, unless
otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource 20 -- Single Life rider covers one person. The SecureSource
20 -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource 20 -- Single Life rider or the
SecureSource 20 -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource 20 rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if:
your contract application is signed on or after Aug. 10, 2009, but prior to
Nov. 30, 2009; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource 20 riders are not available under an inherited qualified
annuity.
The SecureSource 20 rider guarantees that after the waiting period, regardless
of the investment performance of your contract, you will be able to withdraw up
to a certain amount each year from the contract before the annuity payouts begin
until:
SINGLE LIFE: until death (see "At Death" heading below) or until the depletion
of the basic benefit.
JOINT LIFE: until the death of the last surviving covered spouse (see "Joint
Life only: Covered Spouses" and "At Death" headings below) or until the
depletion of the basic benefit.
KEY TERMS
The key terms associated with the SecureSource 20 rider are:
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and until your death (JOINT LIFE: the
death of both covered spouses). After the waiting period, the annual withdrawal
amount guaranteed by the rider can vary each contract year. The maximum ALP is
$300,000.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): the age at which the lifetime
benefit is established.
ENHANCED LIFETIME BASE (ELB): used in the calculation of the ALP on the later of
the ELB date or the establishment of the ALP. The ELB cannot be withdrawn or
annuitized and is not payable as a death benefit.
GUARANTEED BENEFIT AMOUNT (GBA): the total cumulative withdrawals guaranteed by
the rider under the basic benefit. The maximum GBA is $5,000,000. The GBA cannot
be withdrawn or annuitized and is not payable as a death benefit. It is an
interim value used to calculate the amount available for withdrawals each year
after the waiting period under the basic benefit (see "Guaranteed Benefit
Payment" below). At any time, the total GBA is the sum of the individual GBAs
associated with each purchase payment.
GUARANTEED BENEFIT PAYMENT (GBP): the basic benefit amount available each
contract year after the waiting period until the RBA is reduced to zero. After
the waiting period the annual withdrawal amount guaranteed by the rider can vary
each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 173
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. The RALP is the lifetime benefit amount
that can be withdrawn during the remainder of the current contract year.
REMAINING BENEFIT AMOUNT (RBA): each withdrawal you make reduces the amount that
is guaranteed by the rider for future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
REMAINING BENEFIT PAYMENT (RBP): as you make withdrawals during a contract year,
the remaining amount that the rider guarantees will be available for withdrawal
that year is reduced. The RBP is the basic benefit amount that can be withdrawn
during the remainder of the current contract year.
WAITING PERIOD: The period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
GBP Percentage and ALP Percentage. The WAB cannot be withdrawn or annuitized and
is not payable as a death benefit.
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
DESCRIPTION OF THE SECURESOURCE 20 RIDER
Before the lifetime benefit is established, the annual withdrawal amount
guaranteed by the riders after the waiting period is the basic benefit amount.
After the lifetime benefit is established and after the waiting period, the
riders guarantee that you have the option each contract year to cumulatively
withdraw an amount up to the lifetime benefit amount or the basic benefit
amount, but the riders do not guarantee withdrawal of both in a contract year.
The lifetime withdrawal benefit is established automatically:
SINGLE LIFE: on the rider anniversary date after the covered person reaches
age 65, or on the rider effective date if the covered person is age 65 or
older on the rider effective date (see "Annual Lifetime Payment Attained Age
(ALPAA)" heading below);
JOINT LIFE: on the rider anniversary date after the younger covered spouse
reaches age 65, or on the rider effective date if the younger covered spouse
is age 65 or older on the rider effective date (see "Annual Lifetime Payment
Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below).
The basic benefit amount and the lifetime benefit amount can vary based on the
relationship of your contract value to the Withdrawal Adjustment Base (WAB).
When the first withdrawal is taken each contract year after the waiting period,
the percentages used to determine the benefit amounts are set and fixed for the
remainder of that year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next year.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic benefit and lifetime benefit each has its own definition
of the allowed annual withdrawal amount. Therefore a withdrawal may be
considered an excess withdrawal for purposes of the lifetime benefit only, the
basic benefit only, or both.
At any time after the waiting period, as long as your withdrawal does not exceed
the greater of the basic benefit amount or the lifetime benefit amount, if
established, you will not be assessed a surrender charge or any market value
adjustment. If your withdrawals exceed the greater of the RBP or the RALP,
surrender charges under the terms of the contract may apply (see
"Charges -- Surrender Charges"). The amount we actually deduct from your
contract value will be the amount you request plus any applicable surrender
charge. Market value adjustments, if applicable, will also be made (see
"Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the
amount you request. Any withdrawals you take under the contract will reduce the
value of the death benefits (see "Benefits in Case of Death"). Upon full
withdrawal, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
Subject to conditions and limitations, an annual step-up can increase the basic
benefit amount and the lifetime benefit amount, if your contract value has
increased on a rider anniversary.
--------------------------------------------------------------------------------
174 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
Subject to conditions and limitations, if no withdrawals are taken prior to the
third rider anniversary, the 20% rider credit may increase the lifetime benefit
(if already established) or the Enhanced Lifetime Base (ELB) may increase the
lifetime benefit (when established).
The values associated with the basic benefit are GBA, RBA, GBP and RBP. The
values associated with the lifetime benefit are ALP, RALP and ELB. ALP and GBP
are similar in that they are the annual withdrawal amount for each benefit after
the waiting period. RALP and RBP are similar in that they are the remaining
amount that can be withdrawn during the current contract year for each benefit.
IMPORTANT SECURESOURCE 20 RIDER CONSIDERATIONS
You should consider whether a SecureSource 20 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the first death of any owner or
annuitant even if the covered person is still living (see "At Death"
heading below). Therefore, the rider will terminate when a death benefit
becomes payable. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the lifetime benefit terminates even though other contract
owners are still living; or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the lifetime benefit terminates even
though the owner is still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the death of the last surviving covered
spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If both the ALP and the
contract value are zero, the lifetime benefit will terminate.
(c) If the lifetime benefit is first established prior to the third rider
anniversary, the initial ALP is based on the basic benefit's RBA at that
time (see "Annual Lifetime Payment (ALP)" heading below). If the lifetime
benefit is first established on/after the third rider anniversary, the
initial ALP is based on the greater of the basic benefit's RBA and the ELB
at that time. Any withdrawal you take before the ALP is established
reduces the RBA and ELB and therefore may result in a lower amount of
lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be re-established based on your contract value at that time and you will
not receive 20% credit offered under this rider. Any withdrawal request within
the 3-year waiting period must be submitted in writing. Also, after the
waiting period if you withdraw more than the allowed withdrawal amount in a
contract year ("excess withdrawal"), the guaranteed amounts under the rider
may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of subaccounts, one-year fixed account and GPAs
(if available) to the PN program investment options (if applicable) you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect the rider. (See "Making the
Most of Your Contract -- Portfolio Navigator Program.") You may allocate
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the investment option you have chosen. You may make two
elective investment option changes per contract year; we reserve the right to
limit elective investment option changes if required to comply with the
written instructions of a fund (see "Market Timing").
You can allocate your contract value to any available investment options during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior to
any subsequent withdrawal. During these accumulation phases, you may request to
change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 175
portfolio, this reallocation will be made to the applicable fund of funds
investment option. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option classification is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment option
that is more aggressive than the current target investment option after 30 days
written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase and
you choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, you will be in the accumulation
phase again. If this is done after the waiting period, your rider benefit will
be reset as follows:
(a) the total GBA will be reset to the contract value, if your contract value
is less; and
(b) the total RBA will be reset to the contract value, if your contract value
is less; and
(c) the ALP, if established, will be reset to your current ALP Percentage
(either 6% or 5% as described under "GBP Percentage and ALP Percentage"
heading below) times the contract value, if this amount is less than the
current ALP; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(g) the WAB will be reset as follows:
- if the ALP has not been established, the WAB will be equal to the reset
GBA.
if the ALP has been established, the WAB will be equal to the reset ALP,
divided by the current ALP Percentage; and
(h) the ELB, if greater than zero, will be reset to the contract value, if
your contract value is less.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource 20 rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource 20 - Joint Life
rider and will not reduce the fee we charge for this rider. The benefit under
the SecureSource 20 - Joint Life rider continues for the covered spouse who is
the owner of the contract (or annuitant in the case of nonnatural ownership).
The rider will terminate at the death of the contract owner (or annuitant in
the case of nonnatural ownership) because the original covered spouse will be
unable to elect the spousal continuation provision of the contract (see "Joint
Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary. The
annuitant must also be an owner. For non-natural ownership arrangements that
allow for spousal continuation one covered spouse should be the annuitant and
the other covered spouse should be the sole primary beneficiary. For revocable
trust ownerships, the grantor of the trust must be the annuitant and the
beneficiary must either be the annuitant's spouse or a trust that names the
annuitant's spouse as the sole primary beneficiary. You are responsible for
establishing ownership arrangements that will allow for spousal continuation.
If you select the SecureSource 20 - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse can not
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds
--------------------------------------------------------------------------------
176 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
the RBP or RALP is subject to the excess withdrawal processing described below
for the GBA, RBA and ALP. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
BASIC BENEFIT DESCRIPTION
THE GBA AND RBA ARE DETERMINED AT THE FOLLOWING TIMES, SUBJECT TO THE MAXIMUM
AMOUNT OF $5,000,000, CALCULATED AS DESCRIBED:
At contract issue -- the GBA and RBA are equal to the initial purchase
payment.
When you make additional purchase payments -- If a withdrawal is taken during
the waiting period, the GBA and RBA will not change when a subsequent purchase
payment is made during the waiting period. Prior to any withdrawal during the
waiting period and after the waiting period, each additional purchase payment
will have its own GBA and RBA established equal to the amount of the purchase
payment.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you take a withdrawal during the waiting period -- the total GBA and
total RBA will be set equal to zero until the end of the waiting period.
When you take a withdrawal after the waiting period and the amount withdrawn
is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal and the GBA remains unchanged. If there have been
multiple purchase payments, both the total GBA and each payment's GBA
remain unchanged, and each payment's RBA is reduced in proportion to its
RBP.
(b) greater than the total RBP -- EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE GBA AND RBA.
On the rider anniversary at the end of the waiting period -- If the first
withdrawal is taken during the waiting period and you did not decline a rider
fee increase, the total GBA and the total RBA will be reset to the contract
value.
If the first withdrawal is taken during the waiting period and you decline a
rider fee increase, the total GBA and the total RBA will be reset to the
lesser of (1) the GBA at the time of the first withdrawal, plus any additional
purchase payments since the time of the first withdrawal, minus all
withdrawals, or (2) the contract value.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 177
Upon certain changes to your PN program investment options under the PN
program as described under "Use of Portfolio Navigator Program Required,"
above.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GBP PERCENTAGE AND ALP PERCENTAGE: We use two percentages (6% and 5%) to
calculate your GBP and ALP. The percentage used can vary as described below:
During the waiting period, 6% will be used to determine the amount payable to
beneficiaries under the RBA Payout Option described below. After the waiting
period, a comparison of your contract value and the WAB determines your GBP
Percentage and ALP Percentage, unless the percentage is fixed as described
below. On each valuation date, if the benefit determining percentage is less
than the 20% adjustment threshold, then 6% is used in calculating your GBP and
ALP; otherwise, 5% is used. Market volatility and returns, the deduction of fees
and the 20% credit could impact your benefit determining percentage. The benefit
determining percentage is calculated as follows but will not be less than zero:
1 - (A/B)
A = contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
When the first withdrawal in a contract year is taken, the GBP Percentage and
ALP Percentage will be set and fixed for the remainder of that contract year.
Beginning on the next rider anniversary, the GBP Percentage and ALP Percentage
can change on each valuation date as described above until a withdrawal is taken
in that contract year.
Under certain limited situations, your GBP Percentage and ALP Percentage will
not vary each contract year. They will be set at the earliest of (1), (2) or (3)
below and remain fixed for as long as the benefit is payable:
(1) when the RBA Payout Option is elected, or
(2) if the ALP is established, when your contract value on a rider anniversary
is less than two times the ALP (for the purpose of this calculation only,
the ALP is determined using 5%; the ALP Percentage used to determine your
ALP going forward will be either 6% or 5%), or
(3) when the contract value reduces to zero.
For certain periods of time at our discretion and on a non-discriminatory basis,
your GBP Percentage and ALP Percentage may be set by us to 6% if more favorable
to you.
WITHDRAWAL ADJUSTMENT BASE (WAB): One of the components used to determine GBP
Percentage and ALP Percentage. The maximum WAB is $5,000,000. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit,
THE WAB IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At Rider Effective Date -- the WAB is set equal to the initial purchase
payment.
When a subsequent purchase payment is made -- before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB will be
increased by the amount of each additional purchase payment.
--------------------------------------------------------------------------------
178 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
When a withdrawal is taken -- if the first withdrawal is taken during the
waiting period, the WAB will be set equal to zero until the end of the waiting
period.
Whenever a withdrawal is taken after the waiting period, the WAB will be reduced
by the amount in (A) unless the withdrawal is an excess withdrawal for the
lifetime benefit (or the basic benefit if the ALP is not established) when it
will be set equal to the amount in (B).
(A) The WAB is reduced by an amount as calculated below:
A X B
----- where:
C
A = the amount the contract value is reduced by the withdrawal
B = WAB on the date of (but prior to) the withdrawal
C = the contract value on the date of (but prior to) the withdrawal.
(B) If the ALP is not established and the current withdrawal exceeds the RBP,
the WAB will be reset to the GBA immediately following excess withdrawal
processing.
If the ALP is established and the current withdrawal exceeds the RALP, the WAB
will be reset to the ALP divided by the current ALP Percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above). In this
calculation, we use the ALP immediately following excess withdrawal processing.
On rider anniversaries -- unless you decline a rider fee increase, the WAB
will be increased to the contract value on each rider anniversary, if the
contract value is greater, except as follows:
(A) If a withdrawal is taken during the waiting period, the WAB will be
increased to the contract value on each rider anniversary beginning at the
end of the waiting period, if the contract value is greater.
(B) If you decline a rider fee increase and a withdrawal is taken during the
waiting period, the WAB will be reset to the lesser of (1) the GBA at the
time of the first withdrawal, plus any additional purchase payments since
the time of the first withdrawal, minus all withdrawals, or (2) the
contract value.
Upon certain changes to your PN program investment option as described under
"Use of Portfolio Navigator Program Required," above.
On the later of the third rider anniversary or the rider anniversary when the
ALP is established -- unless you decline a rider fee increase, if the ELB is
greater than zero, the WAB will be increased by an amount as calculated below,
but not less than zero.
(A) The ELB, minus
(B) the greater of:
i) your contract value, or
ii) the ALP before the ELB is applied, divided by the ALP Percentage (if
the ALP is established) or the total RBA (if the ALP is established
on the third rider anniversary).
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic benefit. After the waiting period the annual
withdrawal amount guaranteed under the rider can vary each contract year. At any
point in time, each payment's GBP is the lesser of (a) and (b) where (a) is the
GBA for that payment multiplied by the current GBP percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above) and (b) is
the RBA for that payment. The total GBP is the sum of the GBPs for each purchase
payment.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic benefit. At any point in time,
the total RBP is the sum of the RBPs for each purchase payment.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
During the waiting period -- the RBP will be zero.
At the beginning of any contract year after the waiting period and when the
GBP Percentage changes -- the RBP for each purchase payment is set equal to
that purchase payment's GBP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment has its own RBP equal to the purchase payment,
multiplied by the GBP Percentage.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 179
When you make any withdrawal after the waiting period -- the total RBP is
reset to equal the total RBP immediately prior to the withdrawal less the
amount of the withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in the excess withdrawal processing, the applicable RBP will not yet
reflect the amount of the current withdrawal.
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): The ALP is the lifetime benefit amount available
for withdrawals in each contract year after the waiting period until the later
of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
benefit is not in effect and the ALP is zero.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the covered person has already reached age 65.
(b) the rider anniversary following the date the covered person reaches age
65,
- if during the waiting period and no prior withdrawal has been taken; or
- if after the waiting period.
(c) the rider anniversary following the end of the waiting period if the
covered person is age 65 before the end of the waiting period and a prior
withdrawal had been taken.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
JOINT LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
--------------------------------------------------------------------------------
180 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
For (b), (c) and (d) above, if the date described occurs during the waiting
period and a prior withdrawal had been taken, we use the rider anniversary
following the end of the waiting period to establish the ALP.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
Whenever the ALP Percentage changes --
(a) If the ALP Percentage is changing from 6% to 5%, the ALP is reset to the
ALP multiplied by 5%, divided by 6%.
(b) If the ALP Percentage is changing from 5% to 6%, the ALP is reset to the
ALP multiplied by 6%, divided by 5%.
When you make an additional purchase payment -- Before a withdrawal is taken
in the waiting period and at any time after the waiting period, each
additional purchase payment increases the ALP by the amount of the purchase
payment, multiplied by the ALP Percentage.
When you make a withdrawal:
(a) During the waiting period, the ALP, if established, will be set equal to
zero until the end of the waiting period.
(b) After the waiting period, if the amount withdrawn is:
(i) less than or equal to the RALP, the ALP is unchanged.
(ii) greater than the RALP, ALP EXCESS WITHDRAWAL PROCESSING will occur.
If you withdraw less than the ALP in a contract year, there is no carry over
to the next contract year.
On the rider anniversary at the end of the waiting period -- If you took a
withdrawal during the waiting period, the ALP is set equal to the contract
value multiplied by the ALP Percentage if the covered person (JOINT LIFE:
younger covered spouse) has reached age 65.
At step ups -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
Upon certain changes to your PN program investment option under the PN program
as described under "Use of Portfolio Navigator Program Required," above.
20% RIDER CREDIT
If you do not make a withdrawal during the first three rider years and you don't
decline a rider fee increase, then a 20% rider credit may increase your ALP.
This credit is 20% of purchase payments received in the first 180 days that the
rider is in effect and is used to establish the enhanced lifetime base. The
enhanced lifetime base is an amount that may be used to increase the ALP. The
20% rider credit does not increase the basic benefit or the contract value.
Because step ups may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (ELB)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not decline a rider fee increase and you do not make a
withdrawal during the first three rider years, then the enhanced lifetime base
will be the sum of all purchase payments received during the first three rider
years plus the 20% rider credit. If you make a withdrawal during the first three
rider years or decline a rider fee increase, then the 20% rider credit does not
apply and the enhanced lifetime base will be established as zero and will always
be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the contract value (if your contract value is less), if you choose
an asset allocation model that is more aggressive than the target model while
you are in the withdrawal phase.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 181
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You decline a rider fee increase.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn, annuitized or payable as a death benefit.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE
If the ALP is already established, on the third rider anniversary, the ALP will
be increased to equal the enhanced lifetime base multiplied by the ALP
Percentage (either 5% or 6% as described under "GBP Percentage and ALP
Percentage" heading above), if this amount is greater than the current ALP.
Thereafter, the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or the ALP Percentage (either 5% or 6% as described under "GBP Percentage and
ALP Percentage" heading above) multiplied by the contract value immediately
following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime benefit. Prior to
establishment of the ALP, the lifetime benefit is not in effect and the RALP is
zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period -- the RALP will be zero.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals taken in the contract year but not less than zero.
At the beginning of each contract year after the waiting period and when the
ALP Percentage changes -- the RALP is set equal to the ALP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment increases the RALP by the purchase payment, if
applicable multiplied by the ALP Percentage (either 5% or 6% as described
under "GBP Percentage and ALP Percentage" heading above).
At step ups -- (see "Annual Step Up" headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When you make any withdrawal after the waiting period -- the RALP equals the
RALP immediately prior to the withdrawal less the amount of the withdrawal but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available
for future withdrawals. When determining if a withdrawal will result in excess
withdrawal processing, the applicable RALP will not yet reflect the amount of
the current withdrawal.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the benefit amount will not be subject to excess withdrawal processing
provided that the following conditions are met:
The withdrawal is after the waiting period;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. Any withdrawal during the waiting
period will reset the basic benefit and lifetime benefit at the end of the
waiting period. After the waiting period, withdrawal amounts greater than the
RALP or RBP that do not meet the conditions above will result in excess
withdrawal processing. The amount in excess of the RBP and/or RALP that is not
subject to excess withdrawal processing will be recalculated if the RALP and RBP
change due to GBP Percentage and ALP Percentage changes. See Appendix E for
additional information.
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the benefit values may be available. A step up does not create contract value,
guarantee the performance of any investment option, or provide a benefit that
can be withdrawn
--------------------------------------------------------------------------------
182 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
in a lump sum or paid upon death. Rather, a step up determines the current
values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment
period or increase the allowable payment. If there have been multiple payments
and the GBA increases due to the step up, the individual GBAs, RBAs, GBPs, and
RBPs will be combined.
The annual step up may be available as described below, subject to the maximum
GBA, RBA and ALP and subject to the following rules:
You have not declined a rider fee increase.
If you take any withdrawals during the waiting period the annual step up will
not be available until the rider anniversary following the end of the waiting
period.
On any rider anniversary where your contract value is greater than the RBA or,
your contract value multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above) is greater
than the ALP, if established, the annual step up will be applied to your
contract on the rider anniversary.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period, the RBP will not be affected by the step up.
(b) After the waiting period, the RBP will be reset to the increased GBP.
The ALP will be increased to the contract value on the rider anniversary
multiplied by the ALP Percentage (either 5% or 6% as described under "GBP
Percentage and ALP Percentage" heading above), if greater than the current
ALP.
The RALP will be reset as follows:
(a) During the waiting period, the RALP will not be affected by the step up.
(b) After the waiting period, the RALP will be reset to the increased ALP.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource 20 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
20 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that a) the RBP will be calculated as the GBP after
the step-up less all prior withdrawals taken during the current contract year,
but not less than zero, and b) the RALP will be calculated as the ALP after the
step-up less all prior withdrawals taken during the current contract year, but
not less than zero. The spousal continuation step-up is processed on the
valuation date spousal continuation is effective.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be taken from the variable subaccounts, guarantee period
accounts (where available), the one-year fixed account (if applicable) and the
DCA fixed account in the same proportion as your interest in each bears to the
contract value. You cannot specify from which accounts the withdrawal is to be
taken.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero, you
will be paid in the following scenarios:
1) The ALP has not yet been established, the total RBA is greater than zero and
the contract value is reduced to zero as a result of fees or charges or a
withdrawal that is less than or equal to the RBP. In this scenario, you can
choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 183
JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established, the total RBA is greater than zero and the
contract value reduces to zero as a result of fees or charges, or a
withdrawal that is less than or equal to both the RBP and the RALP. In this
scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero.
JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in monthly installments. If the
monthly payment is less than $100, we have the right to change the frequency
but no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate;
In determining the remaining schedule of GBPs, the current GBP is fixed for as
long as payments are made.
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero; and
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource 20 rider and the contract will terminate under either of the
following two scenarios:
If the ALP is established and the RBA is zero, and if the contract value falls
to zero as a result of a withdrawal that is greater than the RALP. This is
full withdrawal of the contract value.
If the ALP is not established and the RBA is zero, and if the contract value
falls to zero as a result of fees, charges or a withdrawal.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the RBA payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract which terminates the rider.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
--------------------------------------------------------------------------------
184 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the RBA payout option available under this rider, or 3)
continue the contract under the spousal continuation provision of the contract.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
REMAINING BENEFIT AMOUNT (RBA) PAYOUT OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource 20 rider after
the waiting period.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid will not exceed the current total
RBA at the time you begin this fixed annuity payout option. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequently
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary (see
"The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary when the death
benefit is payable. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource 20 rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
2. SINGLE LIFE: After the death benefit is payable, continuation of the contract
will terminate the rider.
3. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
4. Annuity payouts under an annuity payout plan will terminate the rider.
5. You may terminate the rider if your annual rider fee after any fee increase
is more than 0.25 percentage points higher than your fee before the increase
(See "Charges -- SecureSource 20 rider fee").
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 185
6. When the RBA and contract value is reduced to zero and either the withdrawal
is taken when the ALP is not established or an excess withdrawal of the RALP
is taken, the rider will terminate.
7. Termination of the contract for any reason will terminate the rider.
8. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
For an example, see Appendix D.
--------------------------------------------------------------------------------
186 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX O: SECURESOURCE STAGES RIDER DISCLOSURE
SECURESOURCE STAGES RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary gains. The SecureSource Stages
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw income over your lifetime.
This benefit is intended for assets you plan to hold and let accumulate for at
least three years. Your benefits under the rider can be reduced if any of the
following occurs:
If you take any withdrawals during the 3-year waiting period, your benefits
will be set to zero until the end of the waiting period when they will be re-
established based on your contract value at that time;
If you take a withdrawal after the waiting period and if you withdraw more
than the allowed withdrawal amount in a contract year, or you take withdrawals
before the lifetime benefit is available;
If you take a withdrawal and later choose to allocate your contract value to
an investment option that is more aggressive than the target investment
option.
If the contract value is 20% or more below purchase payments increased by any
step ups or rider credits and adjusted for withdrawals (see withdrawal
adjustment base described below).
The SecureSource Stages rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year that the lifetime benefit is available. The lifetime benefit
amount can vary based on your attained age and based on the relationship of your
contract value to the withdrawal adjustment base. Each contract year after the
waiting period, the percentage used to determine the benefit amount is set when
the first withdrawal is taken and fixed for the remainder of that year.
At any time after the waiting period, as long as your total withdrawals during
the current year do not exceed the lifetime benefit amount, you will not be
assessed a surrender charge and no market value adjustment will be applied. If
you withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and any applicable market value adjustment. At any time, you
may withdraw any amount up to your entire surrender value, subject to excess
withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages riders available under your contract:
SecureSource Stages - Single Life
SecureSource Stages - Joint Life
The information in this section applies to both SecureSource Stages riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages -- Single Life rider covers one person. The SecureSource
Stages -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource Stages -- Single Life rider or the
SecureSource Stages -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource Stages rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if you purchase your
contract on or after Nov. 30, 2009; and
SINGLE LIFE: you are 80 or younger on the date the contract is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource Stages riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 187
The SecureSource Stages rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
SINGLE LIFE: death (see "At Death" heading below).
JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages rider are:
AGE BANDS: Each age band is associated with a set of lifetime payment
percentages. The covered person (JOINT LIFE: the younger covered spouse) must be
at least the youngest age shown in the first age band for the annual lifetime
payment to be established. After the annual lifetime payment is established,
other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
the younger covered spouse) has reached the youngest age in the first age band.
When the ALP is available, the annual withdrawal amount guaranteed by the rider
can vary each contract year.
ANNUAL STEP-UP: an increase in the benefit base or the principal back guarantee
and a possible increase in the lifetime payment percentage that is available
each rider anniversary if your contract value increases, subject to certain
conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken after the waiting period and before
the annual lifetime payment is established, or (2) a withdrawal that is greater
than the remaining annual lifetime payment when the annual lifetime payment is
available.
EXCESS WITHDRAWAL PROCESSING: after the waiting period, a reduction in benefits
if a withdrawal is taken before the annual lifetime payment is established or if
a withdrawal exceeds the remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. Whenever the annual lifetime payment is
available, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten rider anniversaries, based on a rider credit percentage of 8% in year
one and 6% for years two through ten, as long as no withdrawals have been taken
since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and withdrawals in the waiting period may
reduce or eliminate the benefit of any rider credits. Rider credits may result
in higher rider charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage. The WAB cannot be withdrawn or annuitized and is
not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
--------------------------------------------------------------------------------
188 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be reestablished based on your contract value at that time. Although your
benefits will be set to zero until the end of waiting period, we will deduct
rider fees, based on the anniversary contract value for the remainder of the
waiting period. Any withdrawal request within the 3-year waiting period must
be submitted in writing. In addition, any withdrawals in the first 10 years
will terminate the rider credits. Also, after the waiting period if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model portfolio changes per contract
year. The target investment option is currently the Moderate investment
option. We reserve the right to change the target investment option to an
investment option that is more aggressive than the target investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target or investment option, you will be in the
accumulation phase again. If this is done after the waiting period, your rider
benefit will be reset as follows: the BB, PBG and WAB will be reset to the
contract value, if less than their current amount; and the ALP and RALP, if
available, will be recalculated. You may request to change your investment
option by written request on an authorized form or by another method agreed to
by us.
NON-CANCELABLE: Once elected, the SecureSource Stages rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
fee will continue to be deducted until the contract or rider is terminated or
the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of
nonnatural or revocable trust ownership). The rider will terminate at the
death of the contract owner because the original covered spouse will be unable
to elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of
the trust must be the annuitant and the beneficiary must either be the
annuitant's spouse or a trust that names the annuitant's spouse
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 189
as the sole primary beneficiary. You are responsible for establishing
ownership arrangements that will allow for spousal continuation.
If you select the SecureSource Stages -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawal of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person (e.g., an irrevocable trust or corporation) or a revocable
trust, the covered spouses are the annuitant and the legally married spouse of
the annuitant. The covered spouses lives are used to determine when the annual
lifetime payment is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
younger covered spouses) has reached age 50. When the ALP is established and at
all times thereafter, the ALP is equal to the BB multiplied by the lifetime
payment percentage. Anytime the lifetime payment percentage or BB changes as
described below, the ALP will be recalculated. When the ALP is available, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
--------------------------------------------------------------------------------
190 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50. The ALP will be available on later of the rider anniversary
after the waiting period, or the date the covered person's attained age equals
age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
The ALP will be available on later of the rider anniversary after the waiting
period, or the date the ALP is established.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the remaining annual lifetime payment
guaranteed for withdrawal after any withdrawals are made. The RALP is
established at the same time as the ALP. The RALP will be zero during the
waiting period. After the waiting period, the RALP equals the ALP less all
withdrawals in the current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band for the lifetime payment percentage
used to calculate the initial ALP is the percentage for the covered person's
attained age (JOINT LIFE: younger covered spouses attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouses subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouses attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any annual
rider fee increase or if a withdrawal has been taken since the ALP was made
available, then the lifetime payment percentage will not change on subsequent
birthdays.)
Upon annual step-ups (see "Annual step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was available and no annual rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether Percentage A or Percentage B is used for each
applicable age band:
During the waiting period, percentage A will be used to determine the amount
payable to beneficiaries under the principal back guarantee (PBG).
After the waiting period, a comparison of your contract value and the withdrawal
adjustment base (WAB) determines whether percentage A or percentage B is used to
calculate the ALP unless the percentage is fixed as described below.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 191
On each valuation date, if the benefit determining percentage is less than the
20% adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (A/B) where:
A = Contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
After the ALP is available, the first withdrawal taken in each contract year
will set and fix the lifetime payment percentage for the remainder of the
contract year. Beginning on the next rider anniversary, the lifetime payment
percentage can change on each valuation day as described above until a
withdrawal is taken in that contract year.
Under certain limited situations, your Lifetime Payment Percentage will not vary
each contract year. Percentage A or percentage B will be determined at the
earliest of (1), (2) or (3) below and remain fixed for as long as the benefit is
payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum benefit base (BB), credit base (CB), withdrawal adjustment
base (WAB) and PBG amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: Before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB, CB
(unless it has been permanently set to zero), BB and PBG will be increased by
the amount of each additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits. If the first withdrawal is taken during the
waiting period, the WAB, BB and PBG will be set equal to zero until the end of
the waiting period.
Whenever a withdrawal is taken after the waiting period:
(a) the WAB will be reduced by the "adjustment for withdrawal," as defined
below.
(b) if the ALP is established and the withdrawal is less than or equal to
the RALP, the BB does not change and the PBG is reduced by the amount of
the withdrawal, but it will not be less than zero.
(c) if the ALP is not established, excess withdrawal processing will occur
as follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not
be less than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the
withdrawal and further reduced by an amount calculated as follows, but it
will not be less than zero:
A = the amount of the withdrawal minus the RALP
B = the PBG minus the RALP on the date of (but prior to) the
withdrawal
C = the contract value on the date of (but prior to) the withdrawal
minus the RALP
--------------------------------------------------------------------------------
192 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
The BB will be reduced by an amount as calculated below:
D = the amount of the withdrawal minus the RALP
E = the BB on the date of (but prior to) the withdrawal
F = the contract value on the date of (but prior to) the withdrawal
minus the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is
reduced by a withdrawal in the same proportion as the contract value
is reduced, the proportional amount deducted is the "adjustment for
withdrawal." The "adjustment for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PGB (as applicable) on the date of (but prior to)
the withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
On the rider anniversary following the waiting period: If a withdrawal was
taken during the waiting period and you did not decline any annual rider fee
increase as described in the rider charges provision, the BB, WAB and PBG are
reset to the contract value. If a withdrawal was taken during the waiting
period and you declined any annual rider fee increase, the BB and PBG are
reset to the lesser of (1) the BB or PBG (as applicable) at the time of the
first withdrawal, plus any additional purchase payments since the time of the
first withdrawal, minus all withdrawals, or (2) the contract value. The WAB
will be reset to the BB.
The WAB on rider anniversaries: Unless you decline any annual rider fee
increase or take a withdrawal during the waiting period, the WAB (after any
rider credit is added) will be increased to the contract value, if the
contract value is greater. If a withdrawal was taken during the waiting
period, the WAB will be increased to the contract value, if the contract value
is greater, starting on the rider anniversary following the waiting period.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
annual rider fee increase, a rider credit may be available for the first ten
rider anniversaries. On the first rider anniversary, the rider credit equals the
credit base (CB) 180 days following the rider effective date multiplied by 8%.
On any subsequent rider credit anniversaries, the rider credit equals the CB as
of the prior rider anniversary multiplied by 6%. On the first rider anniversary
the BB and WAB will be set to the greater of the current BB, or the BB 180 days
following the contract date increased by the rider credit and any additional
purchase payments since 180 days following the rider effective date. On any
subsequent rider credit anniversaries the BB and WAB will be set to the greater
of the current BB, or the BB on the prior rider anniversary increased by the
rider credit and any additional purchase payments since the prior rider
anniversary. If the CB is greater than zero, the CB will be permanently reset to
zero on the 10(th) rider anniversary after any adjustment to the WAB and BB, and
there will be no additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you take any withdrawals during the waiting period, the
annual step-up will not be available until the 3(rd) rider anniversary. If you
decline any annual rider fee increase, future annual step-ups will no longer be
available.
The annual step-up will be executed on any rider anniversary where the contract
value is greater than the PBG or the BB after any rider credit is added. If an
annual step-up is executed, the PBG, BB and lifetime payment percentage will be
adjusted as follows: The PBG will be increased to the contract value, if the
contract value is greater. The BB (after any rider credit is added) will be
increased to the contract value, if the contract value is greater. If the
covered person's attained age (Joint Life: younger covered spouses attained age)
on the rider anniversary is in a higher age band and (1) there is an increase to
BB due to a step-up or (2) the BB is at the maximum of $10,000,000 so there was
no step-up of the BB, then the higher age band will be used to determine the
appropriate lifetime payment percentage, regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 193
your RMD that exceeds the benefit amount will not be subject to excess
withdrawal processing provided that the following conditions are met:
The withdrawal is after the waiting period;
The annual lifetime payment is available;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. A withdrawal during the waiting period
will reset the benefit base, the withdrawal adjustment base and the principal
back guarantee to the contract value at the end of the waiting period. After the
waiting period, a withdrawal taken before the annual lifetime payment is
established or withdrawing amounts greater than the remaining annual lifetime
payment that do not meet these conditions will result in excess withdrawal
processing. The amount in excess of the RALP that is not subject to excess
withdrawal processing will be recalculated if the ALP changes due to lifetime
payment percentage changes. See Appendix E for additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
Stages -- Joint Life rider also continues. The surviving covered spouse can name
a new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Rider Anniversary Processing -- Annual Step-Up" heading above)
also apply to the spousal continuation step-up. The WAB will be increased to the
contract value if the contract value is greater. The spousal continuation step-
up is processed on the valuation date spousal continuation is effective.
RULES FOR SURRENDER: Minimum account values following a surrender no longer
apply to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
--------------------------------------------------------------------------------
194 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
elect to take the death benefit under the terms of the contract, or
elect to take the principal back guarantee available under this rider, or
continue the contract and the SecureSource Stages rider under the spousal
continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are equal
to the PBG on the date of death.
If the PBG is greater than zero and the ALP is not established, the BB on the
date of death multiplied by the lifetime payment percentage used for the
youngest age of the covered spouses in the first age band shown on the
contract data page will be paid annually until total payments to the
beneficiary are equal to the PBG on the date of death.
In either of the above cases:
After the date of death, there will be no additional rider credits or annual
step-ups.
The lifetime payment percentage used will be set as of the date of death.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
On the date of death (JOINT LIFE: remaining covered spouse's date of death), if
the CB is greater than zero, the CB will be permanently reset to zero, and there
will be no additional rider credits.
If the PBG equals zero, the benefit terminates. No further payments are made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: You can choose one of the payout options available under the
contract or an alternative fixed annuity payout option available under the
SecureSource Stages rider. Under the rider's payout option, the minimum amount
payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages rider cannot be terminated either by you or us except as
follows:
SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
SINGLE LIFE: after the death benefit is payable, the rider will terminate.
SINGLE LIFE: spousal continuation will terminate the rider.
JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a beneficiary
of a participant in an employer sponsored retirement plan, the rider will
terminate.
On the annuitization start date, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 195
- You may terminate the rider if your annual rider fee would increase more
than 0.25 percentage points (See "Charges -- SecureSource Stages rider fee")
When the contract value is reduced to zero and either the withdrawal taken
when the annual lifetime payment is not established or a withdrawal in excess
of the remaining annual lifetime payment is taken, the rider will terminate.
Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
--------------------------------------------------------------------------------
196 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX P: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (11/06/2003)
Accumulation unit
value at beginning
of period $1.22 $1.05 $0.69 $1.34 $1.13 $1.06 $1.04 $1.00 $1.00 --
Accumulation unit
value at end of
period $0.92 $1.22 $1.05 $0.69 $1.34 $1.13 $1.06 $1.04 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 114 144 126 108 110 112 113 114 5 --
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (11/06/2003)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.85 $1.45 $1.40 $1.21 $1.18 $1.07 $1.00 --
Accumulation unit
value at end of
period $1.17 $1.11 $1.00 $0.85 $1.45 $1.40 $1.21 $1.18 $1.07 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 183 201 201 210 226 247 256 243 23 --
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.19 $1.16 $0.88 $1.91 $1.83 $1.38 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $0.95 $1.19 $1.16 $0.88 $1.91 $1.83 $1.38 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,866 1,831 6,541 7,308 4,293 2,708 1,766 209 -- --
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $1.00 $0.86 $0.67 $0.90 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.98 $1.00 $0.86 $0.67 $0.90 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.06 $0.92 $0.70 $1.21 $1.02 $1.07 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.05 $1.06 $0.92 $0.70 $1.21 $1.02 $1.07 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,157 2,614 2,924 3,189 3,364 7,580 3,015 376 -- --
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.16 $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 29 34 33 2 1 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.05 $1.06 $1.08 $1.07 $1.03 $1.00 $0.99 $1.00 $1.00 --
Accumulation unit
value at end of
period $1.03 $1.05 $1.06 $1.08 $1.07 $1.03 $1.00 $0.99 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,536 2,911 5,788 1,365 513 401 106 18 15 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.24 $1.17 $1.03 $1.12 $1.08 $1.05 $1.04 $1.01 $1.00 --
Accumulation unit
value at end of
period $1.31 $1.24 $1.17 $1.03 $1.12 $1.08 $1.05 $1.04 $1.01 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,322 2,221 22,157 16,780 14,001 8,025 1,298 1,598 146 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.68 $1.46 $1.16 $1.98 $1.86 $1.57 $1.41 $1.21 $0.87 $1.09
Accumulation unit
value at end of
period $1.57 $1.68 $1.46 $1.16 $1.98 $1.86 $1.57 $1.41 $1.21 $0.87
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,844 3,253 15,601 12,449 8,833 6,769 3,606 1,251 828 608
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.69 $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,709 3,592 4,017 4,256 4,540 5,152 3,969 2,410 453 194
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.56 $2.17 $1.27 $2.77 $2.04 $1.54 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.99 $2.56 $2.17 $1.27 $2.77 $2.04 $1.54 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 716 670 2,782 3,582 2,132 1,922 1,178 160 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.16 $1.13 $1.08 $1.09 $1.03 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.26 $1.16 $1.13 $1.08 $1.09 $1.03 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 383 489 15,152 6,045 5,763 4,338 -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 197
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.24 $1.13 $0.79 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.30 $1.24 $1.13 $0.79 $1.07 $1.07 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 626 790 834 1,009 1,242 2,212 -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.60 $1.42 $0.94 $1.27 $1.27 $1.16 $1.13 $1.03 $0.84 $0.91
Accumulation unit
value at end of
period $1.66 $1.60 $1.42 $0.94 $1.27 $1.27 $1.16 $1.13 $1.03 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 583 678 755 746 910 1,056 970 715 521 389
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.51 $1.35 $0.96 $1.20 $1.19 $1.12 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.58 $1.51 $1.35 $0.96 $1.20 $1.19 $1.12 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 215 256 9,864 5,119 4,197 1,896 -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.44 $1.29 $1.02 $1.74 $1.57 $1.28 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.44 $1.29 $1.02 $1.74 $1.57 $1.28 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 4 4 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.14 $0.99 $0.73 $1.33 $1.31 $1.20 $1.12 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.09 $1.14 $0.99 $0.73 $1.33 $1.31 $1.20 $1.12 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 4 4 72 55 4 -- -- 56 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $1.00 $0.84 $0.67 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.96 $1.00 $0.84 $0.67 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 512 577 20,058 11,908 7,074 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.88 $0.78 $0.58 $1.14 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.73 $0.88 $0.78 $0.58 $1.14 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 20 20 20 25 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.90 $0.75 $0.54 $1.00 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.82 $0.90 $0.75 $0.54 $1.00 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 44 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.21 $1.07 $0.86 $1.39 $1.34 $1.18 $1.15 $1.06 $1.00 --
Accumulation unit
value at end of
period $1.21 $1.21 $1.07 $0.86 $1.39 $1.34 $1.18 $1.15 $1.06 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 366 375 327 259 266 256 250 302 59 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.23 $1.22 $1.17 $1.22 $1.17 $1.15 $1.15 $1.15 $1.15 $1.10
Accumulation unit
value at end of
period $1.23 $1.23 $1.22 $1.17 $1.22 $1.17 $1.15 $1.15 $1.15 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 944 1,141 3,618 1,927 1,780 2,023 2,009 2,283 2,513 2,555
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.49 $1.20 $0.97 $1.37 $1.43 $1.22 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.38 $1.49 $1.20 $0.97 $1.37 $1.43 $1.22 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 218 239 10,188 6,327 4,714 4 -- -- -- --
------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.97 $0.85 $0.72 $1.10 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.84 $0.97 $0.85 $0.72 $1.10 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 24 22 1 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.83 $0.76 $0.62 $1.09 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.69 $0.83 $0.76 $0.62 $1.09 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 84 59 57 26 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.27 $1.23 $0.96 $1.55 $1.52 $1.26 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $1.01 $1.27 $1.23 $0.96 $1.55 $1.52 $1.26 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 2 2 8 8 4 -- -- -- --
------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.08 $1.00 $0.71 $0.98 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.08 $1.00 $0.71 $0.98 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 348 447 7,675 4,506 3,095 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
198 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.50 $1.30 $0.97 $1.72 $1.49 $1.36 $1.18 $1.04 $1.00 --
Accumulation unit
value at end of
period $1.43 $1.50 $1.30 $0.97 $1.72 $1.49 $1.36 $1.18 $1.04 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,207 5,203 8,488 13,235 12,095 12,306 6,320 2,509 211 --
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.18 $1.04 $1.09 $1.07 $1.04 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.32 $1.25 $1.18 $1.04 $1.09 $1.07 $1.04 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,880 2,375 11,682 8,946 9,111 3,611 3,067 321 -- --
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.40 $1.89 $1.38 $2.31 $2.03 $1.83 $1.58 $1.28 $0.94 $1.06
Accumulation unit
value at end of
period $2.11 $2.40 $1.89 $1.38 $2.31 $2.03 $1.83 $1.58 $1.28 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,297 1,658 4,341 5,011 3,849 3,086 2,479 2,101 1,221 723
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.44 $1.30 $1.04 $1.89 $1.64 $1.41 $1.21 $1.08 $1.00 --
Accumulation unit
value at end of
period $1.18 $1.44 $1.30 $1.04 $1.89 $1.64 $1.41 $1.21 $1.08 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 466 480 518 572 558 841 705 311 11 --
------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.73 $1.56 $1.16 $1.68 $1.64 $1.41 $1.41 $1.25 $0.97 $0.99
Accumulation unit
value at end of
period $1.74 $1.73 $1.56 $1.16 $1.68 $1.64 $1.41 $1.41 $1.25 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,647 1,877 2,165 2,664 3,166 3,383 3,865 4,021 3,071 2,665
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.86 $1.65 $1.41 $1.35 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.82 $1.86 $1.65 $1.41 $1.35 $1.23 $1.11 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 883 932 7,523 5,803 5,914 3,641 1,249 195 -- --
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.07 $0.83 $1.46 $1.45 $1.20 $1.12 $1.00 -- --
Accumulation unit
value at end of
period $1.04 $1.13 $1.07 $0.83 $1.46 $1.45 $1.20 $1.12 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 241 215 211 232 168 19 23 15 -- --
------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.99 $2.43 $1.85 $2.98 $2.93 $2.56 $2.30 $1.86 $1.47 $1.56
Accumulation unit
value at end of
period $2.76 $2.99 $2.43 $1.85 $2.98 $2.93 $2.56 $2.30 $1.86 $1.47
Number of
accumulation units
outstanding at end
of period (000
omitted) 967 1,131 2,893 3,112 3,200 2,732 2,047 1,426 1,312 1,266
------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.83 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61 $0.79
Accumulation unit
value at end of
period $0.85 $0.83 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 629 876 1,023 1,018 1,360 1,467 1,568 1,667 1,619 1,894
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (11/06/2003)
Accumulation unit
value at beginning
of period $1.02 $0.90 $0.75 $1.33 $1.21 $1.16 $1.08 $1.03 $1.00 --
Accumulation unit
value at end of
period $0.92 $1.02 $0.90 $0.75 $1.33 $1.21 $1.16 $1.08 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 12 12 63 62 62 40 10 38 22 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II
Shares.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (11/06/2003)
Accumulation unit
value at beginning
of period $1.35 $1.16 $0.83 $1.58 $1.45 $1.27 $1.18 $1.04 $1.00 --
Accumulation unit
value at end of
period $1.23 $1.35 $1.16 $0.83 $1.58 $1.45 $1.27 $1.18 $1.04 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 116 103 108 114 108 108 89 87 -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.94 $0.91 $0.72 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.96 $0.94 $0.91 $0.72 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 48 33 14 -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.90 $0.81 $0.61 $1.04 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.83 $0.90 $0.81 $0.61 $1.04 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 359 385 15,819 5,951 3,303 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.29 $1.13 $0.89 $1.41 $1.46 $1.28 $1.25 $1.08 $1.00 --
Accumulation unit
value at end of
period $1.24 $1.29 $1.13 $0.89 $1.41 $1.46 $1.28 $1.25 $1.08 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,854 4,490 9,591 10,469 9,083 8,762 5,134 894 37 --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 199
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.94 $0.84 $0.63 $1.06 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.88 $0.94 $0.84 $0.63 $1.06 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 409 448 17,145 12,315 8,645 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.05 $0.85 $0.60 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.05 $0.85 $0.60 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 55 -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $1.26 $1.16 $1.00 $1.31 $1.28 $1.16 $1.15 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.26 $1.26 $1.16 $1.00 $1.31 $1.28 $1.16 $1.15 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 866 1,476 1,492 1,568 1,781 1,861 1,916 1,655 80 --
------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $2.34 $2.09 $1.60 $2.60 $2.07 $1.60 $1.40 $1.09 $1.00 --
Accumulation unit
value at end of
period $2.45 $2.34 $2.09 $1.60 $2.60 $2.07 $1.60 $1.40 $1.09 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 56 56 49 53 71 68 67 10 --
------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.78 $0.65 $0.47 $0.85 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.69 $0.78 $0.65 $0.47 $0.85 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 134 174 3,671 4,330 1,772 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.19 $0.91 $0.59 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.19 $0.91 $0.59 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 5 5 6 8 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.11 $1.04 $0.73 $1.36 $1.21 $1.14 $1.11 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.08 $1.11 $1.04 $0.73 $1.36 $1.21 $1.14 $1.11 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,933 2,305 2,318 2,536 2,419 2,780 2,447 574 24 --
------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.40 $1.02 $1.73 $1.66 $1.43 $1.27 $1.09 $0.77 $1.00
Accumulation unit
value at end of
period $1.44 $1.60 $1.40 $1.02 $1.73 $1.66 $1.43 $1.27 $1.09 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 627 986 964 930 941 968 903 803 299 6
------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.63 $1.44 $1.23 $1.46 $1.36 $1.28 $1.27 $1.19 $1.03 $1.00
Accumulation unit
value at end of
period $1.62 $1.63 $1.44 $1.23 $1.46 $1.36 $1.28 $1.27 $1.19 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,236 2,721 14,510 11,434 9,968 5,557 3,403 1,659 415 83
------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.43 $1.18 $0.88 $1.43 $1.48 $1.31 $1.21 $1.03 $1.00 --
Accumulation unit
value at end of
period $1.38 $1.43 $1.18 $0.88 $1.43 $1.48 $1.31 $1.21 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 286 342 389 373 359 380 407 389 72 --
------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.14 $1.03 $0.86 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.15 $1.14 $1.03 $0.86 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 254 274 8,749 10,160 8,295 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,958 2,845 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 29,473 35,540 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,906 2,696 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 20,689 20,921 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
200 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.85 $0.78 $0.60 $0.99 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.81 $0.85 $0.78 $0.60 $0.99 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 565 622 21,293 10,481 6,624 -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.09 $0.81 $1.30 $1.24 $1.09 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.31 $1.09 $0.81 $1.30 $1.24 $1.09 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 33,733 30,458 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 127,883 131,141 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 26,527 25,767 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 66,149 77,624 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,018 6,557 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 25,656 24,507 -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.64 $1.33 $0.99 $1.47 $1.57 $1.32 $1.27 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.54 $1.64 $1.33 $0.99 $1.47 $1.57 $1.32 $1.27 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,423 1,652 1,946 2,163 2,437 2,461 2,507 735 158 35
------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.18 $1.77 $1.20 $2.24 $1.95 $1.44 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $1.83 $2.18 $1.77 $1.20 $2.24 $1.95 $1.44 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 936 968 4,062 4,898 2,928 2,562 1,712 264 -- --
------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.42 $1.17 $0.83 $1.40 $1.35 $1.27 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.35 $1.42 $1.17 $0.83 $1.40 $1.35 $1.27 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 828 999 4,279 3,607 2,886 1,545 1,215 162 -- --
------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit
value at beginning
of period $1.02 $0.88 $0.59 $1.15 $1.00 -- -- --
Accumulation unit
value at end of
period $0.77 $1.02 $0.88 $0.59 $1.15 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07 $1.00
Accumulation unit
value at end of
period $1.01 $0.97 $0.88 $0.75 $1.29 $1.26 $1.10 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19 $1.00
Accumulation unit
value at end of
period $0.90 $1.14 $1.11 $0.85 $1.85 $1.80 $1.36 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 14 15 24 40 59 67 39 6
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 201
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $0.98 $0.84 $0.66 $0.89 $1.00 -- -- --
Accumulation unit
value at end of
period $0.95 $0.98 $0.84 $0.66 $0.89 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06 $1.00
Accumulation unit
value at end of
period $0.99 $1.00 $0.89 $0.67 $1.18 $1.00 $1.06 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 18 19 19 42 91 149 50 --
------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.09 $1.11 $1.00 $0.86 $1.20 $1.29 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $0.98 $1.00 $1.02 $1.04 $1.04 $1.02 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 61 73 353 -- 7 4 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.23 $1.17 $1.11 $0.99 $1.08 $1.05 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 11 59 105 66 40 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.22 $1.31 $1.15 $0.92 $1.58 $1.50 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 23 28 51 82 160 181 83 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05 $1.00
Accumulation unit
value at end of
period $1.00 $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 2 14 21 19
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16 $1.00
Accumulation unit
value at end of
period $1.88 $2.44 $2.08 $1.22 $2.70 $2.00 $1.52 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 7 8 18 32 46 24 3
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.12 $1.10 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.12 $1.10 $1.06 $1.08 $1.02 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 6 29 44 38 29 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.20 $1.09 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.20 $1.09 $0.78 $1.06 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 7 42 70 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.51 $1.46 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 1 6 38 55 30 4
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09 $1.00
Accumulation unit
value at end of
period $1.49 $1.43 $1.30 $0.93 $1.17 $1.17 $1.10 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 4 14 23 31 14 -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.23 $0.99 $1.70 $1.54 $1.27 $1.14 $1.00
Accumulation unit
value at end of
period $1.18 $1.37 $1.23 $0.99 $1.70 $1.54 $1.27 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07 $1.00
Accumulation unit
value at end of
period $0.98 $1.04 $0.91 $0.68 $1.24 $1.23 $1.13 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 1 1 1 -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $0.97 $0.82 $0.66 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $0.93 $0.97 $0.82 $0.66 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 10 35 35 43 -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
202 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.86 $0.77 $0.57 $1.13 $1.00 -- -- --
Accumulation unit
value at end of
period $0.70 $0.86 $0.77 $0.57 $1.13 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.88 $0.73 $0.53 $0.99 $1.00 -- -- --
Accumulation unit
value at end of
period $0.79 $0.88 $0.73 $0.53 $0.99 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.08 $1.09 $0.97 $0.79 $1.28 $1.24 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99 $1.00
Accumulation unit
value at end of
period $1.02 $1.02 $1.02 $0.98 $1.03 $1.00 $0.99 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 3 14 21 -- 9 5 --
------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.42 $1.15 $0.94 $1.34 $1.40 $1.20 $1.16 $1.00
Accumulation unit
value at end of
period $1.30 $1.42 $1.15 $0.94 $1.34 $1.40 $1.20 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 3 16 18 30 -- -- --
------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.95 $0.83 $0.71 $1.10 $1.00 -- -- --
Accumulation unit
value at end of
period $0.81 $0.95 $0.83 $0.71 $1.10 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.80 $0.75 $0.61 $1.09 $1.00 -- -- --
Accumulation unit
value at end of
period $0.67 $0.80 $0.75 $0.61 $1.09 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14 $1.00
Accumulation unit
value at end of
period $0.96 $1.20 $1.18 $0.92 $1.51 $1.49 $1.24 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.05 $0.98 $0.70 $0.98 $1.00 -- -- --
Accumulation unit
value at end of
period $1.05 $1.05 $0.98 $0.70 $0.98 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 2 15 27 13 -- -- --
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10 $1.00
Accumulation unit
value at end of
period $1.27 $1.34 $1.17 $0.88 $1.58 $1.37 $1.26 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 31 38 83 177 296 101 8
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.25 $1.19 $1.13 $1.00 $1.06 $1.04 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 13 36 65 166 215 115 19
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21 $1.00
Accumulation unit
value at end of
period $1.53 $1.76 $1.40 $1.02 $1.73 $1.53 $1.40 $1.21
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 6 13 23 38 39 16 --
------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10 $1.00
Accumulation unit
value at end of
period $1.02 $1.26 $1.14 $0.92 $1.68 $1.47 $1.27 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 1 2 5 6 5
------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12 $1.00
Accumulation unit
value at end of
period $1.31 $1.31 $1.19 $0.90 $1.30 $1.29 $1.11 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16 $1.00
Accumulation unit
value at end of
period $1.72 $1.77 $1.58 $1.36 $1.31 $1.21 $1.10 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 3 5 18 34 64 78 39 8
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 203
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.08 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12 $1.00
Accumulation unit
value at end of
period $0.98 $1.08 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19 $1.00
Accumulation unit
value at end of
period $1.36 $1.48 $1.21 $0.93 $1.51 $1.49 $1.32 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 12 17 30 58 65 28 3
------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.75 $0.68 $0.58 $0.93 $1.00 -- -- --
Accumulation unit
value at end of
period $0.77 $0.75 $0.68 $0.58 $0.93 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06 $1.00
Accumulation unit
value at end of
period $0.86 $0.95 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital
Growth Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II
Shares.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10 $1.00
Accumulation unit
value at end of
period $1.09 $1.20 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen
V.I. Mid Cap Growth Fund, Series II Shares on April 27, 2012.
------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.91 $0.89 $0.71 $1.02 $1.00 -- -- --
Accumulation unit
value at end of
period $0.93 $0.91 $0.89 $0.71 $1.02 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.88 $0.80 $0.60 $1.04 $1.00 -- -- --
Accumulation unit
value at end of
period $0.80 $0.88 $0.80 $0.60 $1.04 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 3 23 20 22 -- -- --
------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13 $1.00
Accumulation unit
value at end of
period $1.06 $1.11 $0.98 $0.78 $1.24 $1.30 $1.15 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 31 34 42 78 192 235 119 13
------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.92 $0.82 $0.62 $1.05 $1.00 -- -- --
Accumulation unit
value at end of
period $0.85 $0.92 $0.82 $0.62 $1.05 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 7 33 38 55 -- -- --
------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.02 $0.83 $0.59 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.01 $1.02 $0.83 $0.59 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 4 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.06 $0.92 $1.21 $1.19 $1.09 $1.08 $1.00
Accumulation unit
value at end of
period $1.13 $1.13 $1.06 $0.92 $1.21 $1.19 $1.09 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.98 $1.78 $1.37 $2.25 $1.81 $1.41 $1.24 $1.00
Accumulation unit
value at end of
period $2.06 $1.98 $1.78 $1.37 $2.25 $1.81 $1.41 $1.24
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 2 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.76 $0.64 $0.46 $0.84 $1.00 -- -- --
Accumulation unit
value at end of
period $0.67 $0.76 $0.64 $0.46 $0.84 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 1 6 9 11 -- -- --
------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.16 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $1.05 $1.16 $0.90 $0.58 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
204 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06 $1.00
Accumulation unit
value at end of
period $0.98 $1.02 $0.95 $0.68 $1.27 $1.14 $1.08 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 12 12 11 19 57 87 48 8
------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15 $1.00
Accumulation unit
value at end of
period $1.23 $1.37 $1.21 $0.89 $1.53 $1.47 $1.28 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07 $1.00
Accumulation unit
value at end of
period $1.29 $1.31 $1.16 $1.00 $1.20 $1.12 $1.07 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 10 34 60 120 136 68 12
------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16 $1.00
Accumulation unit
value at end of
period $1.26 $1.32 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.11 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.11 $1.11 $1.01 $0.85 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 5 25 43 46 -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 223 266 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.83 $0.76 $0.59 $0.98 $1.00 -- -- --
Accumulation unit
value at end of
period $0.78 $0.83 $0.76 $0.59 $0.98 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 6 38 35 41 -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09 $1.00
Accumulation unit
value at end of
period $1.14 $1.25 $1.05 $0.78 $1.26 $1.22 $1.08 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 47 47 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.08 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 239 257 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 69 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 205
VARIABLE ACCOUNT CHARGES OF 2.20% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 61 61 ---- -- -- -- --
------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15 $1.00
Accumulation unit
value at end of
period $1.32 $1.41 $1.16 $0.87 $1.30 $1.40 $1.19 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 10 10 11 17 56 72 43 5
------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.07 $1.70 $1.16 $2.17 $1.91 $1.42 $1.20 $1.00
Accumulation unit
value at end of
period $1.73 $2.07 $1.70 $1.16 $2.17 $1.91 $1.42 $1.20
Number of
accumulation units
outstanding at end
of period (000
omitted) 7 7 13 22 46 61 32 3
------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15 $1.00
Accumulation unit
value at end of
period $1.27 $1.35 $1.12 $0.80 $1.36 $1.32 $1.25 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 6 8 14 18 49 56 28 4
------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
206 RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE ONE SELECT VARIABLE ANNUITY -- PROSPECTUS 207
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45301 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R) SIGNATURE SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The information in this
prospectus applies to both contracts unless stated otherwise.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contracts and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contracts described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, surrender
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and surrendering money from the contracts we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contracts described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contracts and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contracts described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contracts and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACTS IN BRIEF...................... 5
EXPENSE SUMMARY............................. 7
CONDENSED FINANCIAL INFORMATION............. 16
FINANCIAL STATEMENTS........................ 16
THE VARIABLE ACCOUNT AND THE FUNDS.......... 16
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 31
THE FIXED ACCOUNT........................... 32
BUYING YOUR CONTRACT........................ 35
CHARGES..................................... 40
VALUING YOUR INVESTMENT..................... 50
MAKING THE MOST OF YOUR CONTRACT............ 51
SURRENDERS.................................. 60
TSA -- SPECIAL PROVISIONS................... 61
CHANGING THE ANNUITANT...................... 62
CHANGING OWNERSHIP.......................... 62
BENEFITS IN CASE OF DEATH................... 63
OPTIONAL BENEFITS........................... 71
THE ANNUITY PAYOUT PERIOD................... 85
TAXES....................................... 87
VOTING RIGHTS............................... 91
SUBSTITUTION OF INVESTMENTS................. 91
ABOUT THE SERVICE PROVIDERS................. 92
ADDITIONAL INFORMATION...................... 94
APPENDICES TABLE OF CONTENTS AND
CROSS-REFERENCE TABLE..................... 95
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 96
APPENDIX B: EXAMPLE -- SURRENDER CHARGES.... 98
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 107
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES
OF RIDERS................................. 113
APPENDIX E: SECURESOURCE SERIES OF
RIDERS --
ADDITIONAL RMD DISCLOSURE................. 121
APPENDIX F: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 123
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 125
APPENDIX H: ASSET ALLOCATION PROGRAM FOR
CONTRACTS WITH APPLICATIONS SIGNED BEFORE
MAY 1, 2006............................... 127
APPENDIX I: GUARANTOR WITHDRAWAL
BENEFIT FOR LIFE RIDER DISCLOSURE......... 128
APPENDIX J: GUARANTOR WITHDRAWAL
BENEFIT RIDER DISCLOSURE.................. 140
APPENDIX K: INCOME ASSURER BENEFIT RIDERS... 148
APPENDIX L: EXAMPLE --
ACCUMULATION PROTECTOR BENEFIT RIDER...... 157
APPENDIX M: SECURESOURCE RIDER DISCLOSURE... 158
APPENDIX N: SECURESOURCE 20 RIDER
DISCLOSURE................................ 171
APPENDIX O: SECURESOURCE STAGES RIDER
DISCLOSURE................................ 185
APPENDIX P: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 195
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 206
--------------------------------------------------------------------------------
2 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount prior to the
application of amounts to an annuity payment plan.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITIZATION START DATE: The date when annuity payments begin according to the
applicable annuity payment plan (referred to as "Retirement date" in the
Original Contract). Throughout this prospectus when we use the term
"Annuitization start date," it includes the term "Retirement date."
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
death (Current Contract), or owner's or annuitant's death (Original Contract)
while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT (CURRENT CONTRACT): The person who becomes the annuitant
when the current annuitant dies prior to the annuitization start date. In the
case of joint ownership, one owner must also be the contingent annuitant.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the regular fixed account and
the Special DCA fixed account (Current Contract) or the one-year fixed account
and the DCA fixed account (Original Contract). Amounts you allocate to the fixed
account earn interest rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates
for guarantee periods we declare when you allocate purchase payments or transfer
contract value to a GPA. These guaranteed rates and periods of time may vary by
state. Unless an exception applies, transfers or surrenders from a GPA done more
than 30 days before the end of the guarantee period will receive a market value
adjustment, which may result in a gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is surrendered or transferred more than 30
days before the end of its guarantee period.
OWNER (YOU, YOUR): The person or persons identified in the contract as owners(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 3
also the annuitant. The owner is responsible for taxes, regardless of whether he
or she receives the contract's benefits. The owner or any joint owner may be a
nonnatural person (e.g. irrevocable trust or corporation) or a revocable trust.
In this case, the annuitant will be deemed to be the owner for contract
provisions that are based on the age or life of the owner. When the contract is
owned by a revocable trust, the annuitant selected should be the grantor of the
trust to qualify for income tax deferral. Any contract provisions that are based
on the age of the owner will be based on the age of the oldest owner. Any
ownership change, including continuation of the contract by your spouse under
the spousal continuation provision of the contract, redefines "owner", "you" and
"your".
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Custodial and investment only plans under Section 401(a) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract (referred to as "Withdrawal value" in the Original
Contract). It is the contract value minus any applicable charges, plus any
positive or negative market value adjustment. Throughout this prospectus when we
use the term "Surrender" it includes the term "Withdrawal".
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract (referred to as "Surrender value" in the Current
Contract). It is the contract value minus any applicable charges, plus any
positive or negative market value adjustment. Throughout this prospectus when we
use the term "Surrender" it includes the term "Withdrawal".
--------------------------------------------------------------------------------
4 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACTS IN BRIEF
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The primary differences are
disclosed in the following sections: "Key Terms", "Expense Summary," "Buying
Your Contract", "Benefits in Case of Death", and "Optional Benefits."
PURPOSE: These contracts allow you to accumulate money for retirement or a
similar long-term goal. You do this by making one or more purchase payments. For
the Current Contract, you may allocate your purchase payments to the regular
fixed account, the Special DCA fixed account, GPAs and/or subaccounts of the
variable account under the contract. For the Original Contract, you may allocate
your purchase payments to the one-year fixed account (if part of your contract),
the DCA fixed account (if part of your contract), the GPAs and/or subaccounts of
the variable account under the contract. When you invest in the subaccounts of
the variable account, you risk losing amounts you invest. These accounts, in
turn, may earn returns that increase the value of the contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. You may be able to purchase an optional benefit
to reduce the investment risk you assume under the contract. Beginning at a
specified time in the future called the annuitization start date, these
contracts provide lifetime or other forms of payout of your contract value (less
any applicable premium tax and/or other charges).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
FREE LOOK PERIOD: You may return your contract to your investment professional
or to our corporate office within the time stated on the first page of your
contract and receive a full refund of the contract value. We will not deduct any
contract charges or fees. However, you bear the investment risk from the time of
purchase until you return the contract and any positive or negative market value
adjustment will apply; the refund amount may be more or less than the payment
you made. (EXCEPTION: If the law requires, we will refund all of your purchase
payments.)
ACCOUNTS: Generally, you may allocate purchase payments among the:
subaccounts of the variable account, each of which invests in a fund with a
particular investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at the annuitization start date will equal or exceed the total
purchase payments you allocate to the subaccounts. (See "The Variable Account
and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
for the Current Contract:
- regular fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on transfers from this account and may
be restrictions on the amount you can allocate to this account (see "Buying
Your Contract", "Transfer policies" and "The Regular Fixed Account").
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 5
- Special DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain
in this account. (See "Special DCA Fixed Account").
for the Original Contract:
- one-year fixed account, if part of your contract, which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract", "Transfer policies" and "The One-Year Fixed
Account").
- DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract
value can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until the
annuitization start date, and once per contract year among the subaccounts after
the annuitization start date. Transfers out of the GPAs done more than 30 days
before the end of the guarantee period will be subject to an MVA, unless an
exception applies. You may establish automated transfers among the accounts.
Transfers into the Special DCA fixed account (Current Contract) and DCA fixed
account (Original Contract) are not permitted. GPAs, the regular fixed account
(Current Contract) and the one-year fixed account (Original Contract) are
subject to special restrictions. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
SURRENDERS: You may surrender all or part of your contract value at any time
before the annuitization start date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and income taxes (including a
10% IRS penalty if you make surrenders prior to your reaching age 59 1/2) and
may have other tax consequences. If you have elected the SecureSource Stages
rider or the SecureSource 20 rider, please consider carefully when you take
withdrawals. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be reset based on your contract value at that time and you will no longer be
eligible to receive the 20% credit available under the SecureSource 20 rider or
any future rider credits under the SecureSource Stages. Certain other
restrictions may apply. (See "Surrenders").
OPTIONAL BENEFITS: You can buy optional benefits with your contract for an
additional charge if you meet certain criteria. We offer optional death benefits
and optional living benefits. Optional living benefits include: different
versions of the guaranteed minimum withdrawal benefits, which permit you to
withdraw a guaranteed amount from the contract over a period of time,
Accumulation Protector Benefit rider, which provides you with a guaranteed
contract value at the end of specified waiting period regardless of the
volatility inherent in the investments in the subaccounts, and Income Assurer
Benefit rider, which provides you with a guaranteed minimum income regardless of
the volatility inherent in the investments in the subaccounts . Guaranteed
minimum withdrawal benefits are SecureSource series riders, Guarantor Withdrawal
Benefit rider and Guarantor Withdrawal Benefit for Life rider. When used in this
prospectus, the term "SecureSource series" includes: the SecureSource Stages 2
riders, the SecureSource Stages riders, the SecureSource 20 riders and the
SecureSource riders, except where the SecureSource Stages 2 riders, the
SecureSource Stages riders, SecureSource 20 riders and SecureSource riders are
specifically referenced and distinguished from other riders in the SecureSource
series.
Optional living benefits require the use of a Portfolio Navigator program (PN
program) investment option which may limit transfers and allocations; may limit
the timing, amount and allocation of purchase payments; and may limit the amount
of surrenders that can be taken under the optional benefit during a contract
year. For more information on optional living benefits, please see "Optional
Benefits -- Optional Living Benefits". Optional benefits vary by state and may
have eligibility requirements.
We offer the following optional death benefits: MAV Death Benefit, 5%
Accumulation Death Benefit, Enhanced Death Benefit, Benefit Protector Death
Benefit rider and Benefit Protector Plus Death Benefit rider. Benefit Protector
Death Benefit rider and Benefit Protector Plus Death Benefit rider are intended
to provide an additional benefit to your beneficiary to help offset expenses
after your death such as funeral expenses or federal and state taxes.
BENEFITS IN CASE OF DEATH: For the Current Contract, if you die before the
annuitization start date, we will pay the beneficiary an amount based on the
applicable death benefit. For the Original Contract, if you or the annuitant die
before the annuitization start date, we will pay the beneficiary an amount based
on the applicable death benefit. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the annuitization start
date. You may choose from a variety of plans to make sure that payouts continue
as long as you like. If you buy a qualified annuity, the payout schedule must
meet IRS requirements. We can make payouts on a fixed or variable basis, or
both. During the annuity payout period, your choices for subaccounts may be
limited. The GPAs, the Special DCA fixed account (Current Contract) and the DCA
fixed accounts (Original Contract) are not available after the annuitization
start date. (See "The Annuity Payout Period").
--------------------------------------------------------------------------------
6 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A SURRENDER FROM THESE CONTRACTS. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAY PAY WHEN YOU MAKE A SURRENDER FROM ONE OF THESE CONTRACTS. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 7%
1 7
2 6
3 6
4 5
5 4
6 2
Thereafter 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE MAXIMUM: $50 CURRENT: $40
ANNUAL CONTRACT ADMINISTRATIVE CHARGE IF YOUR CONTRACT VALUE MAXIMUM: $20 CURRENT: $0
EQUALS OR EXCEEDS $50,000
CONTRACT ADMINISTRATIVE CHARGE AT FULL SURRENDER MAXIMUM: $50 CURRENT: $40
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE ONE OF THE DEATH BENEFIT GUARANTEES. THE DEATH BENEFIT YOU
CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW
SHOWS THE DEATH BENEFIT GUARANTEES AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.30% 0.15% 1.45%
ROPP Death Benefit 1.30 0.15 1.45
MAV Death Benefit 1.55 0.15 1.70
5% Accumulation Death Benefit 1.70 0.15 1.85
Enhanced Death Benefit 1.75 0.15 1.90
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 7
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROPP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. The optional living benefits require participation
in the PN program. The fees apply only if you have selected one of these
benefits.
SECURESOURCE STAGES 2(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
SECURESOURCE STAGES 2(SM) - JOINT LIFE RIDER FEE MAXIMUM: 2.25% CURRENT: 1.15%
(Charged annually on the contract anniversary as a percentage of contract value
or the total Benefit Base, whichever is greater.)
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 1.50%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed after July 18, 2010, but prior to Oct. 4,
2010, the current fee is 1.10%.
SECURESOURCE(R) STAGES - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) STAGES - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.35%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Benefit Base, whichever is greater.)
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
NUMBER OF COMPLETED YEARS SURRENDER CHARGE PERCENTAGE
FROM DATE OF EACH PURCHASE PAYMENT APPLIED TO EACH PURCHASE PAYMENT
0 7%
1 7
2 6
3 6
4 5
5 4
6 2
Thereafter 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
Under this annuity payout plan, you can choose to take a surrender. The amount
that you can surrender is the present value of any remaining variable payouts.
The discount rate we use in the calculation will be 5.17% if the assumed
investment rate is 3.5% and 6.67% if the assumed investment rate is 5%. The
surrender charge equals the present value of the remaining payouts using the
assumed investment rate minus the present value of the remaining payouts using
the discount rate. (See Charges -- Surrender Charge and The Annuity Payout
Period -- Annuity Payout Plans.)
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE AND AT FULL SURRENDER $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full surrender)
--------------------------------------------------------------------------------
8 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE ONE OF THE DEATH BENEFIT GUARANTEES. THE DEATH BENEFIT YOU
CHOOSE DETERMINES THE MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW
SHOWS THE DEATH BENEFIT GUARANTEES AVAILABLE TO YOU AND THEIR COST. THE VARIABLE
ACCOUNT ADMINISTRATIVE CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK
FEE.
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.30% 0.15% 1.45%
MAV Death Benefit 1.50 0.15 1.65
5% Accumulation Death Benefit 1.65 0.15 1.80
Enhanced Death Benefit 1.70 0.15 1.85
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you select one of these
benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits, if available in your state. The fees apply only if you elected one of
these benefits when you purchased your contract. Each optional living benefit
requires participation in the PN program.
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed prior to Jan. 25, 2009 the current fee was
0.55% and for contract applications signed between Jan. 25, 2009 and May 30,
2009, the current fee was 0.80%.
FOR APPLICATIONS SIGNED ON OR AFTER AUG. 10, 2009 BUT PRIOR TO NOV. 30, 2009,
SUBJECT TO STATE AVAILABILITY, OR IN STATES WHERE THE CURRENT CONTRACT WAS NOT
AVAILABLE:
SECURESOURCE(R) 20 - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.25%
SECURESOURCE(R) 20 - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009, BUT PRIOR TO AUG. 10, 2009,
OR IN STATES WHERE THE CURRENT CONTRACT AND SECURESOURCE 20 WERE NOT AVAILABLE:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO JAN. 26, 2009:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 9
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
10 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
AllianceBernstein VPS Balanced Wealth Strategy Portfolio 0.55% 0.25% 0.11% --% 0.91%
(Class B)
AllianceBernstein VPS Global Thematic Growth Portfolio 0.75 0.25 0.19 -- 1.19
(Class B)
AllianceBernstein VPS Growth and Income Portfolio (Class B) 0.55 0.25 0.05 -- 0.85
AllianceBernstein VPS International Value Portfolio (Class 0.75 0.25 0.07 -- 1.07
B)
American Century VP Inflation Protection, Class II 0.47 0.25 0.01 -- 0.73
American Century VP International, Class II 1.31 0.25 0.02 -- 1.58
American Century VP Mid Cap Value, Class II 0.90 0.25 0.01 -- 1.16
American Century VP Ultra(R), Class II 0.90 0.25 0.01 -- 1.16
American Century VP Value, Class II 0.88 0.25 -- -- 1.13
Columbia Variable Portfolio - Cash Management Fund (Class 0.33 0.13 0.14 -- 0.60(1)
3)
Columbia Variable Portfolio - Diversified Bond Fund (Class 0.41 0.13 0.13 -- 0.67
3)
Columbia Variable Portfolio - Diversified Equity Income 0.57 0.13 0.13 -- 0.83
Fund (Class 3)
Columbia Variable Portfolio - Dynamic Equity Fund (Class 3) 0.66 0.13 0.16 0.01 0.96
Columbia Variable Portfolio - Emerging Markets Opportunity 1.07 0.13 0.25 -- 1.45(1)
Fund (Class 3)
Columbia Variable Portfolio - Global Inflation Protected 0.42 0.13 0.14 -- 0.69
Securities Fund (Class 3)
Columbia Variable Portfolio - High Income Fund (Class 2) 0.63 0.25 0.15 -- 1.03(1),(2)
Columbia Variable Portfolio - High Yield Bond Fund (Class 0.58 0.13 0.17 -- 0.88(1)
3)
Columbia Variable Portfolio - Income Opportunities Fund 0.57 0.13 0.14 -- 0.84
(Class 3)
Columbia Variable Portfolio - International Opportunity 0.79 0.13 0.21 -- 1.13
Fund (Class 3)
Columbia Variable Portfolio - Large Cap Growth Fund (Class 0.71 0.13 0.17 -- 1.01(1)
3)
Columbia Variable Portfolio - Marsico Growth Fund (Class 1) 0.97 -- 0.13 -- 1.10(1),(2)
Columbia Variable Portfolio - Marsico International 1.02 0.25 0.20 -- 1.47(1),(2)
Opportunities Fund (Class 2)
Columbia Variable Portfolio - Mid Cap Growth Opportunity 0.76 0.13 0.17 -- 1.06(1)
Fund (Class 3)
Columbia Variable Portfolio - Mid Cap Value Opportunity 0.74 0.13 0.14 -- 1.01
Fund (Class 3)
Columbia Variable Portfolio - S&P 500 Index Fund (Class 3) 0.10 0.13 0.27 -- 0.50
Columbia Variable Portfolio - Select Large-Cap Value Fund 0.71 0.13 0.26 -- 1.10(1)
(Class 3)
Columbia Variable Portfolio - Short Duration U.S. 0.36 0.13 0.15 -- 0.64
Government Fund (Class 3)
Columbia Variable Portfolio - Small Cap Value Fund (Class 0.87 0.25 0.12 0.02 1.26(1),(3)
2)
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 11
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Credit Suisse Trust - Commodity Return Strategy Portfolio 0.50% 0.25% 0.31% --% 1.06%(4)
Dreyfus Investment Portfolios MidCap Stock Portfolio, 0.75 0.25 0.11 -- 1.11
Service Shares
Dreyfus Investment Portfolios Technology Growth Portfolio, 0.75 0.25 0.08 -- 1.08
Service Shares
Dreyfus Variable Investment Fund Appreciation Portfolio, 0.75 0.25 0.05 -- 1.05
Service Shares
Dreyfus Variable Investment Fund International Equity 0.75 0.25 0.35 -- 1.35
Portfolio, Service Shares
Dreyfus Variable Investment Fund International Value 1.00 0.25 0.25 -- 1.50
Portfolio, Service Shares
Eaton Vance VT Floating-Rate Income Fund 0.57 0.50 0.08 -- 1.15
Fidelity(R) VIP Contrafund(R) Portfolio Service Class 2 0.56 0.25 0.09 -- 0.90
Fidelity(R) VIP Growth Portfolio Service Class 2 0.56 0.25 0.11 -- 0.92
Fidelity(R) VIP Investment Grade Bond Portfolio Service 0.32 0.25 0.10 -- 0.67
Class 2
Fidelity(R) VIP Mid Cap Portfolio Service Class 2 0.56 0.25 0.10 -- 0.91
Fidelity(R) VIP Overseas Portfolio Service Class 2 0.71 0.25 0.14 -- 1.10
FTVIPT Franklin Income Securities Fund - Class 2 0.45 0.25 0.02 -- 0.72
FTVIPT Franklin Rising Dividends Securities Fund - Class 2 0.62 0.25 0.02 0.01 0.90(5)
FTVIPT Franklin Small-Mid Cap Growth Securities 0.50 0.25 0.29 0.01 1.05
Fund - Class 2
FTVIPT Mutual Shares Securities Fund - Class 2 0.60 0.25 0.13 -- 0.98
FTVIPT Templeton Global Bond Securities Fund - Class 2 0.46 0.25 0.10 -- 0.81
FTVIPT Templeton Growth Securities Fund - Class 2 0.74 0.25 0.04 -- 1.03
Goldman Sachs VIT Mid Cap Value Fund - Institutional Shares 0.80 -- 0.06 -- 0.86(6)
Goldman Sachs VIT Structured U.S. Equity 0.62 -- 0.08 -- 0.70(7)
Fund - Institutional Shares
Invesco V.I. Global Health Care Fund, Series II Shares 0.75 0.25 0.37 -- 1.37
Invesco V.I. International Growth Fund, Series II Shares 0.71 0.25 0.32 -- 1.28
Invesco V.I. Mid Cap Core Equity Fund, Series II Shares 0.73 0.25 0.30 -- 1.28
Invesco Van Kampen V.I. American Franchise Fund, Series II 0.67 0.25 0.28 -- 1.20(8)
Shares
Invesco Van Kampen V.I. Comstock Fund, Series II Shares 0.56 0.25 0.24 -- 1.05(9)
Invesco Van Kampen V.I. Mid Cap Growth Fund, Series II 0.75 0.25 0.33 -- 1.33(10)
Shares
Invesco Van Kampen V.I. Value Opportunities Fund, Series II 0.69 0.25 0.31 -- 1.25
Shares
Janus Aspen Series Janus Portfolio: Service Shares 0.56 0.25 0.07 -- 0.88
Legg Mason ClearBridge Variable Small Cap Growth 0.75 -- 0.14 -- 0.89
Portfolio - Class I
MFS(R) Investors Growth Stock Series - Service Class 0.75 0.25 0.07 -- 1.07
MFS(R) New Discovery Series - Service Class 0.90 0.25 0.08 -- 1.23
MFS(R) Total Return Series - Service Class 0.75 0.25 0.06 -- 1.06(11)
MFS(R) Utilities Series - Service Class 0.73 0.25 0.08 -- 1.06
Morgan Stanley UIF Global Real Estate Portfolio, Class II 0.85 0.35 0.47 -- 1.67(12)
Shares
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II 0.75 0.35 0.30 -- 1.40(12)
Shares
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II 0.80 0.35 0.29 -- 1.44(12)
Shares
Oppenheimer Capital Appreciation Fund/VA, Service Shares 0.68 0.25 0.12 -- 1.05
Oppenheimer Global Securities Fund/VA, Service Shares 0.63 0.25 0.13 -- 1.01
Oppenheimer Global Strategic Income Fund/VA, Service Shares 0.58 0.25 0.13 0.07 1.03(13)
Oppenheimer Main Street Small- & Mid-Cap Fund(R)/VA, 0.69 0.25 0.14 -- 1.08(14)
Service Shares
PIMCO VIT All Asset Portfolio, Advisor Share Class 0.43 0.25 -- 0.74 1.42(15)
Putnam VT Global Health Care Fund - Class IB Shares 0.63 0.25 0.21 -- 1.09
Putnam VT International Equity Fund - Class IB Shares 0.70 0.25 0.17 -- 1.12
Putnam VT Multi-Cap Growth Fund - Class IB Shares 0.56 0.25 0.16 -- 0.97
--------------------------------------------------------------------------------
12 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME** FEES FEES EXPENSES EXPENSES*** EXPENSES
Putnam VT Small Cap Value Fund - Class IB Shares 0.63% 0.25% 0.15% 0.11% 1.14%
Variable Portfolio - Aggressive Portfolio (Class 2) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Aggressive Portfolio (Class 4) -- 0.25 0.02 0.79 1.06
Variable Portfolio - Conservative Portfolio (Class 2) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Conservative Portfolio (Class 4) -- 0.25 0.02 0.61 0.88
Variable Portfolio - Davis New York Venture Fund (Class 3) 0.71 0.13 0.13 -- 0.97(16)
Variable Portfolio - Goldman Sachs Mid Cap Value Fund 0.77 0.13 0.13 -- 1.03(16)
(Class 3)
Variable Portfolio - Moderate Portfolio (Class 2) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderate Portfolio (Class 4) -- 0.25 0.02 0.71 0.98
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
2)
Variable Portfolio - Moderately Aggressive Portfolio (Class -- 0.25 0.02 0.75 1.02
4)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 2)
Variable Portfolio - Moderately Conservative Portfolio -- 0.25 0.02 0.66 0.93
(Class 4)
Variable Portfolio - Partners Small Cap Value Fund (Class 0.91 0.13 0.15 0.02 1.21(16)
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
Wanger USA 0.86 -- 0.08 -- 0.94(2)
*The Funds provided the information on their expenses and we have not
independently verified the information.
**The previous fund names can be found in "The Variable Account and the
Funds" section of the prospectus.
***Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3), 0.925% for Columbia Variable Portfolio - Select Large-Cap Value
Fund (Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value
Fund (Class 2).
(2)Other expenses have been restated to reflect contractual changes to certain
other fees.
(3)Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4)Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5)The Investment Manager has contractually agreed in advance to reduce its
fees as a result of the Fund's investment in a Franklin Templeton money
market fund. This reduction will continue until at least April 30, 2013.
After fee reductions, net expenses would be 0.89%.
(6)Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(7)Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(8)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 13
(9)The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(10)Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(11)MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(12)The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares, 1.15% for
Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares and 1.35% for
Morgan Stanley UIF U.S. Real Estate Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(13)The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the management fee it receives from the Fund
in an amount equal to the management fee it receives from the Subsidiary.
This undertaking will continue in effect for so long as the Fund invests in
the Subsidiary, and may not be terminated by the Manager unless termination
is approved by the Fund's Board of Trustees. After fee waivers, net
expenses would be 0.97%.
(14)The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(15)PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(16)Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
--------------------------------------------------------------------------------
14 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES,
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
SecureSource Stages 2 - Joint Life rider and the Benefit Protector Plus Death
Benefit(1),(3). Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,295 $2,510 $3,703 $6,347 $665 $1,968 $3,249 $6,347
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROPP Death Benefit and do not select any
optional benefits(2). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$888 $1,320 $1,753 $2,652 $240 $735 $1,253 $2,652
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider or SecureSource 20 - Joint Life
rider and the Benefit Protector Plus Death Benefit.(2),(3) Although your actual
costs may be lower, based on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$1,305 $2,540 $3,750 $6,434 $675 $1,998 $3,297 $6,434
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits(2). Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
AT THE END OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
$888 $1,320 $1,753 $2,652 $240 $735 $1,253 $2,652
(1) In these examples, the contract administrative charge is $50.
(2) In these examples, the contract administrative charge is $40.
(3) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 15
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix P.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation
--------------------------------------------------------------------------------
16 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
program rebalancing or reallocations. Because asset allocation programs
include periodic rebalancing and may also include reallocation, these effects
may occur under the asset allocation program we offer (see "Making the Most of
Your Contract -- Portfolio Navigator Program") or under asset allocation
programs used in conjunction with the contracts and plans of other eligible
purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 17
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
18 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PAYMENTS AND TRANSFERS TO
ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF
THE FOLLOWING FUNDS:
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein N Y Seeks to maximize total AllianceBernstein L.P.
VPS Balanced Wealth return consistent with
Strategy Portfolio AllianceBernstein's
(Class B) determination of reasonable
risk.
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks long-term total return American Century Investment
Inflation using a strategy that seeks Management, Inc.
Protection, Class II to protect against U.S.
inflation.
-------------------------------------------------------------------------------------------------------------------------
American Century VP N Y Seeks capital growth. American Century Investment
International, Class Management, Inc.
II
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Mid Cap Value, Class growth. Income is a Management, Inc.
II secondary objective.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Ultra(R), Class II growth. Management, Inc.
-------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century Investment
Value, Class II growth. Income is a Management, Inc.
secondary objective.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current income Columbia Management
Portfolio - Cash consistent with liquidity Investment Advisers, LLC
Management Fund and stability of principal.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income while attempting to Investment Advisers, LLC
fied Bond Fund conserve the value of the
(Class 3) investment for the longest
period of time.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Diversi- income and, as a secondary Investment Advisers, LLC
fied Equity Income goal, steady growth of
Fund (Class 3) capital.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - Dynamic Investment Advisers, LLC
Equity Fund (Class
3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 19
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital appreciation. Columbia Management
Portfolio - In- Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC, subadviser.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC, subadviser.
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks long-term growth of Columbia Management
Portfolio - Select capital. Investment Advisers, LLC
Large-Cap Value Fund
(Class 3)
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of current Columbia Management
Portfolio - Short income and safety of Investment Advisers, LLC
Duration U.S. principal consistent with
Government Fund investment in U.S.
(Class 3) government and government
agency securities.
-------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
-------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks investment results The Dreyfus Corporation
Portfolios MidCap that are greater than the
Stock Portfolio, total return performance of
Service Shares publicly traded common
stocks of medium-size
domestic companies in the
aggregate, as represented by
the Standard & Poor's MidCap
400 Index.
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks capital appreciation. The Dreyfus Corporation
Portfolios
Technology Growth
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser
Shares
-------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 21
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of current Eaton Vance Management
Floating-Rate Income income.
Fund
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in common the fund's manager. FMR Co.,
Class 2 stocks. Invests in Inc. (FMRC) and other
securities of companies investment advisers serve as
whose value it believes is sub-advisers for the fund.
not fully recognized by the
public. Invests in either
"growth" stocks or "value"
stocks or both. The fund
invests in domestic and
foreign issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP N Y Seeks to achieve capital Fidelity Management &
Growth Portfolio appreciation. Normally Research Company (FMR) is
Service Class 2 invests primarily in common the fund's manager. FMR Co.,
stocks. Invests in companies Inc. (FMRC) and other
that it believes have above- investment advisers serve as
average growth potential sub-advisers for the fund.
(stocks of these companies
are often called "growth"
stocks). The Fund invests in
domestic and foreign
issuers.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager. Fidelity
Service Class 2 preservation of capital. Investments Money
Normally invests at least Management, Inc. (FIMM) and
80% of assets in investment- other investment advisers
grade debt securities (those serve as sub-advisers for
of medium and high quality) the fund.
of all types and repurchase
agreements for those
securities.
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks. the fund's manager. FMR Co.,
Normally invests at least Inc. (FMRC) and other
80% of assets in securities investment advisers serve as
of companies with medium sub-advisers for the fund.
market capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests in
domestic and foreign
issuers. The Fund invests in
either "growth" or "value"
common stocks or both.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR Co.,
allocating investments Inc. (FMRC) and other
across different countries investment advisers serve as
and regions. Normally sub-advisers for the fund.
invests at least 80% of
assets in non-U.S.
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining prospects
Fund - Class 2 for capital appreciation.
The fund normally invests in
both equity and debt
securities.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisory Services,
Rising Dividends appreciation, with LLC
Securities preservation of capital as
Fund - Class 2 an important consideration.
The fund normally invests at
least 80% of its net assets
in investments of companies
that have paid rising
dividends.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks long-term capital Franklin Advisers, Inc.
Small-Mid Cap Growth growth. The fund normally
Securities invests at least 80% of its
Fund - Class 2 net assets in investments of
small capitalization and mid
capitalization companies.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Mutual Shares N Y Seeks capital appreciation, Franklin Mutual Advisers,
Securities with income as a secondary LLC
Fund - Class 2 goal. The fund normally
invests primarily in U.S.
and foreign equity
securities that the manager
believes are undervalued.
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with preservation
Securities of capital, with capital
Fund - Class 2 appreciation as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any maturity,
such as bonds, notes, bills
and debentures.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 23
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in equity
securities of companies
located anywhere in the
world, including those in
the U.S. and emerging
markets.
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Mid Cap N Y Seeks long-term growth of Invesco Advisers, Inc.
Core Equity Fund, capital.
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible into
common and preferred stocks.
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
-------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen N Y Seeks long-term growth of Invesco Advisers, Inc.
V.I. Value capital.
Opportunities Fund,
Series II Shares
(previously Invesco
V.I. - Basic Value
Fund, Series II
Shares)
-------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management LLC
Janus Portfolio: capital.
Service Shares
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Investors N Y Seeks capital appreciation. MFS(R) Investment Management
Growth Stock
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) New Discovery N Y Seeks capital appreciation. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment Management
Series - Service
Class
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity securities.
-------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF N Y Seeks to provide above Morgan Stanley Investment
U.S. Real Estate average current income and Management Inc.
Portfolio, Class II long-term capital
Shares appreciation by investing
primarily in equity
securities of companies in
the U.S. real estate
industry, including real
estate investment trusts.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing a
Service Shares substantial portion of its
assets in securities of
foreign issuers, "growth-
type" companies, cyclical
industries and special
situations that are
considered to have
appreciation possibilities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 25
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
-------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital appreciation. OppenheimerFunds, Inc.
Street Small- & Mid-
Cap Fund(R)/VA,
Service Shares
-------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with preservation Management Company LLC
Share Class of real capital and prudent (PIMCO)
investment management.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital appreciation. Putnam Investment
Health Care Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT N Y Seeks capital appreciation. Putnam Investment
International Equity Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Multi-Cap N Y Seeks long-term capital Putnam Investment
Growth Fund - Class appreciation. Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital appreciation. Putnam Investment
Value Fund - Class Management, LLC
IB Shares
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level of
4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in equity securities and
also invests a small amount
in underlying funds that
invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 2) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level of
(Class 4) risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in
underlying funds that invest
in fixed income securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P., subadviser.
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs Asset
Fund (Class 3) Management, L.P.,
subadviser.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 27
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to achieve
its objective by investing
in a combination of
underlying funds. The fund
invests primarily in a
balance of underlying funds
that invest in fixed income
securities and underlying
funds that invest in equity
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 2) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately aggressive
Portfolio (Class 4) level of risk. This is a
"fund of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that invest
in equity securities and
also invests a moderate
amount in underlying funds
that invest in fixed income
securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in a
combination of underlying
funds. The fund invests
primarily in underlying
funds that invest in fixed
income securities and also
invests a moderate amount in
underlying funds that invest
in equity securities.
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 29
-------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS APPLICATIONS
SIGNED ON OR AFTER SIGNED PRIOR TO INVESTMENT OBJECTIVE AND
INVESTING IN MAY 1, 2007 MAY 1, 2007 POLICIES INVESTMENT ADVISER
-------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
-------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
-------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available for contracts in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments to one or more of the GPAs with guarantee periods declared by us. These
periods of time vary by state. The required minimum investment in each GPA is
$1,000. (Exception: if a PN program model portfolio includes one or more GPAs,
the required minimum investment does not apply.) These accounts are not offered
after the annuitization start date.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our general account is exposed to the risks normally
associated with a portfolio of fixed-income securities, including interest rate,
option, liquidity and credit risk. You should also be aware that we issue other
types of insurance and financial products as well, and we also pay our
obligations under these products from assets in our general account. Our general
account is not segregated or insulated from the claims of our creditors. The
financial statements contained in the SAI include a further discussion of the
risks inherent within the investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or surrender out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window, you may choose to start a new guarantee period of the same length,
transfer the contract value from the specified GPA to a GPA of another length,
transfer the contract value from the specified GPA to any of the subaccounts,
the regular fixed account (Current Contract) or the one-year fixed account
(Original Contract), or surrender the value from the specified GPA (all subject
to applicable surrender and transfer provisions). If we do not receive any
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 31
instructions by the end of your guarantee period, our current practice is to
automatically transfer the contract value from the specified GPA into the
shortest GPA term offered in your state. If no GPAs are offered, we will
transfer the value to the regular fixed account (Current Contract) or the one-
year fixed account (Original Contract), if available. If the regular fixed
account (Current Contract) or the one-year fixed account (Original Contract) is
not available, we will transfer the value to the money market or cash management
variable subaccount we designate.
We guarantee the contract value allocated to the GPAs, including the interest
credited, if you do not make any transfers or surrenders from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you surrender or transfer contract value from a
GPA including surrenders under the SecureSource series of riders, the Guarantor
Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early surrenders." The application of an
MVA may result in either a gain or loss of principal.
For the Current Contract, the 30-day rule does not apply and no MVA will apply
to:
amounts surrendered under contract provisions that waive surrender charges for
Hospital or Nursing Home Confinement and Terminal Illness Disability
Diagnosis;
amounts transferred automatically under the PN program; and
amounts deducted for fees and charges.
Amounts we pay as death claims will not be reduced by any MVA.
For the Original Contract, the 30-day rule does not apply and no MVA will apply
to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts deducted for fees and charges; or
amounts we pay as death claims.
When you request an early surrender, we adjust the early surrender amount by an
MVA formula. The early surrender amount reflects the relationship between the
guaranteed interest rate you are earning in your current GPA and the interest
rate we are crediting on new GPAs that end at the same time as your current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the early surrender, the time remaining in your guarantee period
and your guaranteed interest rate. The MVA is negative, zero or positive
depending on how the guaranteed interest rate on your GPA compares to the
interest rate of a new GPA for the same number of years as the guarantee period
remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO CONTRACT APPLICATIONS SIGNED ON OR AFTER MAY 1,
2006 AND IF AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. For
the Current Contract, the fixed account includes the regular fixed account and
the Special DCA fixed account. For the Original Contract, the fixed account
includes the one-year fixed account and the DCA fixed account. We credit
interest on amounts you allocate to the fixed account at rates we determine from
time to time in our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns we earn on
our general account investments, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
on amounts invested in the fixed account may vary by state but will not be lower
than state law allows. We back the principal and interest guarantees relating to
the fixed account. These guarantees are based on the continued claims-paying
ability of RiverSource Life. You should be aware that our general account is
exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. You
--------------------------------------------------------------------------------
32 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
should also be aware that we issue other types of insurance and financial
products as well, and we also pay our obligations under these products from
assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
THE REGULAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the regular fixed account. The value of the
regular fixed account increases as we credit interest to the regular fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the regular fixed
account is guaranteed for one year. Thereafter, we will change the rates from
time to time at our discretion, but your interest rate for each purchase payment
or transfer will never change more frequently than annually. There are
restrictions on transfers from this account and may be restrictions on the
amount you can allocate to this account (see "Making the Most of Your
Contract -- Transfer policies").
THE SPECIAL DCA FIXED ACCOUNT
You may allocate purchase payments to the Special DCA fixed account. You may not
transfer contract value to the Special DCA fixed account.
You may allocate your entire initial purchase payment to the Special DCA fixed
account for a term of six or twelve months. We reserve the right to offer
shorter or longer terms for the Special DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the Special DCA fixed account to the subaccounts or PN program investment
option you select monthly so that, at the end of the Special DCA fixed account
term, the balance of the Special DCA fixed account is zero. The first Special
DCA monthly transfer occurs one day after we receive your payment. You may not
use the regular fixed account or any GPA as a destination for the Special DCA
monthly transfer. (Exception: if a PN program is in effect, and the PN program
investment option you selected, if applicable, includes the regular fixed
account or any GPA, amounts will be transferred from the Special DCA fixed
account to the regular fixed account or GPA according to the allocation
percentage established for the PN program investment option you have selected.)
The value of the Special DCA fixed account increases when we credit interest to
the Special DCA fixed account, and decreases when we make monthly transfers from
the Special DCA fixed account. When you allocate a purchase payment to the
Special DCA fixed account, the interest rates applicable to that purchase
payment will be the rates in effect for the Special DCA fixed account term you
choose on the date we receive your purchase payment. The applicable interest
rate is guaranteed for the length of the term for the Special DCA fixed account
term you choose. We credit and compound interest daily based on a 365-day year
(366 in a leap year) so as to produce the annual effective rate which we
declare. We credit interest only on the declining balance of the Special DCA
fixed account; we do not credit interest on amounts that have been transferred
from the Special DCA fixed account. As a result, the net effective interest
rates we credit will be less than the declared annual effective rates.
Generally, we will credit the Special DCA fixed account with interest at the
same annual effective rate we apply to the regular fixed account on the date we
receive your purchase payment, regardless of the length of the term you select.
From time to time, we may credit interest to the Special DCA fixed account at
promotional rates that are higher than those we credit to the regular fixed
account. We reserve the right to declare different annual effective rates:
for the Special DCA fixed account and the regular fixed account; and
for the Special DCA fixed accounts with terms of differing length.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the Special DCA fixed account for a six month term;
the Special DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the regular fixed account,
the GPAs and/or the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the regular account and the GPAs.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 33
Once you establish a Special DCA fixed account, you cannot allocate additional
purchase payments to it. However, you may establish another Special DCA fixed
account and allocate new purchase payments to it.
If you participate in a PN program, and you change to a different PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from the Special DCA fixed account to your newly-elected PN
program investment option.
If your contract permits, and you discontinue your participation in a PN program
while a Special DCA fixed account term is in progress, we will allocate
transfers from your Special DCA fixed account for the remainder of the term to
the subaccounts in accordance with your current Special DCA fixed account
allocation instructions. If your current Special DCA fixed account allocation
instructions include a fund to which allocations are restricted and you do not
provide new instructions, we will transfer prorated amounts to the valid portion
of your allocation instruction.
You may discontinue any Special DCA fixed account before the end of its term by
giving us notice. If you do so, we will transfer the remaining balance of the
Special DCA fixed account to the PN program investment option in effect, or if
no PN program investment option is in effect, in accordance with your investment
instructions to us to the regular fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the regular fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the Special DCA fixed account does not guarantee that
any subaccount will gain in value nor will it protect against a decline in value
if market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account if part of your
contract. The value of the one-year fixed account increases as we credit
interest to the one-year fixed account. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit the one-year fixed account with the
current guaranteed annual rate that is in effect on the date we receive your
purchase payment or you transfer contract value to the one-year fixed account.
The interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. There are restrictions on the amount
you can allocate to the one-year fixed account as well as on transfers from this
account (see "Making the Most of Your Contract -- Transfer policies").
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The first DCA monthly transfer occurs one day after we receive your
payment.
The value of the DCA fixed account increases when we credit interest to the DCA
fixed account, and decreases when we make monthly transfers from the DCA fixed
account. When you allocate a purchase payment to the DCA fixed account, the
interest rates applicable to that purchase payment will be the rates in effect
for the DCA fixed account term you choose on the date we receive your purchase
payment. The applicable interest rate is guaranteed for the length of the term
for the DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the DCA fixed account; we do not credit interest on amounts that have
been transferred from the DCA fixed account. As a result, the net effective
interest rates we credit will be less than the declared annual effective rates.
Generally, we will credit the DCA fixed account with interest at the same annual
effective rate we apply to the one-year fixed account on the date we receive
your purchase payment, regardless of the length of the term you select. From
time to time, we may credit interest to the DCA fixed account at promotional
rates that are higher than those we credit to the one-year fixed account. We
reserve the right to declare different annual effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
--------------------------------------------------------------------------------
34 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
for amounts in the DCA fixed account that are transferred to the one-year
fixed account;
for amounts in the DCA fixed account that are transferred to the GPAs;
for amounts in the DCA fixed account that are transferred to the subaccounts.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account for the remainder of the term in
accordance with your investment instructions to us to the one-year fixed
account, the GPAs and the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and the
GPAs, including but not limited to, any limitations described in this prospectus
on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may select a
qualified or nonqualified annuity. You can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. For the Current Contract, you can buy a
contract if you are 85 or younger. For the Original Contract, you can buy a
contract if you and the annuitant are age 85 or younger. (The age limit may be
younger for qualified annuities in some states.)
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 35
When you applied, you could have selected:
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
GPAs, the regular fixed account, the Special DCA fixed account and/or
subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition you could have also selected one of the following optional living
benefits (all require the use of the PN program):
SecureSource Stages 2 riders;
SecureSource Stages riders;
Accumulation Protector Benefit rider
The Current Contract provides for allocation of purchase payments to the GPAs,
the regular fixed account, the Special DCA fixed account and/or the subaccounts
of the variable account subject to the $1,000 required minimum investment for
the GPAs. We currently allow you to allocate the total amount of purchase
payment to the regular fixed account. We reserve the right to limit purchase
payment allocations to the regular fixed account at any time on a non-
discriminatory basis with notification, subject to state restrictions. You
cannot allocate purchase payments to the fixed account for six months following
a partial surrender from the fixed account, a lump sum transfer from the regular
fixed account, or termination of automated transfers from the Special DCA fixed
account prior to the end of the Special DCA fixed account term.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
GPAs, the one-year fixed account, if part of your contract, the DCA fixed
account if part of your contract and/or subaccounts in which you want to
invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available in your state, could have also selected one of the
following optional living benefits (all require the use of the PN program):
SecureSource 20 riders;
SecureSource riders;
Accumulation Protector Benefit rider;
Guarantor Withdrawal Benefit for Life rider;
Guarantor Withdrawal Benefit rider;
Income Assurer Benefit - MAV rider;
Income Assurer Benefit - 5% Accumulation Benefit Base rider; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider.
--------------------------------------------------------------------------------
36 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(1) There is no additional charge for this feature.
(2) Not available with 5% Accumulation or Enhanced Death Benefit.
The Original Contract provides for allocation of purchase payments to the GPAs,
the one-year fixed account (if part of your contract), the DCA fixed account (if
part of your contract) and/or to the subaccounts of the variable account in even
1% increments subject to the $1,000 required minimum investment for the GPAs.
The amount of any purchase payment allocated to the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish an automated dollar-cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect. We reserve the right to further limit purchase payment
allocations to the one-year fixed account if the interest rate we are then
crediting on new purchase payments allocated to the one-year fixed account is
equal to the minimum interest rate stated in the contract.
FOR BOTH THE CURRENT CONTRACT AND THE ORIGINAL CONTRACT:
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the annuitization start date.
THE ANNUITIZATION START DATE
CURRENT CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments. If
your contract is annuitized, the contract goes into payout and only the annuity
payout provisions continue. Unless annuity payout Plan E is selected, you will
no longer have access to your contract value. This means that the death benefit
and any optional benefits you have elected will end. When we process your
application, we will establish the annuitization start date to be the maximum
age (or contract anniversary if applicable). You also can change the
annuitization start date, provided you send us written instructions at least 30
days before annuity payouts begin.
The annuitization start date must be:
no earlier than the 30th day after the contract's effective date; and no later
than
the owner's 95th birthday or the tenth contract anniversary, if later,
or such other date as agreed to by us.
Six months prior to your annuitization date, we will contact you with your
options including the option to postpone your annuitization start date to a
future date. You can also choose to delay the annuitization of your contract
beyond age 95 indefinitely, to the extent allowed by applicable tax laws.
If you do not make an election, annuity payouts using the contract's default
option of annuity payout Plan B - Life with 10 years certain will begin on the
annuitization start date and your monthly annuity payments will continue for as
long as the annuitant lives. If the annuitant does not survive 10 years,
beneficiaries will continue to receive payments until 10 years of payments have
been made. Some distributors require annuitization by age 95. In that case, the
option to continue to defer the annuitization start date after age 95 is not
available.
If you own a qualified annuity (for example, an IRA) and tax laws require that
you take distributions from your annuity prior to your new annuitization start
date, your contract will not be automatically annuitized. However, if you
choose, you can elect to request annuitization or take surrenders to meet your
required minimum distributions.
Please see "SecureSource Stages 2 -- Other Provisions" section regarding options
under this rider at the annuitization start date.
ORIGINAL CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments and you
will receive the first payment on the annuitization start date. The first
annuity payment will be made as provided by the annuity payment plan you select.
When we process your application, we will establish the
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 37
annuitization start date to be the maximum age (or contract anniversary if
applicable). You also can change the annuitization start date, provided you send
us written instructions at least 30 days before annuity payouts begin.
The annuitization start date must be:
the annuitant's 90th(1) birthday or the tenth contract anniversary, if
purchased after age 80(1),
or such other date as agreed upon by us.
Prior to your annuitization start date, we will contact you with your options.
If you do not make an election, your annuitization start date will be deferred.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
annuitization start date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select an annuitization start date
that is later than April 1 of the year following the calendar year when they
reach age 70 1/2).
If you satisfy your required minimum distributions in the form of partial
surrenders from this contract, annuity payouts can start:
As late as the annuitant's 90th(1) birthday or the tenth contract anniversary,
if later, or a date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, will delay the
annuitization start date for these contracts.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the annuitization start date must be
no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75.
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
while the contract is in force and before the annuitization start date. If there
is more than one beneficiary, we will pay each beneficiary's designated share
when we receive their completed claim. A beneficiary will bear the investment
risk of the variable account until we receive the beneficiary's completed claim.
If there is no named beneficiary, the default provisions of your contract will
apply. (See "Benefits in Case of Death" for more about beneficiaries.)
If you select one of the SecureSource series - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
If we do not receive your initial purchase payment within 180 days from the
application signed date, we will consider your contract void from the start.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS (WITHOUT CORPORATE OFFICE APPROVAL)
- CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state
availability)
MAXIMUM TOTAL PURCHASE PAYMENTS* BASED ON YOUR AGE ON THE EFFECTIVE DATE OF
THE PAYMENT:
For the first year and
total:
through age 85 $1,000,000
age 86 or older $0
For each subsequent year:
through age 85 $100,000
age 86 or older $0
--------------------------------------------------------------------------------
38 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
- ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Jan. 26, 2009, after initial purchase payments are received, limited
additional purchase payments allowed for contracts with the Guarantor Withdrawal
Benefit rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource
riders, subject to state restrictions. Initial purchase payments are: 1)
payments received with the application, and 2) Tax Free Exchanges, rollovers,
and transfers listed on the annuity application, paper work initiated within 30
days from the application signed date and received within 180 days from the
application signed date.
For contracts issued in all states except those listed below, the only
additional purchase payments that will be allowed on/after Jan. 26, 2009 are the
maximum annual contribution permitted by the Code for qualified annuities.
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract with the Guarantor Withdrawal Benefit
rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource riders will
be limited to $100,000 for the life of your contract. The limit does not apply
to initial purchase payments,
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Feb. 27, 2012, no additional purchase payments are allowed for
contracts with SecureSource Stages 2 riders, SecureSource Stages riders and
SecureSource 20 riders subject to certain exceptions listed below.
Certain exceptions apply and the following additional purchase payments will be
allowed on or after Feb. 27, 2012:
a. Current tax year contributions for TSAs and Custodial and investment only
plans under Section 401(a) of the Code, up to the annual limit set by the
IRS.
b. Prior and current tax year contributions up to the annual limit set up by the
IRS for any Qualified Accounts except TSAs and 401(a)s. This annual limit
applies to IRAs, Roth IRAs and SEP plans.
We reserve the right to change these current rules any time, subject to state
restrictions.
The riders also prohibit additional purchase payments while the rider is
effective, if (1) you decline a rider fee increase, or (2) the Annual Lifetime
Payment (ALP) is established and your contract value on an anniversary is less
than four times the ALP. (For the purpose of this calculation only, the ALP is
determined using percentage B, as described under "Optional Living
Benefits -- SecureSource Stages 2 Riders, SecureSource Stages Riders and
SecureSource 20 Riders.")
Additional purchase payment restrictions for the Accumulation Protector Benefit
rider
Additional purchase payments are prohibited during the waiting period after the
first 180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
For the Current Contract, additional purchase payments are also allowed within
180 days from the last contract anniversary if you exercise the elective step up
option.
Subject to state restrictions, we reserve the right to change the above purchase
payment limitations, including making further restrictions, upon written notice.
* These limits apply in total to all RiverSource Life annuities you own unless
a higher maximum applies to your contract. We reserve the right to waive or
increase the maximum limit. For qualified annuities, the Code's limits on
annual contributions also apply. Additional purchase payments for inherited
IRA contracts cannot be made unless the payment is IRA money inherited from
the same decedent.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 39
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, surrenders or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully surrendered. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
that applies to the fixed account. For the Current Contract, we reserve the
right to increase this charge after the first contract anniversary to a maximum
of $50.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary. For the Current Contract, we reserve the right to
charge up to $20 after the first contract anniversary for contracts with
contract value of $50,000 or more.
If you take a full surrender from your contract, we will deduct the charge at
the time of surrender regardless of the contract value. We cannot increase the
annual contract administrative charge for the Original Contract. This charge
does not apply to amounts applied to an annuity payment plan or to the death
benefit (other than when deducted from the Full Surrender Value component of the
death benefit for the Current Contract).
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
The mortality and expense risk fee you pay is determined by the death benefit
guarantee in effect:
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MORTALITY AND
EXPENSE RISK FEE
CV Death Benefit* 1.30%
ROPP Death Benefit 1.30
MAV Death Benefit 1.55
5% Accumulation Death Benefit 1.70
Enhanced Death Benefit 1.75
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
--------------------------------------------------------------------------------
40 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
MORTALITY AND
EXPENSE RISK FEE
ROP Death Benefit 1.30%
MAV Death Benefit 1.50
5% Accumulation Death Benefit 1.65
Enhanced Death Benefit 1.70
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of annuitants live. If, as a group, owners or annuitants outlive
the life expectancy we assumed in our actuarial tables, then we must take money
from our general assets to meet our obligations. If, as a group, owners or
annuitants do not live as long as expected, we could profit from the mortality
risk fee. We deduct the mortality risk fee from the subaccounts during the
annuity payout period even if the annuity payout plan does not involve a life
contingency.
Expense risk arises because we cannot increase the contract administrative
charge for the Original Contract, we are limited on how much we can increase the
contract administrative charge for the Current Contract, and we cannot increase
the variable account administrative charge and these charges may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge will cover sales and distribution expenses.
SURRENDER CHARGE
If you surrender all or part of your contract value before the annuitization
start date, we may deduct a surrender charge. As described below, a surrender
charge applies to each purchase payment you make. The surrender charge lasts for
7 years from the date of each purchase payment (see "Expense Summary").
You may surrender an amount during any contract year without a surrender charge.
We call this amount the total free amount (FA for the Current Contract, TFA for
the Original Contract). Throughout this prospectus when we use the acronym FA,
it includes TFA. The FA varies depending on whether your contract includes one
of the SecureSource series of riders, the Guarantor Withdrawal Benefit for Life
rider or the Guarantor Withdrawal Benefit rider:
CURRENT CONTRACT WITHOUT SECURESOURCE STAGES RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year; or
current contract earnings.
During the first contract year, the FA is the greater of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITHOUT SECURESOURCE 20 RIDER, SECURESOURCE RIDER, GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year; or
current contract earnings.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 41
CURRENT CONTRACT WITH SECURESOURCE STAGES RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Annual Lifetime Payment (this amount will be zero during the
waiting period).
During the first contract year, the FA is the greatest of:
10% of all purchase payments applied prior to your surrender request, less any
amounts surrendered prior to your surrender request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITH SECURESOURCE 20 RIDER, SECURESOURCE RIDER OR GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment (for the SecureSource 20 rider, Remaining Benefit Payment and the
Remaining Annual Lifetime Payment are zero during the waiting period).
ORIGINAL CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment to be the prior contract
anniversary's contract value during the first contract year.
Amounts surrendered in excess of the FA may be subject to a surrender charge as
described below.
A surrender charge will apply if the amount you surrender includes any of your
prior purchase payments that are still within their surrender charge schedule.
To determine whether your surrender includes any of your prior purchase payments
that are still within their surrender charge schedule, we surrender amounts from
your contract in the following order:
1. First, we surrender the FA. Contract earnings are surrendered first, followed
by purchase payments. We do not assess a surrender charge on the FA. We
surrender payments that are considered part of the FA on a first-in, first-
out (FIFO) basis for the Current Contract, and last-in, first-out (LIFO)
basis for the Original Contract.
2. Next, we surrender purchase payments received that are beyond the surrender
charge period shown in your contract. We surrender these payments on a FIFO
basis. We do not assess a surrender charge on these payments.
3. Finally, we surrender any additional purchase payments received that are
still within the surrender charge period shown in your contract. We surrender
these payments on a FIFO basis. We do assess a surrender charge on these
payments.
The amount of purchase payments surrendered is calculated using a prorated
formula based on the percentage of contract value being surrendered. As a
result, the amount of purchase payments surrendered may be greater than the
amount of contract value surrendered.
We determine your surrender charge by multiplying each of your payments
surrendered which could be subject to a surrender charge by the applicable
surrender charge percentage (see "Expense Summary"), and then adding the total
surrender charges.
For a partial surrender, we will determine the amount of contract value that
needs to be surrendered, which after any surrender charge and any positive or
negative market value adjustment, will equal the amount you request.
EXAMPLE: Each time you make a purchase payment under the contract, a surrender
charge schedule attaches to that purchase payment. The surrender charge
percentage for each purchase payment declines according to the surrender charge
schedule shown in your contract. (THE SURRENDER CHARGE PERCENTAGES FOR THE 7-
YEAR SURRENDER CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE SUMMARY".)
For example, during the first two years after a purchase payment is made, the
surrender charge percentage attached to that payment is 7%. The surrender charge
percentage for that payment during the seventh year after it is made is 2%. At
the beginning of the eighth year after that purchase payment is made, and
thereafter, there is no longer a surrender charge as to that payment.
For an example, see Appendix B.
--------------------------------------------------------------------------------
42 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
WAIVER OF SURRENDER CHARGES
We do not assess surrender charges for:
surrenders each year that represent the total free amount for that year;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which surrender charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force. (Please note that, if you are buying a new contract with
inherited IRA money, we will not waive surrender charges for a five-year
distribution and, therefore, if that option is selected, you should choose a
surrender charge period that is no longer than the time remaining in the five-
year period.);
amounts applied to an annuity payment plan (EXCEPTION: As described below, if
you select annuity payout Plan E, and choose later to withdraw the value of
your remaining annuity payments, we will assess a surrender charge.)
surrenders made as a result of one of the "Contingent events" described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions). For the Current Contract, waiver of surrender
charges for Contingent events will not apply to Tax Free Exchanges, rollovers
and transfers to another annuity contract;
amounts we refund to you during the free look period; and
death benefits.
CURRENT CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you are confined to a hospital or nursing home and have
been for the prior 60 days or confinement began within 30 days following a 60
day confinement period. Such confinement must begin after the contract issue
date. Your contract will include this provision when you are under age 76 at
contract issue. You must provide us with a letter containing proof
satisfactory to us of the confinement as of the date you request the
surrender. We must receive your surrender request no later than 91 days after
your release from the hospital or nursing home. The amount surrendered must be
paid directly to you.
Surrenders you make if you are disabled with a medical condition and are
diagnosed in the second or later contract years with reasonable medical
certainty, that the disability will result in death within 12 months or less
from the date of the diagnosis. You must provide us with a licensed
physician's statement containing the terminal illness diagnosis, the expected
date of death and the date the terminal illness was initially diagnosed. The
amount surrendered must be paid directly to you.
ORIGINAL CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the surrender.
Surrenders you make if you or the annuitant are diagnosed in the second or
later contract years as disabled with a medical condition that with reasonable
medical certainty will result in death within 12 months or less from the date
of the diagnosis. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
BOTH CONTRACTS:
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 43
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax on the
annuitization start date, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full surrender
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
SECURESOURCE STAGES 2 RIDER CHARGE
We deduct an annual charge for this optional feature only if you select it as
follows:
SecureSource Stages 2 -- Single Life rider, 0.95%
SecureSource Stages 2 -- Joint Life rider, 1.15%
The charge is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages 2 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated or until the contract value reduces to zero. If the
contract or rider is terminated for any reason, we will deduct the charge,
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the SecureSource Stages 2 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each investment option. The SecureSource Stages 2 -- Single Life rider fee
will not exceed a maximum of 1.75%. The SecureSource Stages 2 -- Joint Life
rider fee will not exceed a maximum of 2.25%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iv) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(v) the ability to change your investment option to one that is more
aggressive than your current investment option. Any change to a less
aggressive investment option will further limit the investment
options available to the then current and less aggressive investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive investment option than your current investment option and if the
new investment option has a higher current annual rider fee. The annual rider
fees associated with the available investment option may change at our
discretion, however these changes will not apply to this rider unless you
change your current investment option to a more aggressive one. The new fee
will be in effect on the valuation date we receive your written request to
change your investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same investment option or move to a less
aggressive one. Also, this type of fee increase does not allow you to
terminate the rider.
If your rider fee increases, on the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different fees that were in effect that year, adjusted for the number of
calendar days each fee was in effect.
The fee does not apply after the annuitization start date.
--------------------------------------------------------------------------------
44 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 1.50%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. For contract applications signed on or after
May 3, 2010, we prorate this charge among all accounts and the subaccounts in
the same proportion as your interest in each bears to your total contract value.
For contract applications signed prior to June 1, 2009, the charge will be
prorated among the GPAs, the one-year fixed account and the subaccounts. We will
modify this prorated approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or on the annuitization start date,
we will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) For contract applications signed prior to Oct. 4 2010, the following charges
apply:
APPLICATION SIGNED DATE CURRENT CHARGE
Before Jan. 26, 2009 0.55%
Jan. 26, 2009 -- May 30, 2009 0.80%
May 3, 2010 -- July 18, 2010 0.95%
July 19, 2010 -- Oct. 3 2010 1.10%
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider fee will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 45
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuitization start date.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
SECURESOURCE STAGES RIDER FEE
We deduct a charge for this optional feature only if you select it as follows:
SecureSource Stages - Single Life rider, 1.10%
SecureSource Stages - Joint Life rider, 1.35%
The fee is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge adjusted for
the number of calendar days coverage was in place since we last deducted the
charge.
Currently the SecureSource Stages rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource Stages - Single Life
rider fee will not exceed a maximum of 2.00%. The SecureSource Stages - Joint
Life rider fee will not exceed a maximum of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups, any ability to make additional purchase
payments,
(ii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iii) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current investment option. Any change to
a less aggressive PN program investment option will further limit the
PN program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment option and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however
--------------------------------------------------------------------------------
46 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
these changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive model. Also, this type of fee increase does not allow
you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
SECURESOURCE 20 RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource 20 - Single Life rider, 1.25%;
SecureSource 20 - Joint Life rider, 1.55%.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource 20 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee. If the RBA reduces to zero but the contract
value has not been depleted, you will continue to be charged.
Currently the SecureSource 20 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource 20 - Single Life rider
fee will not exceed a maximum charge of 2.00%. The SecureSource 20 - Joint Life
rider fee will not exceed a maximum charge of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any pending increase to the ALP due to the 20% credit on the later
of the third rider anniversary or the date the ALP is established,
and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current one. Any change to a less
aggressive PN program investment option will further limit the PN
program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee increase after any
increase is more than 0.25 percentage points higher than your fee before
the increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment options and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive PN program investment option. Also, this type of fee
increase does not allow you to terminate the rider.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 47
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, or the contract value reduces to zero. If the contract is terminated
for any reason or on the annuitization start date, we will deduct the charge
from the proceeds payable, adjusted for the number of calendar days coverage was
in place since we last deducted the fee. If the RBA goes to zero but the
contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each investment option. The Guarantor Withdrawal Benefit for
Life rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each investment option.
(1) See disclosure in Appendix I.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE APPENDIX J) UNLESS
OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or on the annuitization start date, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum charge of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
--------------------------------------------------------------------------------
48 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) See disclosure in Appendix J.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any reason or on
the annuitization start date, we will deduct the fee from the proceeds payable
adjusted for the number of calendar days coverage was in place since we last
deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix K.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 49
account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year.
For the Original Contract, on the annuitization start date and if the contract
is terminated for any reason other than death, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocated to the GPAs directly in dollars. The value of
a GPA equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
Current Contract: the sum of your purchase payments allocated to the regular
fixed account and the Special DCA fixed account, and transfer amounts to the
regular fixed account (including any positive or negative MVA on amounts
transferred from the GPAs);
Original Contract: the sum of your purchase payments allocated to the one-year
fixed account (if included), and the DCA fixed account (if included), and
transfer amounts to the one-year fixed account (including any positive or
negative MVA on amounts transferred from the GPAs);
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that
--------------------------------------------------------------------------------
50 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
subaccount. Conversely, we subtract a certain number of accumulation units from
your contract each time you take a partial surrender, transfer amounts out of a
subaccount, or we assess a contract administrative charge, a surrender charge or
fee for any optional riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial surrenders;
surrender charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, for the
Original Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the one-year fixed account or one-year GPA to one or more subaccounts. Automated
transfers are not available for GPA terms of two or more years. You can also
obtain the benefits of
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 51
dollar-cost averaging by setting up regular automatic SIP payments or by
establishing an interest sweep strategy. Interest sweeps are a monthly transfer
of the interest earned from the one-year fixed account or one-year GPA into the
subaccounts of your choice. If you participate in an interest sweep strategy the
interest you earn on the one-year fixed account or one-year GPA will be less
than the annual interest rate we apply because there will be no compounding. For
the Current Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the regular fixed account to one or more subaccounts. You may not set up an
automated transfer to or from the GPAs or set up an automated transfer to the
regular fixed account. You can also obtain the benefits of dollar-cost averaging
by setting up regular automatic SIP payments. The Current Contract does not
allow an interest sweep strategy.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the Special DCA fixed account (Current Contract)
and the DCA fixed account (Original Contract). See the "Special DCA Fixed
Account", "DCA Fixed Account" and "Portfolio Navigator Program" sections in this
prospectus for details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix H -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in a PN program, asset rebalancing is
available for use with the Special DCA fixed account (Current Contract) and the
DCA fixed account (Original Contract) (see "Special DCA Fixed Account" and "DCA
Fixed Account") only if your subaccount allocation for asset rebalancing is
exactly the same as your subaccount allocation for
--------------------------------------------------------------------------------
52 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
transfers from the Special DCA fixed account and the DCA fixed account. If you
change your subaccount allocations under the asset rebalancing program or the
Special DCA fixed account and the DCA fixed account, we will automatically
change the subaccount allocations so they match. If you do not wish to have the
subaccount allocation be the same for the asset rebalancing program and the
Special DCA fixed account and the DCA fixed account, you must terminate the
asset rebalancing program or the Special DCA fixed account and the DCA fixed
account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 53
percentages stated for the model portfolio. If you are participating in the PN
program through a model portfolio, you instruct us to automatically rebalance
your contract value quarterly in order to maintain alignment with these
allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the fund of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolios investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA fixed account
(Original Contract) or Special DCA fixed account (Current Contract), when
available (see "The Special DCA Fixed Account" and "DCA Fixed Account"), and you
are participating in the PN program, we will make monthly transfers in
accordance with your instructions from the DCA fixed account (Original Contract)
or Special DCA fixed account (Current Contract), into the investment option or
model portfolio you have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in
--------------------------------------------------------------------------------
54 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
your contract value, but there is no guarantee that this will happen. For
additional information about the risks of investing in a Portfolio Navigator
funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM;
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full surrender. Surrender charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDERS : The
SecureSource series or the Guarantor Withdrawal Benefit for Life riders
require that your contract value be invested in one of the PN program
investment options for the life of the contract. Subject to state
restrictions, we reserve the right to limit the number of investment options
from which you can select based on the dollar amount of purchase payments you
make. Because you cannot terminate the SecureSource series rider or the
Guarantor Withdrawal Benefit for Life rider once you have selected it, you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE
SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO
CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY
IT IN THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full surrender if you do not
want to invest in any of the PN program investment options. Surrender charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM
(AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE
CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
For the Current Contract, you may transfer contract value from any one
subaccount, GPAs, the regular fixed account and the Special DCA fixed account to
another subaccount before the annuitization start date. For the Original
Contract, you may transfer contract value from any one subaccount, GPAs, the
one-year fixed account, or the DCA fixed account to another subaccount before
the annuitization start date. Certain restrictions apply to transfers involving
the GPAs, the regular fixed account and the one-year fixed account. You may not
transfer contract value to the Special DCA fixed account or the DCA fixed
account. You may not transfer contract value from the Special DCA fixed account
or the DCA fixed account except as part of automated monthly transfers.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period, unless an exception applies.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 55
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
CURRENT CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the regular fixed
account at any time. However, if you made a transfer from the regular fixed
account to the subaccounts or the GPAs, took a partial surrender from the
fixed account or terminated automated transfers from the Special DCA fixed
account, you may not make a transfer from any subaccount or GPA to the regular
fixed account for six months following that transfer, partial surrender or
termination.
You may transfer contract values from the regular fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the regular fixed account are not subject to an MVA. You may transfer the
entire contract value to the regular fixed account. Subject to state
restrictions, we reserve the right to limit transfers to the regular fixed
account at any time on a non-discriminatory basis with notification. Transfers
out of the regular fixed account, including automated transfers, are limited
to 30% of regular fixed account value at the beginning of the contract year(1)
or $10,000, whichever is greater. Because of this limitation, it may take you
several years to transfer all your contract value from the regular fixed
account. You should carefully consider whether the regular fixed account meets
your investment criteria before you invest. Subject to state restrictions, we
reserve the right to change the percentage allowed to be transferred from the
regular fixed account at any time on a non-discriminatory basis with
notification.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs or the
regular fixed account into the Special DCA fixed account. However, you may
transfer contract values as automated monthly transfers from the Special DCA
fixed account to the subaccounts or the PN program model portfolio or
investment option in effect. (See "Special DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and Special DCA fixed account.
(1) All purchase payments received into the regular fixed account prior to your
transfer request are considered your beginning of contract year value during
the first contract year.
ORIGINAL CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account at any time. However, if you made a transfer from the one-year fixed
account to the subaccounts or the GPAs, you may not make a transfer from any
subaccount or GPA back to the one-year fixed account for six months following
that transfer.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to further limit transfers to or from the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values as automated monthly transfers from the DCA fixed account to
any of
--------------------------------------------------------------------------------
56 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
the investment options available under your contract, subject to investment
minimums and other restrictions we may impose on investments in the one-year
fixed account and the GPA, as described above. (See "DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and DCA fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be greater for underlying
funds that invest in securities such as small cap stocks, high yield bonds, or
municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 57
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN
ITS SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING
FURTHER TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST
FOLLOW THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON
BEHALF OF AN UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND.
MARKET TIMING POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT
YOUR INVESTMENT IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
--------------------------------------------------------------------------------
58 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or surrender to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
CURRENT CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire subaccount balance**
ORIGINAL CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $500 or entire account balance
ALL CONTRACTS
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of
the distribution.
** The contract value after a partial surrender must be at least $500.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
Your investment professional can help you set up automated transfers among your
subaccounts, regular fixed account (Current Contract), the one-year fixed
account (Original Contract) or GPAs or automated partial surrenders from the
GPAs, regular fixed account, one-year fixed account, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract) or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account (Original Contact only) to
any one of the subaccounts may not exceed an amount that, if continued, would
deplete the one-year fixed account within 12 months.
Automated transfers from the regular fixed account (Current Contract only) are
limited to 30% of the regular fixed account values at the beginning of the
contract year or $10,000, whichever is greater.
Automated surrenders may be restricted by applicable law under some contracts.
You may not make additional purchase payments if automated partial surrenders
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a Special DCA fixed account (Current
Contract) or DCA fixed account (Original Contract) (see "Special DCA Fixed
Account", "Fixed Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
If you have one of the SecureSource series of riders, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, you may set
up automated partial surrenders up to the benefit amount available for
withdrawal under the rider.
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $50
ORIGINAL CONTRACT:
Transfers or surrenders: $100 monthly
$250 quarterly, semiannually or annually
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 59
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $250 or entire contract balance
ORIGINAL CONTRACT:
Transfers or surrenders: $500 or entire account balance
MAXIMUM AMOUNT
CURRENT CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $100,000
ORIGINAL CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone surrender within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and surrenders are automatically available. You may request
that telephone transfers and surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before the
annuitization start date by sending us a written request or calling us. If we
receive your surrender request in good order at our corporate office before the
close of business, we will process your surrender using the accumulation unit
value we calculate on the valuation date we received your surrender request. If
we receive your surrender request at our corporate office at or after the close
of business, we will process your surrender using the accumulation unit value we
calculate on the next valuation date after we received your surrender request.
We may ask you to return the contract. You may have to pay a contract
administrative charge, surrender charges or any applicable optional rider
charges (see "Charges"), federal income taxes and penalties. State and local
income taxes may also apply (see "Taxes"). You cannot make surrenders after the
annuitization start date except under Variable Annuity Payout Plan E. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Any partial surrenders you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected one of the SecureSource
series of riders, the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider and your partial surrenders in any contract
year exceed the permitted surrender amount under the terms of the rider, your
benefits under the rider may be reduced (see "Optional Benefits"). The first
partial surrender request during the first contract year, for the SecureSource
Stages 2 rider and any partial surrender request that reverses previous step-ups
during the 3-year waiting period or exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement. This form shows the
projected effect of the surrender on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you.
In addition, surrenders you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
SURRENDER POLICIES
CURRENT CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
Special DCA fixed account and/or the regular fixed account in the same
proportion as your value
--------------------------------------------------------------------------------
60 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
in each account correlates to your total contract value, unless requested
otherwise(1). The minimum contract value after partial surrender is $500.
ORIGINAL CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
DCA fixed account and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1)
After executing a partial surrender, the value in the one-year fixed account and
each GPA and subaccount must be either zero or at least $50.
(1) If you elected one of the SecureSource series of riders, you do not have the
option to request from which account to surrender.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be made to this
contract, we will not be responsible for any obligations and requirements under
ERISA and the regulations thereunder, unless we have prior written agreement
with the employer. You should consult with your employer to determine whether
your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 61
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING THE ANNUITANT
For the Current Contract, if you have a nonqualified annuity and are a natural
person (excluding a revocable trust), you may change the annuitant or contingent
annuitant if the request is made prior to the annuitization start date and while
the existing annuitant or contingent annuitant is living. The change will become
binding on us when we receive it. If you and the annuitant are not the same
person and the annuitant dies before the annuitization start date, the owner
becomes the annuitant unless a contingent annuitant has been previously
selected. You may not change the annuitant if you have a qualified annuity or
there is non-natural or revocable trust ownership.
For the Original Contract, annuitant changes are not allowed.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office. We
will honor any change of ownership request received in good order that we
believe is authentic and we will use reasonable procedures to confirm
authenticity. If we follow these procedures, we will not take any responsibility
for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders and
any owner was not an owner before the change, all owners (including any prior
owner who is still an owner after the ownership change) (along with the
annuitant for the Original Contract) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract.
If you have an Income Assurer Benefit rider and/or the Benefit Protector Plus
rider, the riders will terminate upon transfer of ownership of the annuity
contract.
For the Original Contract, our current administrative practice is that if you
have the Benefit Protector rider, the owner can choose to terminate the Benefit
Protector rider during the 30-day window following the effective date of the
ownership change.
For the Current Contract, if you have the Benefit Protector rider, if any owner
is older than age 75 immediately following the ownership change, the rider will
terminate upon change of ownership. If all owners are younger than age 76, the
rider continues unless the owner chooses to terminate it during the 30-day
window following the effective date of the ownership change. The Benefit
Protector death benefit values may be reset (see "Optional Death
Benefits - Benefit Protector Death Benefit Rider").
For the Current Contract, the death benefit may change due to a change of
ownership. If any owner is older than age 85 immediately following the ownership
change, the MAV Death Benefit, 5% Accumulation Death Benefit and EDB will
terminate, the ROPP Death Benefit will be unavailable, and the Contract Value
Death Benefit will apply. If any owner is older than age 79 but all owners are
younger than age 86, the MAV Death Benefit, the 5% Accumulation Death Benefit,
and the EDB will terminate and the ROPP Death Benefit will apply. If all owners
are age 79 or younger, the ROPP Death Benefit, MAV Death Benefit, 5%
Accumulation Death Benefit or EDB will continue. The ROPP Death Benefit, MAV
Death Benefit, 5% Accumulation Death Benefit and EDB values may be reset (see
"Benefits in the Case of Death"). If the death benefit that applies to your
contract changes due to an ownership change, the mortality and expense risk fee
may change as well (see "Charges - Mortality and Expense Risk Fee").
The SecureSource series - Joint Life rider, if selected, only allows transfer of
the ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force,
subject to state restrictions. For the SecureSource Stages 2 - Joint Life rider,
if ownership is transferred from a covered spouse to their
--------------------------------------------------------------------------------
62 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
revocable trust(s), the annuitant must be one of the covered spouses. The
Accumulation Protector Benefit, the SecureSource - Single Life, the Guarantor
Withdrawal Benefit for Life and the Guarantor Withdrawal Benefit riders will
continue upon transfer of ownership of the annuity contract and the values may
be reset. For SecureSource rider and Guarantor Withdrawal Benefit for Life
rider, any ownership change that impacts the guarantees provided will not be
considered in good order until we receive a signed Benefit Impact
Acknowledgement form showing the projected effect of the ownership change on the
rider benefits or a verbal acknowledgement that you understand and accept the
impacts that have been explained to you. For the Secure Source Stages 2 - Single
Life riders, Secure Source 20 - Single Life and SecureSource Stages - Single
Life riders, an ownership change that results in different covered person will
terminate the rider, subject to state restrictions. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
We will pay the death benefit to your beneficiary upon your death if you die
before the annuitization start date while this contract is in force. If a
contract has more than one person as the owner, we will pay the benefits upon
the first to die of any owner. The basic death benefit available under your
contract at contract issue is the ROPP Death Benefit. In addition to the ROPP
Death Benefit, we also offer the following optional death benefits at contract
issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if you are age 79 or younger at contract
issue, you can elect any one of the above optional death benefits. If you are
age 80 or older at contract issue, the ROPP Death Benefit will apply.
Once you elect a death benefit, you cannot change it; however the death benefit
that applies to your contract may change due to an ownership change (see
"Changing Ownership") or continuation of the contract by the spouse under the
spousal continuation provision.
We show the death benefit that applies to your contract at issue on your
contract's data page. The death benefit determines the mortality and expense
risk fee that is assessed against the subaccounts. (See "Charges -- Mortality
and Expense Risk Fee.")
We will base the benefit paid on the death benefit coverage in effect on the
date of your death.
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROPP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the
partial surrender.
DB = the applicable ROPP value or MAV on the date of (but prior to) the
partial surrender
CV = contract value on the date of (but prior to) the partial surrender.
COVERED LIFE CHANGE: is either continuation of the contract by a spouse under
the spousal continuation provision, or an ownership change where any owner after
the ownership change was not an owner prior to the change.
CONTRACT VALUE DEATH BENEFIT (CV DEATH BENEFIT): is the death benefit available
if any owner after an ownership change or spouse who continues the contract
under the spousal continuation provision is over age 85 and therefore cannot
qualify for the ROPP death benefit. Under this benefit, we will pay the
beneficiary the greater of:
- the Full Surrender Value, or
- the contract value after any rider charges have been deducted.
FULL SURRENDER VALUE: is the contract value immediately prior to the surrender
(immediately prior to payment of a death claim for death benefits) less:
any surrender charge,
pro rata rider charges,
the contract charge, and
plus:
any positive or negative market value adjustment.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 63
RETURN OF PURCHASE PAYMENTS (ROPP) DEATH BENEFIT
The ROPP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for surrenders.
If you die before the annuitization start date and while this contract is in
force, the death benefit will be the greatest of:
1. the contract value after any rider charges have been deducted,
2. the ROPP Value, or
3. the Full Surrender Value.
ROPP VALUE: is the total purchase payments on the contract issue date.
Additional purchase payments will be added to the ROPP value. Adjusted partial
surrenders will be subtracted from the ROPP value.
After a covered life change for a spouse who continues the contract and is age
85 or younger, we reset the ROPP value to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value). If the spouse who continues
the contract is age 86 or older, the ROPP Death Benefit will terminate and he or
she will be eligible for the CV death benefit.
After a covered life change other than for the spouse who continues the
contract, if the prior owner and all current owners are eligible for the ROPP
death benefit we reset the ROPP value on the valuation date we receive your
request for the ownership change to the contract value after any rider charges
have been deducted, if the contract value is less.
If the prior owner was not eligible for the ROPP but all current owners are
eligible, we reset the ROPP value to the contract value after any rider charges
have been deducted on the valuation date we receive your request for the
ownership change.
IF AVAILABLE IN YOUR STATE AND YOU ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU
MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE
YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE
THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR CERTAIN OLDER
ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 80. BE SURE TO
DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS
ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you die while the contract is in force
and before the annuitization start date, the death benefit will be the greatest
of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV; or
4. the Full Surrender Value as described above.
The MAV equals the ROPP value prior to the first contract anniversary. Every
contract anniversary prior to the earlier of your 81st birthday or your death,
we compare the MAV to the current contract value and we reset the MAV to the
higher amount. The MAV is increased by any additional purchase payments and
reduced by adjusted partial surrenders.
After a covered life change for a spouse who is age 79 or younger and continues
the contract, we reset the MAV to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value).
After a covered life change other than for a spouse who continues the contract,
if all owners are under age 80, we reset the MAV on the valuation date we
receive your request for the ownership change to the lesser of these two values:
(a) the contract value after any rider charges have been deducted, or
(b) the MAV on that date, but prior to the reset.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the MAV. If your spouse is
over age 79 but younger than age 86 when the contract was continued, he or she
will be eligible for the ROPP death benefit. If your spouse is age 86 or older
when the contract was continued, he or she will be eligible for the CV death
benefit.
--------------------------------------------------------------------------------
64 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you die while the contract is
in force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the 5% accumulation death benefit floor; or
4. the Full Surrender Value as described above.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% ACCUMULATION DEATH BENEFIT FLOOR: is equal to the sum of:
1. the contract value in the Excluded Accounts (currently, regular fixed account
and GPAs), if any, and
2. the variable account floor.
PROTECTED ACCOUNT BASE (PAB) AND EXCLUDED ACCOUNT BASE (EAB): Adjustments to
variable account floor require tracking amounts representing purchase payments,
not previously surrendered, that are allocated or transferred to the Protected
Accounts (currently, subaccounts and the Special DCA fixed account) and Excluded
Accounts.
- PAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Protected Accounts.
- EAB equals amounts representing purchase payments, not previously
surrendered or transferred, that are in the Excluded Accounts.
VARIABLE ACCOUNT FLOOR: Variable account floor is PAB increased on contract
anniversaries prior to the earlier of your 81st birthday or your death.
NET TRANSFER: If multiple transfers are made on the same valuation day, they are
combined to determine the net amount of contract value being transferred between
the Protected Accounts and Excluded Accounts. This net transfer amount is used
to adjust the EAB, PAB and variable account floor values.
ESTABLISHMENT OF VARIABLE ACCOUNT FLOOR, PAB AND EAB
On the contract date, 1) variable account floor and PAB are established as your
initial purchase payment allocated to the Protected Accounts; and 2) EAB is
established as your initial purchase payment allocated to the Excluded Accounts.
ADJUSTMENTS TO VARIABLE ACCOUNT FLOOR, PAB AND EAB
Variable account floor, PAB and EAB are adjusted by the following:
1. When an additional purchase payment is made;
(A) any payment you allocate to the Protected Accounts are added to PAB and to
variable account floor, and
(B) any payment you allocate to the excluded accounts are added to EAB.
2. When transfers are made to the Protected Accounts from the Excluded Accounts,
we increase PAB and variable account floor, and we reduce EAB.
The amount we deduct from EAB and add to PAB and to variable account floor is
calculated for each net transfer using the following formula:
A = the amount the contract value in the Excluded Accounts is reduced by the
net transfer
B = EAB on the date of (but prior to) the transfer
C = the contract value in the Excluded Accounts on the date of (but prior to)
the transfer.
3. When partial surrenders are made from the Excluded Accounts, we reduce EAB by
the same amount as calculated above for transfers from the Excluded Accounts,
using surrender amounts in place of transfer amounts. Partial surrenders from
Excluded Accounts do not increase PAB.
4. When transfers are made to the Excluded Accounts from the Protected Accounts,
we reduce PAB and variable account floor, and increase EAB.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 65
The amounts we deduct from PAB and variable account floor are calculated for
each net transfer using the following formula:
A = the amount the contract value in the Protected Accounts is reduced by the
net transfer
B = the applicable PAB or variable account floor on the date of (but prior
to) the transfer
C = the contract value in the Protected Accounts on the date of (but prior
to) the transfer.
The amount we subtract from PAB is added to EAB.
5. When partial surrenders are made from the Protected Accounts, we reduce PAB
and variable account floor by the same amount as calculated above for
transfers from the Protected Accounts, using surrender amounts in place of
transfer amounts. Partial surrenders from Protected Accounts do not increase
EAB.
6. After a covered life change for a spouse who continues the contract, variable
account floor and PAB are reset to the contract value in the Protected
Accounts on the date of continuation. EAB is reset to the contract value in
the Excluded Accounts on the date of continuation. The contract value is
after any rider charges have been deducted and after any increase to the
contract value due to the death benefit that would otherwise have been paid
(without regard to the Full Surrender Value).
7. After a covered life change other than for a spouse who continues the
contract, variable account floor, PAB and EAB are reset on the valuation date
we receive your written request for the covered life change if all owners are
eligible for the 5% Accumulation Death Benefit.
Variable account floor and PAB are reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Protected Accounts on that date, and
B = Variable account floor on that date (but prior to the reset).
EAB is reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Excluded Accounts on that date, and
B = EAB on that date (but prior to the reset).
8. On a contract anniversary when variable account floor is greater than zero:
(A) On the first contract anniversary, we increase variable account floor by
an amount equal to 5%, multiplied by variable account floor as of 60 days
after the contract date.
(B) On each subsequent contract anniversary prior to the earlier of your 81st
birthday or your death, we increase variable account floor by 5%,
multiplied by the prior contract anniversary's variable account floor.
(C) Any variable account floor increase on contract anniversaries does not
increase PAB or EAB.
For contracts issued in New Jersey and Washington state, the cap on the variable
account floor is 200% of PAB.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the 5% Accumulation Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you die while the contract is in
force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV as described above;
4. the 5% accumulation death benefit floor as described above; or
5. the Full Surrender Value as described above.
If your spouse chooses to continue the contract under spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he
--------------------------------------------------------------------------------
66 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
or she will continue to be eligible for the Enhanced Death Benefit. If your
spouse is over age 79 but younger than age 86 when the contract was continued,
he or she will be eligible for the ROPP death benefit. If your spouse is age 86
or older when the contract was continued, he or she will be eligible for the CV
Death Benefit.
For an example of how each death benefit is calculated, see Appendix C.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner or
annuitant, we will pay the benefits upon the first to die of any owner or the
annuitant. The basic death benefit available under your contract at contract
issue is the ROP Death Benefit. In addition to the ROP Death Benefit, we also
offer the following optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
We will base the benefit paid on the death benefit coverage you chose when you
purchased the contract.
HERE ARE SOME TERMS USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the partial
surrender.
DB = the applicable ROP value or MAV on the date of (but prior to) the partial
surrender.
CV = contract value on the date of (but prior to) the partial surrender.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, adjusted for surrenders.
If you or the annuitant die before the annuitization start date and while this
contract is in force, the death benefit will be the greater of these two values,
minus any applicable rider charges:
1. contract value; or
2. total purchase payments applied to the contract minus adjusted partial
surrenders.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR CERTAIN OLDER ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE
LIMITED AFTER AGE 80. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL
WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
surrenders; or
3. the MAV on the date of death.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 67
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract
anniversary. On the first contract anniversary, we set the MAV as the greater of
these two values:
(a) current contract value; or
(b) total purchase payments applied to the contract minus adjusted partial
surrenders.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by adjusted partial surrenders. Every contract anniversary after that
prior to the earlier of your or the annuitant's 81st birthday, we compare the
MAV to the current contract value and we reset the MAV to the higher amount.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before the annuitization start date, the
death benefit will be the greatest of these three values, minus any applicable
rider charges:
1. contract value;
2. total purchase payments applied to the contract minus adjusted partial
surrenders; or
3. the 5% variable account floor.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account.
Thereafter, we continue to add subsequent purchase payments allocated to the
subaccounts or the DCA fixed account and subtract adjusted transfers and partial
surrenders from the subaccounts or the DCA fixed account. On each contract
anniversary after the first, through age 80, we add an amount to the variable
account floor equal to 5% of the prior anniversary's variable account floor. We
stop adding this amount after you or the annuitant reach age 81 or after the
earlier of your or the annuitant's death.
PST X VAF
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL SURRENDERS = ---------
SAV
PST = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial surrender or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
surrender.
SAV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer or partial surrender.
The amount of purchase payments surrendered or transferred from any subaccount
or fixed account (if applicable) or GPA account is calculated as (a) times (b)
where:
(a) is the amount of purchase payments in the account or subaccount on the date
of but prior to the current surrender or transfer; and
(b) is the ratio of the amount of contract value transferred or surrendered from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current surrender or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments allocated to the subaccounts and the
DCA fixed account that have not been surrendered or transferred out of the
subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these four values, minus any applicable rider charges:
1. contract value;
--------------------------------------------------------------------------------
68 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
2. total purchase payments applied to the contract minus adjusted partial
surrenders;
3. the MAV on the date of death as described above; or
4. the 5% variable account floor as described above.
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE THE ANNUITIZATION START DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value). To do this your spouse must, on the date our death claim
requirements are fulfilled, give us written instructions to continue the
contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse will be subject to all limitations
and/or restrictions of those features or riders just as if they were purchasing
a new contract and the values may be reset. (see "Optional Benefits" and
"Benefits in the Case of Death"). If the death benefit applicable to the
contract changes due to spousal continuation, the mortality and expense risk fee
may change as well (see "Charges -- Mortality and Expense Risk Fee").
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
FOR THE ORIGINAL CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid. To do this your spouse
must, on the date our death claim requirements are fulfilled, give us written
instructions to continue the contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse and the new annuitant (if applicable)
will be subject to all limitations and/or restrictions of those features or
riders just as if they were purchasing a new contract and the values may be
reset. (See "Optional Benefits" and "Optional Death Benefits".)
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 69
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid (without
regard to the Full Surrender Value). To do this your spouse must, on the date
our death claim requirements are fulfilled, give us written instructions to
continue the contract as owner. There will be no surrender charges on the
contract from that point forward unless additional purchase payments are made.
If you elected any optional contract features or riders, your spouse will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract and the values may be reset
(see "Optional Benefits", "Optional Death Benefits" and "Benefits in the Case
of Death"). If the death benefit applicable to the contract changes due to
spousal continuation, the mortality and expense risk fee may change as well
(see "Charges -- Mortality and Expense Risk Fee"). If your spouse is the sole
beneficiary and elects to treat the contract his/her own as an inherited IRA,
the SecureSource Stages rider will terminate.
If you purchased this contract as an inherited IRA and your spouse is the sole
beneficiary, he or she can elect to continue this contract as an inherited
IRA.
If you purchased this contract as an inherited IRA and your spouse is not the
sole beneficiary, he or she can elect an alternative payment plan for their
share of the death benefit and all optional death benefits and living benefits
will terminate. Your spouse must follow the schedule of minimum surrenders
established based on your life expectancy.
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
FOR THE ORIGINAL CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid. To do
this your spouse must, on the date our death claim requirements are fulfilled,
give us written instructions to continue the contract as owner. There will be
no surrender charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to
all limitations and/or restrictions of those features or riders just as if
they were purchasing a new contract and the values may be reset. (See
"Optional Benefits" and "Optional Death Benefits".)
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
--------------------------------------------------------------------------------
70 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
OPTIONAL LIVING BENEFITS
SECURESOURCE STAGES 2 RIDERS
The SecureSource Stages 2 rider is an optional benefit that you can add to your
contract for an additional charge. This benefit is intended to provide to you,
after the lifetime benefit is established, a specified withdrawal amount
annually for life, even if your contract value is zero, subject to the terms and
provisions described in this section. Additionally, this benefit offers a credit
feature to help in low or poor performing markets and a step up feature to lock
in contract anniversary gains.
The SecureSource Stages 2 rider may be appropriate for you if you intend to make
periodic withdrawals from your annuity contract after the waiting period and
wish to ensure that market performance will not adversely affect your ability to
withdraw income over your lifetime. This rider may not be appropriate for you if
you do not intend to limit withdrawals to the amount allowed in order to receive
the full benefits of the rider.
Your benefits under the rider can be reduced if any of the following occurs:
- If you take any withdrawals during the 1-year waiting period, the lifetime
benefit amount will be determined using percentage B for the appropriate age
band as long as rider benefits are payable;
- If you withdraw more than the allowed withdrawal amount in a contract year,
or you take withdrawals before the lifetime benefit is available;
- If you take a withdrawal and later choose to allocate your contract value to
a fund of funds that is more aggressive than the target fund;
- If the contract value is 20% or more below purchase payments increased by
any contract anniversary gains or rider credits and adjusted for withdrawals
(see withdrawal adjustment base described below).
The SecureSource Stages 2 rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year after the lifetime benefit is established. Your age at the time of
the first withdrawal will determine the age band for as long as benefits are
payable except as described in the lifetime payment percentage provision.
As long as your total withdrawals during the current year do not exceed the
lifetime benefit amount, you will not be assessed a surrender charge. If you
withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and benefits will be reduced in accordance with excess
withdrawal processing. At any time, you may withdraw any amount up to your
entire surrender value, subject to excess withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 71
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages 2 riders available under your
contract:
- SecureSource Stages 2 -- Single Life
- SecureSource Stages 2 -- Joint Life
The information in this section applies to both SecureSource Stages 2 riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages 2 -- Single Life rider covers one person. The
SecureSource Stages 2 -- Joint Life Rider covers two spouses jointly who are
named at contract issue. You may elect only the SecureSource Stages 2 -- Single
Life rider or the SecureSource Stages 2 -- Joint Life rider, not both, and you
may not switch riders later. You must elect the rider when you purchase your
contract. The rider effective date will be the contract issue date.
The SecureSource Stages 2 rider is an optional benefit that you may select for
an additional annual charge if:
- SINGLE LIFE: you are 85 or younger on the date the contract is issued; or
- JOINT LIFE: you and your spouse are 85 or younger on the date the contract
is issued.
The SecureSource Stages 2 riders are not available under an inherited qualified
annuity.
The SecureSource Stages 2 rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
- SINGLE LIFE: death (see "At Death" heading below).
- JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages 2 rider are:
AGE BANDS: Each age band is associated with a two lifetime payment percentages.
The covered person (JOINT LIFE: the younger covered spouse) must be at least the
youngest age shown in the first age band for the annual lifetime payment to be
established. After the annual lifetime payment is established, in addition to
your age, other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: the younger covered spouse)
has reached the youngest age in the first age band. After the waiting period,
the annual withdrawal amount guaranteed by the rider can vary each contract
year.
ANNUAL STEP-UP: an increase in the benefit base and/or the principal back
guarantee and a possible increase in the lifetime payment percentage that is
available each rider anniversary if your contract value increases, subject to
certain conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken before the annual lifetime payment is
established, or (2) a withdrawal that is greater than the remaining annual
lifetime payment after the annual lifetime payment is established.
EXCESS WITHDRAWAL PROCESSING: a reduction in benefits if a withdrawal is taken
before the annual lifetime payment is established or if a withdrawal exceeds the
remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band. The
difference between percentage A and percentage B is referred to as the income
bonus. Percentage B is referred to as the minimum lifetime payment percentage.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
--------------------------------------------------------------------------------
72 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you take withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. After the annual lifetime payment is
established, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten contract anniversaries based on a rider credit percentage of 8% for
the first anniversary and 6% thereafter, as long as no withdrawals have been
taken since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and excess withdrawals may reduce or eliminate
the benefit of any rider credits. Rider credits may result in higher rider
charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
limiting benefits under the rider. If you take any withdrawals during the
waiting period, the lifetime benefit amount will be determined using percentage
B, the minimum lifetime payment percentage, for the appropriate age band and
percentage A, and therefore the income bonus, will not be available as long as
rider benefits are payable. The waiting period starts on the rider effective
date and ends on the day prior to the first anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage after the waiting period. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES 2 RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages 2 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 1-year waiting period, the
lifetime benefit amount will be determined using percentage B for the
appropriate age band and percentage A, and therefore the income bonus, will
not be available as long as rider benefits are payable. Any withdrawals in the
first 10 years will terminate any remaining rider credits. Also, if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider will be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must elect one of the
investment options under the PN program. This requirement limits your choice
of investment options. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option classification as shown in your contract if your
current investment option is more aggressive than the target investment option
classification. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option is currently the Moderate investment option. We reserve the
right to change the target investment option to an investment option
classification that is more aggressive than the Moderate investment option
after 30 days written notice.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 73
After you have taken a withdrawal and prior to any benefit reset, you are in a
withdrawal phase. During withdrawal phases you may request to change your
investment option to the target investment option or any investment option
that is more conservative than the target investment option without a benefit
reset as described below. If you are in a withdrawal phase and you choose to
allocate your contract value to an investment option that is more aggressive
than the target investment option, you will be in the accumulation phase again
and your rider benefit will be reset as follows:
1. the BB, PBG and WAB will be reset to the contract value, if less than
their current amount; and
2. the ALP and RALP, if available, will be recalculated. You may request to
change your investment option by written request on an authorized form or
by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource Stages 2 rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
charge will continue to be deducted until the contract or rider is terminated
or the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages 2 -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages 2 -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of nonnatural
or revocable trust ownership). The rider will terminate at the death of the
contract owner because the original covered spouse will be unable to elect the
spousal continuation provision of the contract (see "Joint Life only: Covered
Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of the
trust must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource Stages 2 -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period the lifetime benefit amount will be determined using
percentage B for as long as rider benefits are payable. While the rider
permits certain excess withdrawals to be taken for the purpose of satisfying
RMD requirements for your contract alone without reducing future benefits
guaranteed under the rider, there can be no guarantee that changes in the
federal income tax law after the effective date of the rider will not require
a larger RMD to be taken, in which case, future guaranteed withdrawals under
the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased
--------------------------------------------------------------------------------
74 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
owner who was treated as married to the owner under state law and for purposes
of this rider, but whose marriage is not recognized under DOMA, will be
required to take distributions from the contract in the manner applicable to
non-spouse beneficiaries. In some circumstances, these required distributions
could substantially reduce or eliminate the value of the rider. See
"Taxes -- Other -- Spousal status."
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person or a revocable trust, the covered spouses are the annuitant
and the legally married spouse of the annuitant. The covered spouses lives are
used to determine when the annual lifetime payment is established, and the
duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading
below). The covered spouses are established on the rider effective date and
cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: younger covered spouses) has
reached age 50. When the ALP is established and at all times thereafter, the ALP
is equal to the BB multiplied by the lifetime payment percentage. Anytime the
lifetime payment percentage or BB changes as described below, the ALP will be
recalculated. After the waiting period and when the ALP is established, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the annual lifetime payment guaranteed
for withdrawal for the remainder of the contract year. The RALP is established
at the same time as the ALP. The RALP equals the ALP less all withdrawals in the
current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band used to calculate the initial ALP is
the percentage for the covered person's attained age (JOINT LIFE: younger
covered spouse's attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouse's subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouse's attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 75
any rider fee increase or if a withdrawal has been taken since the ALP was
established, then the lifetime payment percentage will not change on
subsequent birthdays.)
Upon annual step-ups (see "Annual Step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was established and no rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether percentage A or percentage B is used for each
applicable age band:
During the waiting period, percentage B will be used. If you take a withdrawal
in the waiting period, percentage B will be used and the income bonus will not
be available for as long as rider benefits are payable.
If no withdrawal is taken during the waiting period, after the waiting period a
comparison of your contract value and the withdrawal adjustment base (WAB)
determines whether percentage A or percentage B is used to calculate the ALP
unless the percentage is fixed as described below. Market volatility, a
prolonged flat, low or down market, rider credits, and the deduction of charges
all impact whether you are eligible for percentage A or percentage B. On each
valuation date, if the benefit determining percentage is less than the 20%
adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (a/b) where:
a = Contract value at the end of the prior valuation period
b = WAB at the end of the prior valuation period
After the ALP is established and after the waiting period, the first withdrawal
taken in each contract year will set and fix the lifetime payment percentage for
the remainder of the contract year. Beginning on the next rider anniversary, the
lifetime payment percentage can change on each valuation day as described above
until a withdrawal is taken in that contract year.
However, at the earliest of (1), (2) or (3) below Percentage A and Percentage B
will be set and remain fixed as long as the benefit is payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values
(benefit base (BB), credit base (CB) and withdrawal adjustment base (WAB)) and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: If the WAB and CB are greater
than zero, the WAB and CB will be increased by the amount of each additional
purchase payment. The BB and PBG will be increased by the amount of each
additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits.
When a withdrawal is taken:
(a) If the first withdrawal is taken during the waiting period, the WAB will
be permanently reset to zero. If the first withdrawal is taken after the
waiting period, the WAB will be reduced by the "adjustment for
withdrawal," as defined below.
(b) If the ALP is established and the withdrawal is less than or equal to the
RALP, the BB does not change and the PBG is reduced by the amount of the
withdrawal, but it will not be less than zero.
--------------------------------------------------------------------------------
76 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(c) If the ALP is not established, excess withdrawal processing will occur as
follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not be less
than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the withdrawal and
further reduced by an amount calculated as follows, but it will not be
less than zero:
a = the amount of the withdrawal minus the RALP
b = the PBG minus the RALP on the date of (but prior to) the withdrawal
c = the contract value on the date of (but prior to) the withdrawal minus
the RALP
The BB will be reduced by an amount as calculated below:
d = the amount of the withdrawal minus the RALP
e = the BB on the date of (but prior to) the withdrawal
f = the contract value on the date of (but prior to) the withdrawal minus
the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is reduced by a
withdrawal in the same proportion as the contract value is reduced, the
proportional amount deducted is the "adjustment for withdrawal." The "adjustment
for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PBG (as applicable) on the date of (but prior to) the
withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
THE WAB ON RIDER ANNIVERSARIES: Unless the WAB is permanently reset to zero or
you decline any rider fee increase, the WAB (after any rider credit is added)
will be increased to the contract value, if the contract value is greater.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
rider fee increase, rider credits are available for the first ten contract
anniversaries. On the first anniversary, the rider credit equals the credit
base (CB) 180 days following the rider effective date multiplied by 8%. On any
subsequent anniversaries, the rider credit equals the CB as of the prior rider
anniversary multiplied by 6%. On the first anniversary the BB and WAB will be
set to the greater of the current BB, or the BB 180 days following the
contract date increased by the rider credit and any additional purchase
payments since 180 days following the rider effective date. On any subsequent
rider credit dates the BB and WAB will be set to the greater of the current
BB, or the BB on the prior anniversary increased by the rider credit and any
additional purchase payments since the prior anniversary. If the CB is greater
than zero, the CB will be permanently reset to zero on the 10th rider
anniversary after any adjustment to the WAB and BB, and there will be no
additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you decline any rider fee increase, future annual step-
ups will no longer be available.
The annual step-up will be executed on any rider anniversary where the
contract value is greater than the PBG or the BB after any rider credit is
added. If an annual step-up is executed, the PBG, BB and lifetime payment
percentage will be adjusted as follows: The PBG will be increased to the
contract value, if the contract value is greater. The BB (after any rider
credit is added) will be increased to the contract value, if the contract
value is greater. If the covered person's attained age (Joint Life: younger
covered spouses attained age) on the rider anniversary is in a higher age band
and (1) there is an
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 77
increase to BB due to a step-up or (2) the BB is at the maximum of $10,000,000
so there was no step-up of the BB, then the higher age band will be used to
determine the appropriate lifetime payment percentage, regardless of any prior
withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of your RMD that exceeds the benefit amount will not be subject to
excess withdrawal processing provided that the following conditions are met:
- The annual lifetime payment is established;
- The RMD is for your contract alone;
- The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
- The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on
the contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. If any withdrawal is taken in the
waiting period, including RMDs, Percentage B for the applicable age band will be
used as long as rider benefits are payable. Any withdrawals taken before the
annual lifetime payment is established or withdrawing amounts greater than the
remaining annual lifetime payment that do not meet these conditions will result
in excess withdrawal processing. The amount in excess of the RALP that is not
subject to excess withdrawal processing will be recalculated if the ALP changes
due to lifetime payment percentage changes. See Appendix E for additional
information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages 2 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource Stages
2 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
Unless you decline a rider fee increase, at the time of spousal continuation, a
step-up may be available. All annual step-up rules (see "Rider Anniversary
Processing -- Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that the RALP will be reduced for any prior
withdrawals in that contract year. The WAB, if greater than zero, will be
increased to the contract value if the contract value is greater. The spousal
continuation step-up is processed on the valuation date spousal continuation is
effective.
RULES FOR SURRENDER: Minimum contract values following surrender no longer apply
to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that contract year.
--------------------------------------------------------------------------------
78 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
- elect to take the death benefit under the terms of the contract, or
- elect to take the principal back guarantee available under this rider, or
- continue the contract and the SecureSource Stages 2 -- Joint Life rider
under the spousal continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
1. If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are
equal to the PBG on the date of death.
2. If the PBG is greater than zero and the ALP is not established, the BB on
the date of death multiplied by the lifetime payment percentage used for
the youngest age of the covered spouses in the first age band will be paid
annually until total payments to the beneficiary are equal to the PBG on
the date of death.
In either of the above cases:
- After the date of death, there will be no additional rider credits or annual
step-ups.
- The lifetime payment percentage used will be set as of the date of death.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
3. On the date of death (JOINT LIFE: remaining covered spouse's date of
death), if the CB is greater than zero, the CB will be permanently reset to
zero, and there will be no additional rider credits.
4. If the PBG equals zero, the benefit terminates. No further payments are
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: If your annuitization start date is the maximum
annuitization start date, you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the SecureSource Stages 2 rider. Under the rider's payout option, the minimum
amount payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages 2 rider cannot be terminated either by you or us except
as follows:
- SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 79
- SINGLE LIFE: after the death benefit is payable, the rider will terminate.
- SINGLE LIFE: spousal continuation will terminate the rider.
- JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a
beneficiary of a participant in an employer sponsored retirement plan, the
rider will terminate.
- On the annuitization start date, the rider will terminate.
- You may terminate the rider if your annual rider fee after any increase is
more than 0.25 percentage points higher than your fee before the increase.
(see "Charges -- SecureSource Stages 2 rider charge").
- When the contract value is zero and either the annual lifetime payment is
not established or a withdrawal in excess of the remaining annual lifetime
payment is taken, the rider will terminate.
- Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit, available for
contract applications signed on or after May 3, 2010, that you may select for an
additional charge. We have offered a different version of the Accumulation
Protector Benefit rider for the Original Contract with applications signed prior
to June 1, 2009. The description of the Accumulation Protector Benefit rider in
this section applies to both Original and Current contracts unless noted
otherwise. The Accumulation Protector Benefit rider specifies a waiting period
that ends on the benefit date. The Accumulation Protector Benefit rider provides
a one-time adjustment to your contract value on the benefit date if your
contract value is less than the Minimum Contract Accumulation Value (defined
below) on that benefit date. On the benefit date, if the contract value is equal
to or greater than the Minimum Contract Accumulation Value, as determined under
the Accumulation Protector Benefit rider, the Accumulation Protector Benefit
rider ends without value and no benefit is payable.
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: if you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
For the Current Contract, if you are (or if the owner is a non-natural person,
then the annuitant is) age 80 or younger at contract issue and this rider is
available in your state, you may elect the Accumulation Protector Benefit rider
at the time you purchase your contract and the rider effective date will be the
contract issue date. For the Original Contract, you may have elected the
Accumulation Protector Benefit rider at the time you purchased your contract and
the rider effective date was the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further charges for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial surrenders or make a full surrender; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource Stages 2 rider.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the regular fixed account that are available under
the contract to other contract owners who do not elect this rider. You may
allocate qualifying purchase payments to the Special DCA fixed account, when
available (see "The Special DCA Fixed Account"), and we will make monthly
transfers into the PN program investment option you have chosen. (See "Making
the Most of Your Contract -- Portfolio Navigator Program");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider. Some exceptions apply (see
"Additional Purchase Payments with Elective Step Up" below). In addition, we
reserve the right to change these additional purchase payment limitations,
including making further restrictions, upon written notice;
if you purchase this contract as a qualified annuity, for example, an IRA, you
may need to take partial surrenders from your contract to satisfy the RMDs
under the Code. Partial surrenders, including those used to satisfy RMDs, will
reduce any
--------------------------------------------------------------------------------
80 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
potential benefit that the Accumulation Protector Benefit rider provides. You
should consult your tax advisor if you have any questions about the use of
this rider in your tax situation;
if you think you may surrender all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step-up option (described below) or your
surviving spouse exercises the spousal continuation elective step-up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your investment option to one that causes
the Accumulation Protector Benefit rider charge to increase (see "Charges").
Be sure to discuss with your investment professional whether an Accumulation
Benefit rider is appropriate for your situation.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL SURRENDERS: The adjustment made for each partial
surrender from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial surrender to the contract value on the date of (but
immediately prior to) the partial surrender; and
(b) is the MCAV on the date of (but immediately prior to) the partial surrender.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your investment option after we have exercised our
rights to increase the rider fee.
Your initial MCAV is equal to your initial purchase payment. It is increased by
the amount of any subsequent purchase payments and any purchase payment credits
received within the first 180 days that the rider is effective. It is reduced by
any adjustments for partial surrenders made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 81
The elective step up does not create contract value, guarantee the performance
of any investment option or provide any benefit that can be surrendered or paid
upon death. Rather the elective step up is an interim calculation used to arrive
at the final MCAV, which is used to determine whether a benefit will be paid
under the rider on the benefit date.
The elective step up option is not available for inherited IRAs or if the
benefit date would be after the annuitization start date.
ADDITIONAL PURCHASE PAYMENTS WITH ANNUAL ELECTIVE STEP UPS -- CURRENT CONTRACT
ONLY
If your MCAV is increased as a result of elective step up, you have 180 days
from the latest contract anniversary to make additional purchase payments, if
allowed under the base contract. The MCAV will include the amount of any
additional purchase payments received during this period. We reserve the right
to change these additional purchase payment limitations.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up for the entire contract year. In addition, the waiting period will
restart as of the most recent contract anniversary.
CHANGE OF OWNERSHIP OR ASSIGNMENT
Subject to state limitations, a change of ownership or assignment is subject to
our approval.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full surrender;
- annuitization begins;
- the contract terminates as a result of the death benefit being paid; or
- when a beneficiary elects an alternative payment plan which is an inherited
IRA.
The rider will terminate on the benefit date.
For an example, see Appendix L.
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE JULY 19, 2010)
If you bought a contract before July 19, 2010 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
------------------------------------------------------------------------------------------------------------------------
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
------------------------------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider B") Appendix J
------------------------------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider A") Appendix J
2006
------------------------------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit for Life Appendix I
------------------------------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix K
------------------------------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 SecureSource Rider Appendix M
------------------------------------------------------------------------------------------------------------------------
Before Nov. 30, 2009 SecureSource 20 Rider Appendix N
------------------------------------------------------------------------------------------------------------------------
Before July 19, 2010 SecureSource Stages Rider Appendix O
------------------------------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
--------------------------------------------------------------------------------
82 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
OPTIONAL ADDITIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you (Current Contract) or you or the annuitant (Original Contract)
are 70 or older at the rider effective date, The Benefit Protector does not
provide any additional benefit before the first rider anniversary.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector to your contract. You must elect the
Benefit Protector at the time you purchase your contract and your rider
effective date will be the contract issue date. You may not select this rider if
you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector is appropriate for your situation.
The Benefit Protector provides that if you (Current Contract) or you or the
annuitant (Original Contract) die after the first rider anniversary, but before
the annuitization start date, and while this contract is in force, we will pay
the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you (Current Contract) or you and the
annuitant (Original Contract) were under age 70 on the rider effective date;
or
- 15% of your earnings at death if you (Current Contract) or you or the
annuitant (Original Contract) were 70 or older on the rider effective date.
For the Current Contract, if this rider is effective after the contract date or
if there has been a covered life change, remaining purchase payment is
established or set as the contract value on the rider effective date or, if
later, the date of the most recent covered life change. Thereafter, remaining
purchase payments is increased by the amount of each additional purchase payment
and adjusted for each partial surrender.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
remaining purchase payments (also referred to as purchase payments not
previously surrendered under the Original Contract). Partial surrenders will
come from any earnings before reducing purchase payments in the contract. The
earnings at death may not be less than zero and may not be more than 250% of the
purchase payments not previously surrendered that are one or more years old.
Note: Purchase payments not previously surrendered is calculated differently and
is not the same value as purchase payments not previously surrendered used in
the surrender charge calculation.
TERMINATING THE BENEFIT PROTECTOR
CURRENT CONTRACT:
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider within 30 days after any rider anniversary
beginning with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
Your spouse may terminate the rider within 30 days following the effective
date of the spousal continuation if your spouse is age 75 or younger.
A new owner may terminate the rider within 30 days following the effective
date of an ownership change if the new owner is age 75 or younger.
The rider will terminate for a spousal continuation or ownership change if the
spouse or new owner is age 76 or older at the time of the change.
The rider will terminate after the death benefit is payable, unless the spouse
continues the contract under spousal continuation provision.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
ORIGINAL CONTRACT:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 83
Our current administrative practice allows a new owner or your spouse to
terminate the rider within 30 days following the effective date of the
ownership change or spousal continuation.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the annuitization
start date, your spouse may keep the contract as owner. For Current Contract,
your spouse will be subject to all the limitations and restrictions of the rider
just as if they were purchasing a new contract and the age of the new spouse at
the time of the change will be used to determine the earnings at death
percentage going forward. If your spouse does not qualify for the rider on the
basis of age we will terminate the rider. If they do qualify for the rider on
the basis of age we will set the contract value equal to the death benefit that
would otherwise have been paid (without regard to the Full Surrender Value) and
we will substitute this new contract value on the date of death for "remaining
purchase payments" used in calculating earnings at death.
For Current Contract, after a covered life change other than a spouse that
continues the contract, the new owner will be subject to all the limitations and
restrictions of the rider just as if they were purchasing a new contract and the
age of the new owner at the time of the change will be used to determine the
earnings at death percentage going forward. If the new owner does not qualify
for the rider on the basis of age we will terminate the rider. If they do
qualify for the rider on the basis of age we will substitute the contract value
on the date of the ownership changes for remaining purchase payments used in
calculating earnings at death.
For an example, see Appendix F.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you (Current Contract), or you or the annuitant (Original
Contract) are 70 or older at the rider effective date. It does not provide any
additional benefit before the first rider anniversary and it does not provide
any benefit beyond what is offered under the Benefit Protector rider during the
second rider year. Be sure to discuss with your investment professional whether
or not the Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector Plus to your contract. You must elect
the Benefit Protector Plus at the time you purchase your contract and your rider
effective date will be the contract issue date. This rider is only available for
transfers, exchanges or rollovers. If this is a non-qualified annuity,
transfers, exchanges or rollovers must be from another annuity or life insurance
policy. You may not select this rider if you select the Benefit Protector Rider,
5% Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you (Current Contract), or you or
the annuitant (Original Contract) die after the first rider anniversary, but
before the annuitization start date, and while this contract is in force, we
will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously surrendered as follows:
PERCENTAGE IF YOU (CURRENT CONTRACT) PERCENTAGE IF YOU (CURRENT CONTRACT)
RIDER YEAR WHEN DEATH OR YOU AND THE ANNUITANT (ORIGINAL CONTRACT) ARE OR YOU OR THE ANNUITANT (ORIGINAL CONTRACT) ARE
OCCURS; UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
--------------------------------------------------------------------------------
84 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU (CURRENT CONTACT) OR YOU AND THE
ANNUITANT (ORIGINAL CONTRACT) ARE UNDER
RIDER YEAR WHEN DEATH OCCURS; AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase
payment*)
Five or more 40% x (earnings at death + 50% of initial purchase
payment*)
IF YOU (CURRENT CONTRACT) OR YOU OR THE
ANNUITANT (ORIGINAL CONTRACT) ARE AGE 70
RIDER YEAR WHEN DEATH OCCURS; OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase
payment*)
Five or more 15% x (earnings at death + 50% of initial purchase
payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously surrendered.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract, on
the annuitization start date, or when the death benefit is payable.
The rider will terminate if there is an ownership change.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value for the Current Contract). We will then terminate the
Benefit Protector Plus (see "Benefits in Case of Death").
For an example, see Appendix G.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting on the annuitization start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements. We do not deduct any surrender charges under the
payout plans listed below, except under annuity payout Plan E. (See
"Charges -- Surrender charge under Annuity Payout Plan E").
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your annuitization
start date after any rider charges have been deducted, plus any positive or
negative MVA (less any applicable premium tax). Additionally, we currently allow
you to use part of the amount available to purchase payouts, leaving any
remaining contract value to accumulate on a tax-deferred basis. If you select a
variable annuity payout, we reserve the right to limit the number of subaccounts
in which you may invest. The GPAs and the Special DCA fixed account (Current
Contract) and the DCA fixed account (Original Contract) are not available during
this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate.
For information with respect to transfers between accounts after annuity payouts
begin, (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 85
If you ask us at least 30 days before the annuitization start date, we will
substitute an annuity table based on an assumed 3.5% investment rate for the 5%
Table A in the contract. The assumed investment rate affects both the amount of
the first payout and the extent to which subsequent payouts increase or
decrease. For example, annuity payouts will increase if the investment return is
above the assumed investment rate and payouts will decrease if the return is
below the assumed investment rate. Using a 5% assumed interest rate results in a
higher initial payout, but later payouts will increase more slowly when annuity
unit values rise and decrease more rapidly when they decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before the annuitization start date. Generally, you may select one of
the Plans A through E below or another plan agreed to by us. Some of the annuity
payout plans may not be available if you have selected the Income Assurer
Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die before the
elected period expires. We calculate the guaranteed payout period from the
annuitization start date. If the annuitant outlives the elected guaranteed
payout period, we will continue to make payouts until the annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.71% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. (See "Charges -- Surrender charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your surrender to the full discounted value. A 10% IRS penalty
tax could apply if you take a surrender. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix I: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix J: Guarantor
--------------------------------------------------------------------------------
86 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
Withdrawal Benefit Rider"). The amount paid in the current contract year will
be reduced for any prior withdrawals in that year. These annualized amounts
will be paid in the frequency that you elect. The frequencies will be among
those offered by us at the time but will be no less frequent than annually.
If, at the death of the owner, total payouts have been made for less than the
RBA, the remaining payouts will be paid to the beneficiary.
REMAINING BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH
THE SECURESOURCE 20 RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource 20 Riders"). The amount paid in the current contract
year will be reduced for any prior withdrawals in that year. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequent
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you have the responsibility for electing a payout plan under
your contract that complies with applicable law. Your contract describes your
payout plan options. The options will meet certain IRS regulations governing
RMDs if the payout plan meets the incidental distribution benefit requirements,
if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
For qualified and nonqualified contracts with the SecureSource Stages rider, on
the annuitization start date you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the rider. Under the rider's payout option, the minimum amount payable shown in
Table B will not apply, and you will receive the ALP provided by this rider
until the later of the death of covered person (JOINT LIFE: both covered
spouses) or depletion of the PBG. If you choose to receive the ALP, the amount
payable each year will be equal to the ALP on the annuitization start date. The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually. If You choose to
receive the ALP rather than a payout option available under the contract, all
other contract features, rider features and charges terminate after the
annuitization start date except for the principal back guarantee. You must
select a payout plan as of the annuitization start date set forth in your
contract.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitization start date. If you do
not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time amounts are applied to an annuity payout plan. If
the calculations show that monthly payouts would be less than $20, we have the
right to pay the amount that would otherwise have been applied to a plan to the
owner in a lump sum or to change the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you (Current Contract), or you or the
annuitant (Original Contract) die after annuity payouts begin, we will pay any
amount payable to the beneficiary as provided in the annuity payout plan in
effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike surrenders described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 87
return of part of your investment in the contract and will not be taxed. All
amounts you receive after your investment in the contract is fully recovered
will be subject to tax. Under Annuity Payout Plan A: Life annuity -- no refund,
where the annuitant dies before your investment in the contract is fully
recovered, the remaining portion of the unrecovered investment may be available
as a federal income tax deduction to the owner for the last taxable year. Under
all other annuity payout plans, where the annuity payouts end before your
investment in the contract is fully recovered, the remaining portion of the
unrecovered investment may be available as a federal income tax deduction to the
taxpayer for the tax year in which the payouts end. (See "The Annuity Payout
Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
SURRENDERS: Generally, if you surrender all or part of your nonqualified annuity
before the annuitization start date, including surrenders under any optional
withdrawal benefit rider, your surrender will be taxed to the extent that the
contract value immediately before the withdrawal exceeds the investment in the
contract. Different rules may apply if you exchange another contract into this
contract.
You also may have to pay a 10% IRS penalty for surrenders of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
surrender, including surrenders under any optional withdrawal benefit rider, we
may deduct federal, and in some cases state withholding against the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Annuitization Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
--------------------------------------------------------------------------------
88 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a surrender for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity or qualified long-term care insurance contract, or for an endowment
contract under which payments will begin no later than payments would have begun
under the contract exchanged, (3) the exchange of an annuity contract for
another annuity or for a qualified long-term care insurance contract, and (4)
the exchange of a qualified long-term care insurance contract for a qualified
long-term care insurance contract. However, if the life insurance policy has an
outstanding loan, there may be tax consequences. Depending on the issue date of
your original policy or contract, there may be tax or other benefits that are
given up to gain the benefits of the new policy or contract. Consider whether
the features and benefits of the new policy or contract outweigh any tax or
other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
SURRENDERS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire surrender will generally be includable as ordinary income and
is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
SURRENDERS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 89
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required surrenders called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a surrender, including surrenders
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Annuitization Start Date").
--------------------------------------------------------------------------------
90 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
surrenders from your contract. However, the IRS may determine that these charges
should be treated as partial surrenders subject to taxation to the extent of any
gain as well as the 10% tax penalty for surrenders before the age of 59 1/2, if
applicable.
We reserve the right to report charges for these riders as partial surrenders if
we, as a withholding and reporting agent, believe that we are required to report
them. In addition, we will report any benefits attributable to these riders on
your death (Current Contract), or your or the annuitant's death (Original
Contract) as an annuity death benefit distribution, not as proceeds from life
insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 91
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
The contract is offered to customers of various financial institutions,
brokerage firms and their affiliate insurance agencies. No financial
institution, brokerage firm or insurance agency has any legal responsibility
to pay amounts that are owed under the contract. The obligations and
guarantees under the contract are our sole responsibility.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 8.0% each time a purchase
payment is made. We may also pay ongoing trail commissions of up to 1.25% of
the contract value. We do not pay or withhold payment of trail commissions
based on which investment options you select.
We may pay selling firms an additional sales commission of up to 1% of
purchase payments for a period of time we select. For example, we may offer to
pay an additional sales commission to get selling firms to market a new or
enhanced contract or to increase sales during the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
--------------------------------------------------------------------------------
92 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 93
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934 (1934 Act) is incorporated by
reference into this prospectus, as well as all of our subsequent annual reports
on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K
filed with the SEC under the 1934 Act. To access this document, see "SEC
Filings" under "Investors Relations" on our website at www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
94 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 96 p. 31
Appendix B: Example -- Surrender Charges p. 98 Charges -- Surrender Charge p. 41
Appendix C: Example -- Death Benefits p. 107 Benefits in Case of Death p. 63
Appendix D: Example -- SecureSource Optional Living Benefits
Series of Riders p. 113 p. 71
Appendix E: SecureSource Series of Optional Living Benefits
Riders -- Additional RMD Disclosure p. 121 p. 71
Appendix F: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 123 Death Benefit Rider p. 83
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 125 Plus Death Benefit Rider p. 84
Appendix H: Asset Allocation Program for N/A
Contracts with Applications Signed
Before May 1, 2006 p. 127
Appendix I: Guarantor Withdrawal Benefit N/A
for Life Rider Disclosure p. 128
Appendix J: Guarantor Withdrawal Benefit N/A
Rider Disclosure p. 140
Appendix K: Income Assurer Benefit N/A
Riders p. 148
Appendix L: Example -- Accumulation Optional Living Benefits
Protector Benefit Rider p. 157 p. 71
Appendix M: SecureSource Rider N/A
Disclosure p. 158
Appendix N: SecureSource 20 Rider N/A
Disclosure p. 171
Appendix O: SecureSource Stages Rider N/A
Disclosure p. 185
Appendix P: Condensed Financial Condensed Financial Information p. 16
Information (Unaudited) p. 195
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract), regular fixed account
(Current Contract), and one-year fixed account (Original Contract) and the fees
and charges that apply to your contract.
The examples of death benefits and optional riders in appendices include a
partial surrender to illustrate the effect of a partial surrender on the
particular benefit. These examples are intended to show how the optional riders
operate, and do not take into account whether the rider is part of a qualified
contract. Qualified contracts are subject to required minimum distributions at
certain ages which may require you to take partial surrenders from the contract
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you
are considering the addition of certain death benefits and/or optional riders to
a qualified contract, you should consult your tax advisor prior to making a
purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 95
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early surrenders."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a surrender from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
surrender new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY SURRENDER AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or surrendered.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 surrender from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 3.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 2.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
96 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, your surrender charge percentage is 6%. (See
"Charges -- Surrender Charge.") We do not apply MVAs to the amounts we deduct
for surrender charges, so we would deduct the surrender charge from your early
surrender after we applied the MVA. Also note that when you request an early
surrender, we surrender an amount from your GPA that will give you the net
amount you requested after we apply the MVA and any applicable surrender charge,
unless you request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDIX B: EXAMPLE -- SURRENDER CHARGES
EXAMPLE -- SURRENDER CHARGES
We determine your surrender charge by multiplying the amount of each purchase
payment surrendered which could be subject to a surrender charge by the
applicable surrender charge percentage, and then totaling the surrender charges.
We calculate the amount of purchase payments surrendered (PPS) as:
Current Contract:
PPS = PPSC + PPF
PPSC = purchase payments surrendered that could be subject to a surrender charge
= (PS - FA) / (CV - FA) x (PP - PPF)
PPF = purchase payments surrendered that are not subject to a surrender charge
= FA - contract earnings, but not less than zero
PP = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
PS = amount the contract value is reduced by the surrender
FA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
CV = contract value prior to the surrender
Original Contract:
PPS = XSF + (ACV - XSF) / (CV - TFA) x (PPNPS - XSF)
XSF = 10% of prior anniversary's contract value - contract earnings, but not less
than zero
ACV = amount the contract value is reduced by the surrender - contract earnings,
but not less than zero
TFA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
PPNPS = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
CV = contract value prior to the surrender
When determining the surrender charge, contract earnings are defined as the
contract value, including any positive or negative MVA on amounts being
surrendered, less purchase payments not previously surrendered. We determine
current contract earnings by looking at the entire contract value, not the
earnings of any particular subaccount, GPA, the regular fixed account (Current
Contract), the one-year fixed account (Original Contract), the Special DCA fixed
account (Current Contract) or the DCA fixed account (Original Contract). If the
contract value is less than purchase payments received and not previously
surrendered, then contract earnings are zero.
The examples below show how the surrender charge for a full and partial
surrender is calculated for a contract with a seven-year surrender charge
schedule. Each example illustrates the amount of the surrender charge for both a
contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
98 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT: FULL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50.000.00 50.000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS: 60,000.00 40,000.00
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS - FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 60,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 99
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 6.0% x 6.0%
---------- ----------
surrender charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $56,960.00 $37,212.00
--------------------------------------------------------------------------------
100 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT: PARTIAL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
--------------------------------------------------------------------------------------------------------
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PP): 50,000.00 50,000.00
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender PS
(determined by iterative process described above): 15,319.15 15,897.93
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC = PPF + (PS - FA) / (CV - FA) *
(PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 15,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,319.15 19,165.51
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 101
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,319.15 19,165.51
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 5,319.15 14,965.51
multiplied by the surrender charge rate: x 6.0% x 6.0%
---------- ----------
surrender charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,319.15 15,897.93
SURRENDER CHARGE: (319.15) (897.93)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
102 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
FULL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PPNPS):
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) X (PPNPS -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
--------- ---------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 103
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less XSF: 0.00 4,200.00
--------- ---------
amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 6.0% x 6.0%
--------- ---------
surrender charge: 3,000.00 2,748.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,000.00) (2,748.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
--------- ---------
NET FULL SURRENDER PROCEEDS: 56,960.00 37,212.00
--------------------------------------------------------------------------------
104 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
PARTIAL SURRENDER CHARGE CALCULATION -- SEVEN-YEAR SURRENDER CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with a
seven-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 6.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: 60,000.00 40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for
the net partial surrender proceeds to match the amount requested. We start with
an estimate of the amount of contract value to surrender and calculate the
resulting surrender charge and net partial surrender proceeds as illustrated
below. We then adjust our estimate and repeat until we determine the amount of
contract value to surrender that generates the desired net partial surrender
proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings available in the
contract at the time of surrender as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously surrendered
(PPNPS): 50,000.00 50,000.00
--------- ---------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA) available in the
contract as the greatest of the following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5.800.00 4.200.00
--------- ---------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the contract value
surrendered exceeds earnings.
Contract value surrendered: 15,319.15 15,897.93
Less earnings in the contract: 10,000.00 0.00
--------- ---------
ACV (but not less than zero): 5,319.15 15,897.93
STEP 4. Next we determine XSF, the amount by which 10% of the prior
anniversary's contract value exceeds earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
--------- ---------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 105
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) * (PPNPS -
XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,319.15 15,897.93
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50.000.00
--------- ---------
PPS = 5,319.15 19,165.51
STEP 6. We then calculate the surrender charge as a
percentage of PPS.
Note that for a contract with a loss, PPS may be
greater than the amount you request to surrender:
PPS: 5,319.15 19,165.51
less XSF: 0.00 4,200.00
--------- ---------
amount of PPS subject to a surrender charge: 5,319.15 14,965.51
multiplied by the surrender charge rate: x 6.0% x 6.0%
--------- ---------
surrender charge: 319.15 897.93
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,319.15 15,897.93
SURRENDER CHARGE: (319.15) (897.93)
--------- ---------
NET PARTIAL SURRENDER PROCEEDS: 15,000.00 15,000.00
--------------------------------------------------------------------------------
106 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX C: EXAMPLE -- DEATH BENEFITS
CURRENT CONTRACT:
EXAMPLE -- ROPP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including surrender charge) partial surrender; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROPP DEATH BENEFIT AS FOLLOWS:
Contract value at death: $23,000.00
----------
Purchase payments minus adjusted partial surrenders:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.54
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROPP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 107
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- = 1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
108 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the regular fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- =
$24,300 -1,543.21
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- =
$24,300 -1,543.21
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,000
---------------- =
$19,000 -1,657.89
----------
variable account floor benefit: $19,342.11
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 109
ORIGINAL CONTRACT:
EXAMPLE -- ROP DEATH BENEFIT
You purchase the contract with a payment of $20,000; and
on the first contract anniversary you make an additional purchase payment of
$5,000; and
During the second contract year the contract value falls to $22,000 and you
take a $1,500 (including surrender charge) partial surrender; and
During the third contract year the contract value grows to $23,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
CONTRACT VALUE AT DEATH: $23,000.00
----------
Purchase payments minus adjusted partial surrenders:
Total purchase payments: $25,000.00
minus adjusted partial surrenders calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$23,295.45
EXAMPLE -- MAV DEATH BENEFIT
You purchase the contract with a payment of $25,000; and
on the first contract anniversary the contract value grows to $26,000; and
During the second contract year the contract value falls to $22,000, at which
point you take a $1,500 (including surrender charge) partial surrender,
leaving a contract value of $20,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $20,500.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,704.55
$22,000
----------
for a death benefit of: $23,295.45
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $26,000.00
plus purchase payments made since the prior anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $26,000
---------------- = -1,772.73
$22,000
----------
for a death benefit of: $24,227.27
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $24,227.27
--------------------------------------------------------------------------------
110 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS
CALCULATED AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,000.00
1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrenders from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $24,642.11
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 111
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 with $5,000 allocated to
the one-year fixed account and $20,000 allocated to the subaccounts; and
on the first contract anniversary, the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year, the one-year fixed account value is $5,300
and the subaccount value is $19,000. Total contract value is $24,300. You take
a $1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,000.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a death benefit of: $23,456.79
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,000.00
plus purchase payments made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,000
---------------- = -1,543.21
$24,300
----------
for a MAV Death Benefit of: $23,456.79
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor the first contract anniversary, calculated as:
1.05 x $20,000 $21,000.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,000
---------------- = -$1,657.89
$19,000
----------
variable account floor benefit: $19,342.11
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $24,642.11
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5% VARIABLE ACCOUNT FLOOR: $24,642.11
--------------------------------------------------------------------------------
112 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES OF RIDERS
SECURESOURCE STAGES 2 RIDERS
EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual Step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT
DURATION PURCHASE PARTIAL CONTRACT DETERMINING
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $4,000
1 0 0 98,000 108,000 108,000 9.3% 108,000 5,400
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4)
7.5 0 10,000 90,000 125,134(5) 117,000 23.1% 118,877(5) 6,257(5)
8 0 0 80,000 125,134 117,000 31.6% 118,877 6,257
9 0 0 95,000 125,134 117,000 18.8% 118,877 7,508(4)
CONTRACT LIFETIME
DURATION PAYMENT
IN YEARS RALP PERCENT
At Issue $4,000(1) 4%
1 5,400(2) 5%
2 5,700 5%
3 6,000 5%
3.5 0 5%
4 6,000 5%
5 7,800(3) 6%(3)
6 7,800 6%
7 6,500(4) 5%(4)
7.5 0 5%
8 6,257 5%
9 7,508(4) 6%(4)
(1) The ALP and RALP are based on percentage B until the end of the 1-year
waiting period.
(2) Since no withdrawal was taken, at the end of the 1-year waiting period, the
ALP and RALP are recalculated based on percentage A.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The Lifetime Payment Percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Lifetime Benefit Description - Determination of
Adjustment of Benefit Values".
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 113
SECURESOURCE STAGES
EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT
DURATION PURCHASE PARTIAL CONTRACT DETERMINING
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $5,000
1 0 0 98,000 108,000 108,000 9.3% 100,000 5,400
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4)
7.5 0 10,000 90,000 117,000(5) 117,000 23.1% 108,000(5) 5,850(5)
8 0 0 80,000 117,000 117,000 31.6% 108,000 5,850
9 0 0 95,000 117,000 117,000 18.8% 108,000 7,020(4)
CONTRACT LIFETIME
DURATION PAYMENT
IN YEARS RALP PERCENT
At Issue $ 0(1) 5%
1 0 5%
2 0 5%
3 6,000(2) 5%
3.5 0 5%
4 6,000 5%
5 7,800(3) 6%(3)
6 7,800 6%
7 6,500(4) 5%(4)
7.5 0 5%
8 5,850 5%
9 7,020(4) 6%(4)
(1) The RALP is zero until the end of the 3-Year waiting period.
(2) At the end of the 3-Year waiting period, the RALP is set equal to the ALP.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the Lifetime Payment Percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Determination of Adjustment of Benefit Values" in
the "Lifetime Benefit Description".
--------------------------------------------------------------------------------
114 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- SECURESOURCE 20
EXAMPLE #1: LIFETIME BENEFIT NOT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER
ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ----------------------------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0
1 0 0 98,000 100,000 2.0% 100,000 100,000 6,000 0
2 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0
3 0 0 125,000 125,000 0.0% 125,000 125,000 7,500 7,500
3.5 0 6,000 111,000 118,590 6.4% 125,000 119,000 7,500 1,500
4 0 0 104,000 118,590 12.3% 125,000 119,000 7,500 7,500
5 0 0 90,000 118,590 24.1% 125,000 119,000 6,250(2) 6,250(2)
6 0 0 95,000 118,590 19.9% 125,000 119,000 7,500 7,500
6.5 0 7,500 87,500 87,500(3) 0.0% 125,000 111,500 7,500 0
7 0 0 90,000 90,000 0.0% 125,000 111,500 7,500 7,500
7.5 0 10,000 70,000 70,000(4) 0.0% 70,000(4) 70,000(4) 4,200(4) 0
8 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500
CONTRACT LIFETIME BENEFIT
DURATION ------------------
IN YEARS ALP RALP
At Issue NA NA
1 NA NA
2 NA NA
3 NA NA
3.5 NA NA
4 7,140(1) 7,140(1)
5 5,950(2) 5,950(2)
6 7,140 7,140
6.5 5,250(3) 0
7 5,400 5,400
7.5 4,200(4) 0
8 4,500 4,500
(1) The ALP and RALP are established on the contract anniversary following the
date the covered person (younger Covered Spouse for Joint) reaches age 65 as
the greater of the ELB or the RBA, times the ALP percentage.
(2) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(3) The $7,500 withdrawal is greater than the $7,140 RALP allowed under the
lifetime benefit and therefore excess withdrawal processing is applied to
the ALP, resetting the ALP to the lesser of the prior ALP or the ALP
percentage times the contract value following the withdrawal. The WAB is
reset to the ALP after the reset divided by the current ALP percentage. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(4) The $10,000 withdrawal is greater than both the $7,500 RBP allowed under the
basic benefit and the $5,400 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
less than 20%, so the ALP percentage and GBP percentage are set at 6% for
the remainder of the contract year.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 115
EXAMPLE #2: LIFETIME BENEFIT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 65.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue. On the 7th
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
LIFETI-
HYPOTHETICAL ME
CONTRACT ASSUMED BASIC BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ---------------------------------------- -------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP ALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 $6,000
1 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 6,300
2 0 0 110,000 110,000 0.0% 110,000 110,000 6,600 0 6,600
3 0 0 110,000 120,000 8.3% 110,000 110,000 6,600 6,600(1) 7,200
3.5 0 6,000 104,000 113,455 8.3% 110,000 104,000 6,600 600 7,200
4 0 0 100,000 113,455 11.9% 110,000 104,000 6,600 6,600 7,200
4.5 0 7,000 90,000 105,267 14.5% 90,000 90,000 5,400(2) 5,400(2) 7,200
5 0 0 80,000 105,267 24.0% 90,000 90,000 4,500(3) 4,500(3) 6,000(3)
5.5 0 10,000 70,000 70,000(4) 0.0% 70,000 70,000 3,500(4) 3,500(4) 3,500(4)
6 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500
7 0 0 70,000 70,000(5) 0.0% 70,000(5) 70,000(5) 4,200(5) 4,200(5) 4,200(5)
LIFETI-
ME
CONTRACT BENEFIT
DURATION -------
IN YEARS RALP
At Issue $ 0
1 0
2 0
3 7,200(1)
3.5 1,200
4 7,200
4.5 200
5 6,000(3)
5.5 3,500(4)
6 4,500
7 4,200(5)
(1) At the end of the 3-Year waiting period, the RBP and RALP are set equal to
the GBP and ALP, respectively. The 20% rider credit is applied to the
lifetime benefit.
(2) The $7,000 withdrawal is greater than the $6,600 RBP allowed under the basic
benefit and therefore excess withdrawal processing is applied to the basic
benefit. The GBA is reset to the lesser of the prior GBA or the contract
value following the withdrawal. The RBA is reset to the lesser of the prior
RBA less the withdrawal or the contract value following the withdrawal. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(3) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(4) The $10,000 withdrawal is greater than both the $4,500 RBP allowed under the
basic benefit and the $6,000 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
greater than or equal to 20%, so the ALP Percentage and GBP percentage are
set at 5% for the remainder of the contract year.
(5) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or the ALP percentage times the contract value. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. Any future
withdrawals will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
--------------------------------------------------------------------------------
116 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- SECURESOURCE RIDERS
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive investment option during a
withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate PN program investment
option if you are invested more aggressively than the Moderate PN program
investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 117
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
118 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive
investment option. The target PN program investment option under the contract
is the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate PN program investment option if you are
invested more aggressively than the Moderate PN program investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 119
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
120 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX E: SECURESOURCE SERIES OF RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
SecureSource series of riders to satisfy the RMD rules under 401(a)(9) of the
Code without application of the excess withdrawal processing described in the
rider. We reserve the right to modify this administrative practice at any time
upon 30 days' written notice to you.
For SecureSource Stages and SecureSource 20 riders, owners subject to annual RMD
rules under Section 401(a)(9) of the Code, withdrawing from this contract during
the waiting period to satisfy these rules will set your benefits to zero and you
will not receive any future rider credit.
Amounts you withdraw from this contract (for SecureSource Stages and
SecureSource 20 riders, amounts you withdraw from this contract after the
waiting period) to satisfy these rules are not subject to excess withdrawal
processing under the terms of the rider subject to the following rules and our
current administrative practice:
For SecureSource and SecureSource 20 riders:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year*,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource series of riders.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current contract year,*
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year*.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
series of riders.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
For SecureSource Stages and SecureSource Stages 2 riders:
(1) Each calendar year, if your ALERMDA is greater than the ALP,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the ALP.
- The LABA will be reduced by the total of the amount that each withdrawal
in the current calendar year exceeds the RALP at the time of each
withdrawal, but shall not be reduced to less than zero.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 121
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
Stages and SecureSource Stages 2.
* For SecureSource 20 riders, adjusted for any subsequent changes between 5%
and 6% as described under "GBP Percentage and ALP Percentage".
The ALERMDA is:
(1) determined by us each calendar year (for SecureSource Stages and
SecureSource 20 riders, starting with the calendar year in which the waiting
period ends);
(2) based on your initial purchase payment and not the entire interest value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource Series
rider is attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your rider within the
SecureSource series of riders may not be sufficient to satisfy the requirements
under the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your available
RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP
as described under the excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing one of the SecureSource series of riders.
--------------------------------------------------------------------------------
122 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX F: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
you select the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The death benefit under the MAV Death Benefit equals the contract
value, or $105,000. You have not reached the first contract
anniversary so the Benefit Protector does not provide any additional
benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV Death Benefit minus remaining purchase payments for
the Current Contract or MAV Death Benefit minus payments not
previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract year the contract value falls to $105,000.
The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 6% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to a 6%
surrender charge because your payment is in its third year of the
surrender charge schedule, so we will surrender $39,500
($37,130 + $2,370 in surrender charges) from your contract value.
Altogether, we will surrender $50,000 and pay you $47,630. We
calculate purchase payments not previously surrendered as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
surrender is contract earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old.
The death benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $255,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The
death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $305,000
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 123
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector benefit (40% of earnings at death up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old)
0.40 x ($250,000 - $105,000) = +58,000
--------
Total death benefit of: $308,000
--------------------------------------------------------------------------------
124 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX G: BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
you select the MAV Death Benefit.
During the first contract year the contract value grows to $105,000.
The death benefit equals MAV Death Benefit, which is the contract
value, or $105,000. You have not reached the first contract
anniversary so the Benefit Protector Plus does not provide any
additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any additional benefit
beyond what is provided by the Benefit Protector at this time. The
death benefit equals:
MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus remaining purchase
payments for the Current Contract or MAV rider minus payments not
previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
MAV Death Benefit (MAV): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 7% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to a 7%
surrender charge because your payment is within the third year of
the surrender charge schedule, so we will surrender $39,500 ($36,735
+ $2,765 in surrender charges) from your contract value. Altogether,
we will surrender $50,000 and pay you $47,235. We calculate purchase
payments not previously surrendered as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial surrender is contract
earnings). The death benefit equals:
MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue
and not previously withdrawn: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000.
The death benefit equals the previous death benefit calculated. The
reduction in contract value has no effect.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 125
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
During the tenth contract year you make an additional purchase
payment of $50,000. Your new contract value is now $250,000. The new
purchase payment is less than one year old and so it has no effect
on the Benefit Protector Plus value. The death benefit equals:
MAV Death Benefit: $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$250,000 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
MAV Death Benefit (contract value): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV rider minus payments not previously
surrendered):
0.40 x ($250,000 - $105,000) = +58,000
plus 20% of purchase payments made within 60 days of contract
issue
and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $319,000
--------------------------------------------------------------------------------
126 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX H: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts, any GPAs that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts, any GPAs according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts, any GPAs that make up the
model portfolio you selected and the allocation percentages to those
subaccounts, any GPAs will not change unless we adjust the composition of the
model portfolio to reflect the liquidation, substitution or merger of an
underlying fund, a change of investment objective by an underlying fund or when
an underlying fund stops selling its shares to the variable account. We reserve
the right to change the terms and conditions of the asset allocation program
upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 127
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
you purchase your contract on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the annuitization start
date (see "Buying Your Contract -- The Annuitization Start Date"). Before the
annuitization start date, you have the right to withdraw some or all of your
contract value, less applicable administrative, surrender and rider charges
imposed under the contract at the time of the withdrawal (see "Making the Most
of Your Contract -- Surrenders"). Because your contract value will fluctuate
depending on the performance of the underlying funds in which the subaccounts
invest, the contract itself does not guarantee that you will be able to take a
certain withdrawal amount each year before the annuitization start date, nor
does it guarantee the length of time over which such withdrawals can be made
before the annuitization start date.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
128 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any partial withdrawals
you take under the contract will reduce the value of the death benefits (see
"Benefits in Case of Death"). Upon full withdrawal of the contract, you will
receive the remaining contract value less any applicable charges (see "Making
the Most of Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator investment option, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant (see "At Death" heading below). Therefore, if there are
multiple contract owners or the annuitant is not an owner, the rider may
terminate or the lifetime withdrawal benefit may be reduced. This
possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 129
of the subaccounts, GPAs or the one-year fixed account that are available
under the contract to contract owners who do not elect this rider. (See
"Making the Most of Your Contract -- Portfolio Navigator Program.") You may
allocate purchase payments to the DCA fixed account, when available, and we
will make monthly transfers into the investment option you have chosen.
Subject to state restrictions, we reserve the right to limit the number of
investment options from which you can select based on the dollar amount of
purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or after the annuitization start date.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may
incur a 10% IRS early withdrawal penalty and may be considered taxable income.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
--------------------------------------------------------------------------------
130 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life(R) rider may not be sufficient to
satisfy the requirements under the Code for these types of distributions. In
such a situation, amounts withdrawn to satisfy such distribution requirements
will exceed your available RBP or RALP amount and may result in the reduction
of your GBA, RBA, and/or ALP as described under the excess withdrawal
provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any surrender charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a death benefit. Rather, the GBA is an interim value used to
calculate the amount available for withdrawals each year under the basic
withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time, the
total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 131
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase
--------------------------------------------------------------------------------
132 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
payment has its own GBP, which is equal to the lesser of that payment's RBA or
7% of that payment's GBA, and the total GBP is the sum of the individual GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 133
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the
--------------------------------------------------------------------------------
134 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but never less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but never less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 135
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but will never be less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero. We will notify you of this option. If
no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
--------------------------------------------------------------------------------
136 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments multiplied by 6%. If the
anniversary date occurs at any other time, the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set equal to the ALP less all prior withdrawals made in the
current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life(R) rider.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 137
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
138 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 139
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor(R) Withdrawal Benefit is an optional benefit that was offered for
an additional annual charge if (1):
RIDER A
you purchase(d) your contract on or after April 30, 2005 in those states where
the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life rider
are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
you purchased your contract prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments. Certain withdrawals and step ups, as described below, can cause the
initial guaranteed withdrawal benefit to change. The guarantee remains in effect
if your partial withdrawals in a contract year do not exceed the allowed amount.
As long as your withdrawals in each contract year do not exceed the allowed
amount, you will not be assessed a surrender charge. Under the original rider,
the allowed amount is the Guaranteed Benefit Payment (GBP -- the amount you may
withdraw under the terms of the rider in each contract year, subject to certain
restrictions prior to the third contract anniversary, as described below). Under
the enhanced rider, the allowed amount is equal to 7% of purchase payments for
the first three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
surrender charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a surrender charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable surrender charge (see "Charges -- Surrender Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Surrenders").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuitization start date. If
you select the Guarantor Withdrawal Benefit rider, you may not select an Income
Assurer Benefit rider or the Accumulation Protector Benefit rider. If you
exercise the annual step up election (see "Elective Step Up" and "Annual Step
Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
140 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
H: Asset Allocation Program for Contracts Purchased Before May 1, 2006"),
however, you may elect to participate in the Portfolio Navigator program after
May 1, 2006. The Portfolio Navigator program and the asset allocation program
limit your choice of subaccounts, one-year fixed account and GPAs (if
available) to PN program investment options you have selected. This means you
will not be able to allocate contract value to all of the subaccounts, GPAs or
the one-year fixed account that are available under the contract to contract
owners who do not elect this rider. You may allocate purchase payments to the
DCA fixed account, when available, and we will make monthly transfers into the
investment option you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw in each contract year without incurring a
withdrawal charge (see "Charges -- Surrender Charge"). The FA may be greater
than GBP under this rider. Any amount you withdraw under the contract's FA
provision that exceeds the GBP is subject to the excess withdrawal processing
for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or after the
annuitization start date.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2
may incur a 10% IRS early withdrawal penalty and may be considered taxable
income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules without applying excess
withdrawal processing under terms of the rider, subject to the following
rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 141
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). You should consult your
tax advisor before you select this optional rider if you have any questions
about the use of this rider in your tax situation.
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
adjusted for subsequent purchase payments, partial withdrawals in excess of the
GBP, and step ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment. The total GBA
when an additional purchase payment is added is the sum of the individual GBAs
immediately prior to the receipt of the additional purchase payment, plus the
GBA associated with the additional purchase payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups:
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
--------------------------------------------------------------------------------
142 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment;
When you make additional purchase payments -- each additional purchase payment
has its own RBA equal to the amount of the purchase payment. The total RBA
when an additional purchase payment is added is the sum of the individual RBAs
immediately prior to the receipt of the additional purchase payment, plus the
RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment multiplied by 7%. At the beginning of any
other contract year, each individual RBP is set equal to each individual GBP.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 143
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or provide a benefit that can be withdrawn or paid upon death. Rather,
a step up determines the current values of the GBA, RBA, GBP and RBP, and may
extend the payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
--------------------------------------------------------------------------------
144 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have been paid;
the GBA will be reset to the greater of the GBA on the valuation date we receive
the spouse's written request to continue the contract and the death benefit that
would otherwise have been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 145
time but will be no less frequent than annually. If, at the death of the owner,
total payments have been made for less than the RBA, the remaining payments will
be paid to the beneficiary (see "The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor(R)
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
$7,700 + $3,500 = $ 11,200
--------------------------------------------------------------------------------
146 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 147
APPENDIX K : EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if you purchased your contract prior to May 1, 2007. These riders
are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer Benefit
rider you choose, that establishes a benefit floor. When the benefit floor
amount is greater than the contract value, there may be a higher annuitization
payout than if you annuitized your contract without the Income Assurer Benefit.
Your annuitization payout will never be less than that provided by your contract
value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments paid in the last five years
before exercise of the benefit which we reserve the right to exclude from the
calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
surrender charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN program investment option to one that causes the rider
charge to increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
the annuitant on the annuitization start date must be between 50 to 86 years
old; and
--------------------------------------------------------------------------------
148 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + I)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full surrender from the
contract, on the annuitization start date, or on the date that a death benefit
is payable; and
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
when a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
*The rider and annual fee terminate 30 days following the contract anniversary
after the annuitant's 86th birthday, however, if you exercise the Income
Assurer Benefit rider before this time, your benefits will continue according
to the annuity payout plan you have selected.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 149
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments made to the contract minus proportionate adjustments for
partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and reduce
the MAV by proportionate adjustments for partial withdrawals. Every contract
anniversary after that prior to the earlier of your or the annuitant's 81st
birthday, we compare the MAV to the current contract value and we reset the MAV
to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments less excluded payments, less proportionate
adjustments for partial surrenders; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment multiplied by the ratio of the current contract value
over the estimated contract value on the anniversary prior to such purchase
payment. The estimated contract value at such anniversary is calculated by
assuming that payments, any credits, and partial surrenders occurring in a
contract year take place at the beginning of the year for that anniversary and
every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR -- is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer
Benefit(R) 5% variable account floor is calculated differently and is not the
same value as the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments made to the protected investment options minus
adjusted partial withdrawals and transfers from the protected investment
options; plus
an amount equal to 5% of your initial purchase payment allocated to the
protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments to or withdraw or
transfer amounts from the protected investment options, we adjust the variable
account floor by adding the additional purchase payment and subtracting adjusted
surrenders and adjusted transfers. On each subsequent contract anniversary after
the first anniversary of the effective date of this rider, prior to the earlier
of your or the annuitant's 81st birthday, we increase the variable account floor
by adding the amount ("roll-up amount") equal to 5% of the prior contract
anniversary's variable account floor.
The amount of purchase payment withdrawn from or transferred between the
excluded investment options and the protected investment options is calculated
as (a) times (b) where:
(a) is the amount of purchase payment in the investment options being
withdrawn or transferred on the date of but prior to the current surrender
or transfer; and
(b) is the ratio of the amount of the transfer or surrender to the value in
the investment options being withdrawn or transferred on the date of (but
prior to) the current surrender or transfer.
--------------------------------------------------------------------------------
150 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted surrenders and adjusted transfers for the variable account floor are
equal to the amount of the surrender or transfer from the protected investment
options as long as the sum of the surrenders and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current surrender or transfer from the protected investment options plus
the sum of all prior surrenders and transfers made from the protected investment
options in the current policy year exceeds the roll-up amount from the prior
contract anniversary we will calculate the adjusted withdrawal or adjusted
transfer for the variable account floor as the result of (a) plus [(b) times
(c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any surrenders and transfers made from the protected investment options in
the current policy year but prior to the current surrender or transfer.
However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
surrender or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current surrender (including any
surrender charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current surrender or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments less excluded payments, less proportionate
adjustments for partial surrenders; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments made to the contract minus proportionate
adjustments for partial surrenders;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments, less excluded payments, less proportionate
adjustments for partial withdrawals;
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 151
Remember that the riders require you to choose a PN program investment option.
The riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program investment options
include protected investment options and excluded investment options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and the one-year fixed account). Excluded investment options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial surrenders or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED MAXIMUM GUARANTEED
CONTRACT CONTRACT PURCHASE ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE PAYMENTS VALUE (MAV)(1) BASE - MAV(2)
-------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $108,000
2 125,000 none 125,000 125,000
3 132,000 none 132,000 132,000
4 150,000 none 150,000 150,000
5 85,000 none 150,000 150,000
6 121,000 none 150,000 150,000
7 139,000 none 150,000 150,000
8 153,000 none 153,000 153,000
9 140,000 none 153,000 153,000
10 174,000 none 174,000 174,000
11 141,000 none 174,000 174,000
12 148,000 none 174,000 174,000
13 208,000 none 208,000 208,000
14 198,000 none 208,000 208,000
15 203,000 none 208,000 208,000
-------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
152 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 174,000 812.58
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 814.32
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 174,000 657.72
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
------------------------------------------------------------------------------------------------------------------------
IAB - MAV PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 650.76
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 153
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED BENEFIT BASE -
CONTRACT CONTRACT PURCHASE 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE PAYMENTS BENEFIT BASE(1) BENEFIT BASE(2)
----------------------------------------------------------------------------------
1 $108,000 $100,000 $105,000 $108,000
2 125,000 none 110,250 125,000
3 132,000 none 115,763 132,000
4 150,000 none 121,551 150,000
5 85,000 none 127,628 127,628
6 121,000 none 134,010 134,010
7 139,000 none 140,710 140,710
8 153,000 none 147,746 153,000
9 140,000 none 155,133 155,133
10 174,000 none 162,889 174,000
11 141,000 none 171,034 171,034
12 148,000 none 179,586 179,586
13 208,000 none 188,565 208,000
14 198,000 none 197,993 198,000
15 203,000 none 207,893 207,893
----------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 171,034 778.20
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 198,000 974.16
15 203,000 1,025.15 1,027.18 207,893 1,049.86
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 779.91
12 840.46
13 998.40
14 976.14
15 1,051.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
154 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the sale for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
---------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN D - LAST IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
------------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 171,034 632.83
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 198,000 786.06
15 203,000 826.21 818.09 207,893 846.12
------------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 625.98
12 671.65
13 796.64
14 778.14
15 837.81
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED MAXIMUM MAV OR 5%
CONTRACT CONTRACT PURCHASE ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE PAYMENTS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
---------------------------------------------------------------------------------------------------
1 $108,000 $100,000 $108,000 $105,000 $108,000
2 125,000 none 125,000 110,250 125,000
3 132,000 none 132,000 115,763 132,000
4 150,000 none 150,000 121,551 150,000
5 85,000 none 150,000 127,628 150,000
6 121,000 none 150,000 134,010 150,000
7 139,000 none 150,000 140,710 150,000
8 153,000 none 153,000 147,746 153,000
9 140,000 none 153,000 155,133 155,133
10 174,000 none 174,000 162,889 174,000
11 141,000 none 174,000 171,034 174,000
12 148,000 none 174,000 179,586 179,586
13 208,000 none 208,000 188,565 208,000
14 198,000 none 208,000 197,993 208,000
15 203,000 none 208,000 207,893 208,000
---------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be withdrawn.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 155
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $ 772.56 $ 774.30 $174,000 $ 772.56
11 141,000 641.55 642.96 174,000 791.70
12 148,000 691.16 692.64 179,586 838.66
13 208,000 996.32 998.40 208,000 996.32
14 198,000 974.16 976.14 208,000 1,023.36
15 203,000 1,025.15 1,027.18 208,000 1,050.40
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 774.30
11 793.44
12 840.46
13 998.40
14 1,025.44
15 1,052.48
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT ASSUMED NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY CONTRACT PLAN D - LAST PLAN D - LAST IAB - MAX PLAN D - LAST
AT EXERCISE VALUE SURVIVOR NO REFUND(2) SURVIVOR NO REFUND(2) BENEFIT BASE SURVIVOR NO REFUND(2)
----------------------------------------------------------------------------------------------------------------------
10 $174,000 $629.88 $622.92 $174,000 $629.88
11 141,000 521.70 516.06 174,000 643.80
12 148,000 559.44 553.52 179,586 678.83
13 208,000 807.04 796.64 208,000 807.04
14 198,000 786.06 778.14 208,000 825.76
15 203,000 826.21 818.09 208,000 846.56
----------------------------------------------------------------------------------------------------------------------
IAB - MAX PROVISIONS
---------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN D - LAST
AT EXERCISE SURVIVOR NO REFUND(2)
------------------------------------
10 $622.92
11 636.84
12 671.65
13 796.64
14 817.44
15 838.24
------------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
156 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX L: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
THE EXAMPLE ASSUMES:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
INITIAL PAYMENT 100,000
--------------- ------------
HYPOTHETICAL
END OF PARTIAL SURRENDER MCAV ADJUSTMENT ACCUMULATION ASSUMED
CONTRACT (BEGINNING OF FOR PARTIAL BENEFIT CONTRACT
YEAR YEAR) SURRENDER MCAV AMOUNT VALUE
1 $ 0 $ 0 $100,000 $ 0 $112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 157
APPENDIX M: SECURESOURCE RIDER DISCLOSURE
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
--------------------------------------------------------------------------------
158 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any withdrawals you take
under the contract will reduce the value of the death benefits (see "Benefits in
Case of Death"). Upon full withdrawal of the contract, you will receive the
remaining contract value less any applicable charges (see "Making the Most of
Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 159
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate purchase payments to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen. You may make two elective investment option
changes per contract year; we reserve the right to limit elective investment
option changes if required to comply with the written instructions of a fund
(see "Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model changes per contract year and
will not cause your rider fee to increase.
The target investment option is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment
option that is more aggressive than the current target investment option after
30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or investment
option that is more conservative than the target investment option without a
benefit reset as described below. If you are in a withdrawal phase and you
choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, your rider benefit will be reset
as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option (or change from the model
portfolio to an investment option) by written request on an authorized form or
by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will
--------------------------------------------------------------------------------
160 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
not reduce the fee we charge for this rider. The benefit under the
SecureSource - Joint Life rider continues for the covered spouse who is the
owner of the contract (or annuitant in the case of nonnatural ownership). The
rider will terminate at the death of the contract owner (or annuitant in the
case of nonnatural ownership) because the original spouse will be unable to
elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the guaranteed amount of withdrawal available under the rider and
such withdrawals may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix E for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 161
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an interim
value used to calculate the amount available for withdrawals each year under the
basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At any time,
the total GBA is the sum of the individual GBAs associated with each purchase
payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. Please note that if the withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
--------------------------------------------------------------------------------
162 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment. Each payment's GBP will be reset to 7% of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 163
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments multiplied by 6%. The
step up reversal will only happen once during the waiting period, when the
first withdrawal is made.
--------------------------------------------------------------------------------
164 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups may increase
your ALP, they may reduce or eliminate any benefit of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments,
multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 165
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix E for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
--------------------------------------------------------------------------------
166 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 167
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
--------------------------------------------------------------------------------
168 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set to the
ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 169
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
170 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX N: SECURESOURCE 20 RIDER DISCLOSURE
SECURESOURCE 20 RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary values. The SecureSource 20
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw your principal over time. This benefit
is intended for assets you plan to hold and let accumulate for at least three
years. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be re-established based on your contract value at that time and you will not
receive 20% credit offered under this rider.
There are two optional SecureSource 20 riders available under your contract:
SecureSource 20 -- Single Life; or
SecureSource 20 -- Joint Life.
The information in this section applies to both Secure Source 20 riders, unless
otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource 20 -- Single Life rider covers one person. The SecureSource
20 -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource 20 -- Single Life rider or the
SecureSource 20 -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource 20 rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if:
your contract application is signed on or after Aug. 10, 2009, but prior to
Nov. 30, 2009; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource 20 riders are not available under an inherited qualified
annuity.
The SecureSource 20 rider guarantees that after the waiting period, regardless
of the investment performance of your contract, you will be able to withdraw up
to a certain amount each year from the contract before the annuity payouts begin
until:
SINGLE LIFE: until death (see "At Death" heading below) or until the depletion
of the basic benefit.
JOINT LIFE: until the death of the last surviving covered spouse (see "Joint
Life only: Covered Spouses" and "At Death" headings below) or until the
depletion of the basic benefit.
KEY TERMS
The key terms associated with the SecureSource 20 rider are:
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and until your death (JOINT LIFE: the
death of both covered spouses). After the waiting period, the annual withdrawal
amount guaranteed by the rider can vary each contract year. The maximum ALP is
$300,000.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): the age at which the lifetime
benefit is established.
ENHANCED LIFETIME BASE (ELB): used in the calculation of the ALP on the later of
the ELB date or the establishment of the ALP. The ELB cannot be withdrawn or
annuitized and is not payable as a death benefit.
GUARANTEED BENEFIT AMOUNT (GBA): the total cumulative withdrawals guaranteed by
the rider under the basic benefit. The maximum GBA is $5,000,000. The GBA cannot
be withdrawn or annuitized and is not payable as a death benefit. It is an
interim value used to calculate the amount available for withdrawals each year
after the waiting period under the basic benefit (see "Guaranteed Benefit
Payment" below). At any time, the total GBA is the sum of the individual GBAs
associated with each purchase payment.
GUARANTEED BENEFIT PAYMENT (GBP): the basic benefit amount available each
contract year after the waiting period until the RBA is reduced to zero. After
the waiting period the annual withdrawal amount guaranteed by the rider can vary
each contract year.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 171
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. The RALP is the lifetime benefit amount
that can be withdrawn during the remainder of the current contract year.
REMAINING BENEFIT AMOUNT (RBA): each withdrawal you make reduces the amount that
is guaranteed by the rider for future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
REMAINING BENEFIT PAYMENT (RBP): as you make withdrawals during a contract year,
the remaining amount that the rider guarantees will be available for withdrawal
that year is reduced. The RBP is the basic benefit amount that can be withdrawn
during the remainder of the current contract year.
WAITING PERIOD: The period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
GBP Percentage and ALP Percentage. The WAB cannot be withdrawn or annuitized and
is not payable as a death benefit.
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
DESCRIPTION OF THE SECURESOURCE 20 RIDER
Before the lifetime benefit is established, the annual withdrawal amount
guaranteed by the riders after the waiting period is the basic benefit amount.
After the lifetime benefit is established and after the waiting period, the
riders guarantee that you have the option each contract year to cumulatively
withdraw an amount up to the lifetime benefit amount or the basic benefit
amount, but the riders do not guarantee withdrawal of both in a contract year.
The lifetime withdrawal benefit is established automatically:
SINGLE LIFE: on the rider anniversary date after the covered person reaches
age 65, or on the rider effective date if the covered person is age 65 or
older on the rider effective date (see "Annual Lifetime Payment Attained Age
(ALPAA)" heading below);
JOINT LIFE: on the rider anniversary date after the younger covered spouse
reaches age 65, or on the rider effective date if the younger covered spouse
is age 65 or older on the rider effective date (see "Annual Lifetime Payment
Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below).
The basic benefit amount and the lifetime benefit amount can vary based on the
relationship of your contract value to the Withdrawal Adjustment Base (WAB).
When the first withdrawal is taken each contract year after the waiting period,
the percentages used to determine the benefit amounts are set and fixed for the
remainder of that year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next year.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic benefit and lifetime benefit each has its own definition
of the allowed annual withdrawal amount. Therefore a withdrawal may be
considered an excess withdrawal for purposes of the lifetime benefit only, the
basic benefit only, or both.
At any time after the waiting period, as long as your withdrawal does not exceed
the greater of the basic benefit amount or the lifetime benefit amount, if
established, you will not be assessed a surrender charge or any market value
adjustment. If your withdrawals exceed the greater of the RBP or the RALP,
surrender charges under the terms of the contract may apply (see
"Charges -- Surrender Charges"). The amount we actually deduct from your
contract value will be the amount you request plus any applicable surrender
charge. Market value adjustments, if applicable, will also be made (see
"Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the
amount you request. Any withdrawals you take under the contract will reduce the
value of the death benefits (see "Benefits in Case of Death"). Upon full
withdrawal, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
Subject to conditions and limitations, an annual step-up can increase the basic
benefit amount and the lifetime benefit amount, if your contract value has
increased on a rider anniversary.
--------------------------------------------------------------------------------
172 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
Subject to conditions and limitations, if no withdrawals are taken prior to the
third rider anniversary, the 20% rider credit may increase the lifetime benefit
(if already established) or the Enhanced Lifetime Base (ELB) may increase the
lifetime benefit (when established).
The values associated with the basic benefit are GBA, RBA, GBP and RBP. The
values associated with the lifetime benefit are ALP, RALP and ELB. ALP and GBP
are similar in that they are the annual withdrawal amount for each benefit after
the waiting period. RALP and RBP are similar in that they are the remaining
amount that can be withdrawn during the current contract year for each benefit.
IMPORTANT SECURESOURCE 20 RIDER CONSIDERATIONS
You should consider whether a SecureSource 20 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the first death of any owner or
annuitant even if the covered person is still living (see "At Death"
heading below). Therefore, the rider will terminate when a death benefit
becomes payable. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the lifetime benefit terminates even though other contract
owners are still living; or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the lifetime benefit terminates even
though the owner is still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the death of the last surviving covered
spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If both the ALP and the
contract value are zero, the lifetime benefit will terminate.
(c) If the lifetime benefit is first established prior to the third rider
anniversary, the initial ALP is based on the basic benefit's RBA at that
time (see "Annual Lifetime Payment (ALP)" heading below). If the lifetime
benefit is first established on/after the third rider anniversary, the
initial ALP is based on the greater of the basic benefit's RBA and the ELB
at that time. Any withdrawal you take before the ALP is established
reduces the RBA and ELB and therefore may result in a lower amount of
lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be re-established based on your contract value at that time and you will
not receive 20% credit offered under this rider. Any withdrawal request within
the 3-year waiting period must be submitted in writing. Also, after the
waiting period if you withdraw more than the allowed withdrawal amount in a
contract year ("excess withdrawal"), the guaranteed amounts under the rider
may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of subaccounts, one-year fixed account and GPAs
(if available) to the PN program investment options (if applicable) you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect the rider. (See "Making the
Most of Your Contract -- Portfolio Navigator Program.") You may allocate
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the investment option you have chosen. You may make two
elective investment option changes per contract year; we reserve the right to
limit elective investment option changes if required to comply with the
written instructions of a fund (see "Market Timing").
You can allocate your contract value to any available investment options during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior to
any subsequent withdrawal. During these accumulation phases, you may request to
change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 173
portfolio, this reallocation will be made to the applicable fund of funds
investment option. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option classification is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment option
that is more aggressive than the current target investment option after 30 days
written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase and
you choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, you will be in the accumulation
phase again. If this is done after the waiting period, your rider benefit will
be reset as follows:
(a) the total GBA will be reset to the contract value, if your contract value
is less; and
(b) the total RBA will be reset to the contract value, if your contract value
is less; and
(c) the ALP, if established, will be reset to your current ALP Percentage
(either 6% or 5% as described under "GBP Percentage and ALP Percentage"
heading below) times the contract value, if this amount is less than the
current ALP; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(g) the WAB will be reset as follows:
- if the ALP has not been established, the WAB will be equal to the reset
GBA.
if the ALP has been established, the WAB will be equal to the reset ALP,
divided by the current ALP Percentage; and
(h) the ELB, if greater than zero, will be reset to the contract value, if
your contract value is less.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource 20 rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource 20 - Joint Life
rider and will not reduce the fee we charge for this rider. The benefit under
the SecureSource 20 - Joint Life rider continues for the covered spouse who is
the owner of the contract (or annuitant in the case of nonnatural ownership).
The rider will terminate at the death of the contract owner (or annuitant in
the case of nonnatural ownership) because the original covered spouse will be
unable to elect the spousal continuation provision of the contract (see "Joint
Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary. The
annuitant must also be an owner. For non-natural ownership arrangements that
allow for spousal continuation one covered spouse should be the annuitant and
the other covered spouse should be the sole primary beneficiary. For revocable
trust ownerships, the grantor of the trust must be the annuitant and the
beneficiary must either be the annuitant's spouse or a trust that names the
annuitant's spouse as the sole primary beneficiary. You are responsible for
establishing ownership arrangements that will allow for spousal continuation.
If you select the SecureSource 20 - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse can not
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds
--------------------------------------------------------------------------------
174 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
the RBP or RALP is subject to the excess withdrawal processing described below
for the GBA, RBA and ALP. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
BASIC BENEFIT DESCRIPTION
THE GBA AND RBA ARE DETERMINED AT THE FOLLOWING TIMES, SUBJECT TO THE MAXIMUM
AMOUNT OF $5,000,000, CALCULATED AS DESCRIBED:
At contract issue -- the GBA and RBA are equal to the initial purchase
payment.
When you make additional purchase payments -- If a withdrawal is taken during
the waiting period, the GBA and RBA will not change when a subsequent purchase
payment is made during the waiting period. Prior to any withdrawal during the
waiting period and after the waiting period, each additional purchase payment
will have its own GBA and RBA established equal to the amount of the purchase
payment.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you take a withdrawal during the waiting period -- the total GBA and
total RBA will be set equal to zero until the end of the waiting period.
When you take a withdrawal after the waiting period and the amount withdrawn
is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal and the GBA remains unchanged. If there have been
multiple purchase payments, both the total GBA and each payment's GBA
remain unchanged, and each payment's RBA is reduced in proportion to its
RBP.
(b) greater than the total RBP -- EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE GBA AND RBA.
On the rider anniversary at the end of the waiting period -- If the first
withdrawal is taken during the waiting period and you did not decline a rider
fee increase, the total GBA and the total RBA will be reset to the contract
value.
If the first withdrawal is taken during the waiting period and you decline a
rider fee increase, the total GBA and the total RBA will be reset to the
lesser of (1) the GBA at the time of the first withdrawal, plus any additional
purchase payments since the time of the first withdrawal, minus all
withdrawals, or (2) the contract value.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 175
Upon certain changes to your PN program investment options under the PN
program as described under "Use of Portfolio Navigator Program Required,"
above.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GBP PERCENTAGE AND ALP PERCENTAGE: We use two percentages (6% and 5%) to
calculate your GBP and ALP. The percentage used can vary as described below:
During the waiting period, 6% will be used to determine the amount payable to
beneficiaries under the RBA Payout Option described below. After the waiting
period, a comparison of your contract value and the WAB determines your GBP
Percentage and ALP Percentage, unless the percentage is fixed as described
below. On each valuation date, if the benefit determining percentage is less
than the 20% adjustment threshold, then 6% is used in calculating your GBP and
ALP; otherwise, 5% is used. Market volatility and returns, the deduction of fees
and the 20% credit could impact your benefit determining percentage. The benefit
determining percentage is calculated as follows but will not be less than zero:
1 - (A/B)
A = contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
When the first withdrawal in a contract year is taken, the GBP Percentage and
ALP Percentage will be set and fixed for the remainder of that contract year.
Beginning on the next rider anniversary, the GBP Percentage and ALP Percentage
can change on each valuation date as described above until a withdrawal is taken
in that contract year.
Under certain limited situations, your GBP Percentage and ALP Percentage will
not vary each contract year. They will be set at the earliest of (1), (2) or (3)
below and remain fixed for as long as the benefit is payable:
(1) when the RBA Payout Option is elected, or
(2) if the ALP is established, when your contract value on a rider anniversary
is less than two times the ALP (for the purpose of this calculation only,
the ALP is determined using 5%; the ALP Percentage used to determine your
ALP going forward will be either 6% or 5%), or
(3) when the contract value reduces to zero.
For certain periods of time at our discretion and on a non-discriminatory basis,
your GBP Percentage and ALP Percentage may be set by us to 6% if more favorable
to you.
WITHDRAWAL ADJUSTMENT BASE (WAB): One of the components used to determine GBP
Percentage and ALP Percentage. The maximum WAB is $5,000,000. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit,
THE WAB IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At Rider Effective Date -- the WAB is set equal to the initial purchase
payment.
When a subsequent purchase payment is made -- before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB will be
increased by the amount of each additional purchase payment.
--------------------------------------------------------------------------------
176 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
When a withdrawal is taken -- if the first withdrawal is taken during the
waiting period, the WAB will be set equal to zero until the end of the waiting
period.
Whenever a withdrawal is taken after the waiting period, the WAB will be reduced
by the amount in (A) unless the withdrawal is an excess withdrawal for the
lifetime benefit (or the basic benefit if the ALP is not established) when it
will be set equal to the amount in (B).
(A) The WAB is reduced by an amount as calculated below:
A X B
----- where:
C
A = the amount the contract value is reduced by the withdrawal
B = WAB on the date of (but prior to) the withdrawal
C = the contract value on the date of (but prior to) the withdrawal.
(B) If the ALP is not established and the current withdrawal exceeds the RBP,
the WAB will be reset to the GBA immediately following excess withdrawal
processing.
If the ALP is established and the current withdrawal exceeds the RALP, the WAB
will be reset to the ALP divided by the current ALP Percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above). In this
calculation, we use the ALP immediately following excess withdrawal processing.
On rider anniversaries -- unless you decline a rider fee increase, the WAB
will be increased to the contract value on each rider anniversary, if the
contract value is greater, except as follows:
(A) If a withdrawal is taken during the waiting period, the WAB will be
increased to the contract value on each rider anniversary beginning at the
end of the waiting period, if the contract value is greater.
(B) If you decline a rider fee increase and a withdrawal is taken during the
waiting period, the WAB will be reset to the lesser of (1) the GBA at the
time of the first withdrawal, plus any additional purchase payments since
the time of the first withdrawal, minus all withdrawals, or (2) the
contract value.
Upon certain changes to your PN program investment option as described under
"Use of Portfolio Navigator Program Required," above.
On the later of the third rider anniversary or the rider anniversary when the
ALP is established -- unless you decline a rider fee increase, if the ELB is
greater than zero, the WAB will be increased by an amount as calculated below,
but not less than zero.
(A) The ELB, minus
(B) the greater of:
i) your contract value, or
ii) the ALP before the ELB is applied, divided by the ALP Percentage (if
the ALP is established) or the total RBA (if the ALP is established
on the third rider anniversary).
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic benefit. After the waiting period the annual
withdrawal amount guaranteed under the rider can vary each contract year. At any
point in time, each payment's GBP is the lesser of (a) and (b) where (a) is the
GBA for that payment multiplied by the current GBP percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above) and (b) is
the RBA for that payment. The total GBP is the sum of the GBPs for each purchase
payment.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic benefit. At any point in time,
the total RBP is the sum of the RBPs for each purchase payment.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
During the waiting period -- the RBP will be zero.
At the beginning of any contract year after the waiting period and when the
GBP Percentage changes -- the RBP for each purchase payment is set equal to
that purchase payment's GBP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment has its own RBP equal to the purchase payment,
multiplied by the GBP Percentage.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 177
When you make any withdrawal after the waiting period -- the total RBP is
reset to equal the total RBP immediately prior to the withdrawal less the
amount of the withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in the excess withdrawal processing, the applicable RBP will not yet
reflect the amount of the current withdrawal.
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): The ALP is the lifetime benefit amount available
for withdrawals in each contract year after the waiting period until the later
of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
benefit is not in effect and the ALP is zero.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the covered person has already reached age 65.
(b) the rider anniversary following the date the covered person reaches age
65,
- if during the waiting period and no prior withdrawal has been taken; or
- if after the waiting period.
(c) the rider anniversary following the end of the waiting period if the
covered person is age 65 before the end of the waiting period and a prior
withdrawal had been taken.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
JOINT LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
--------------------------------------------------------------------------------
178 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
For (b), (c) and (d) above, if the date described occurs during the waiting
period and a prior withdrawal had been taken, we use the rider anniversary
following the end of the waiting period to establish the ALP.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
Whenever the ALP Percentage changes --
(a) If the ALP Percentage is changing from 6% to 5%, the ALP is reset to the
ALP multiplied by 5%, divided by 6%.
(b) If the ALP Percentage is changing from 5% to 6%, the ALP is reset to the
ALP multiplied by 6%, divided by 5%.
When you make an additional purchase payment -- Before a withdrawal is taken
in the waiting period and at any time after the waiting period, each
additional purchase payment increases the ALP by the amount of the purchase
payment, multiplied by the ALP Percentage.
When you make a withdrawal:
(a) During the waiting period, the ALP, if established, will be set equal to
zero until the end of the waiting period.
(b) After the waiting period, if the amount withdrawn is:
(i) less than or equal to the RALP, the ALP is unchanged.
(ii) greater than the RALP, ALP EXCESS WITHDRAWAL PROCESSING will occur.
If you withdraw less than the ALP in a contract year, there is no carry over
to the next contract year.
On the rider anniversary at the end of the waiting period -- If you took a
withdrawal during the waiting period, the ALP is set equal to the contract
value multiplied by the ALP Percentage if the covered person (JOINT LIFE:
younger covered spouse) has reached age 65.
At step ups -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
Upon certain changes to your PN program investment option under the PN program
as described under "Use of Portfolio Navigator Program Required," above.
20% RIDER CREDIT
If you do not make a withdrawal during the first three rider years and you don't
decline a rider fee increase, then a 20% rider credit may increase your ALP.
This credit is 20% of purchase payments received in the first 180 days that the
rider is in effect and is used to establish the enhanced lifetime base. The
enhanced lifetime base is an amount that may be used to increase the ALP. The
20% rider credit does not increase the basic benefit or the contract value.
Because step ups may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (ELB)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not decline a rider fee increase and you do not make a
withdrawal during the first three rider years, then the enhanced lifetime base
will be the sum of all purchase payments received during the first three rider
years plus the 20% rider credit. If you make a withdrawal during the first three
rider years or decline a rider fee increase, then the 20% rider credit does not
apply and the enhanced lifetime base will be established as zero and will always
be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the contract value (if your contract value is less), if you choose
an asset allocation model that is more aggressive than the target model while
you are in the withdrawal phase.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 179
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You decline a rider fee increase.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn, annuitized or payable as a death benefit.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE
If the ALP is already established, on the third rider anniversary, the ALP will
be increased to equal the enhanced lifetime base multiplied by the ALP
Percentage (either 5% or 6% as described under "GBP Percentage and ALP
Percentage" heading above), if this amount is greater than the current ALP.
Thereafter, the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or the ALP Percentage (either 5% or 6% as described under "GBP Percentage and
ALP Percentage" heading above) multiplied by the contract value immediately
following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime benefit. Prior to
establishment of the ALP, the lifetime benefit is not in effect and the RALP is
zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period -- the RALP will be zero.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals taken in the contract year but not less than zero.
At the beginning of each contract year after the waiting period and when the
ALP Percentage changes -- the RALP is set equal to the ALP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment increases the RALP by the purchase payment, if
applicable multiplied by the ALP Percentage (either 5% or 6% as described
under "GBP Percentage and ALP Percentage" heading above).
At step ups -- (see "Annual Step Up" headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When you make any withdrawal after the waiting period -- the RALP equals the
RALP immediately prior to the withdrawal less the amount of the withdrawal but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available
for future withdrawals. When determining if a withdrawal will result in excess
withdrawal processing, the applicable RALP will not yet reflect the amount of
the current withdrawal.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the benefit amount will not be subject to excess withdrawal processing
provided that the following conditions are met:
The withdrawal is after the waiting period;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. Any withdrawal during the waiting
period will reset the basic benefit and lifetime benefit at the end of the
waiting period. After the waiting period, withdrawal amounts greater than the
RALP or RBP that do not meet the conditions above will result in excess
withdrawal processing. The amount in excess of the RBP and/or RALP that is not
subject to excess withdrawal processing will be recalculated if the RALP and RBP
change due to GBP Percentage and ALP Percentage changes. See Appendix E for
additional information.
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the benefit values may be available. A step up does not create contract value,
guarantee the performance of any investment option, or provide a benefit that
can be withdrawn
--------------------------------------------------------------------------------
180 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
in a lump sum or paid upon death. Rather, a step up determines the current
values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment
period or increase the allowable payment. If there have been multiple payments
and the GBA increases due to the step up, the individual GBAs, RBAs, GBPs, and
RBPs will be combined.
The annual step up may be available as described below, subject to the maximum
GBA, RBA and ALP and subject to the following rules:
You have not declined a rider fee increase.
If you take any withdrawals during the waiting period the annual step up will
not be available until the rider anniversary following the end of the waiting
period.
On any rider anniversary where your contract value is greater than the RBA or,
your contract value multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above) is greater
than the ALP, if established, the annual step up will be applied to your
contract on the rider anniversary.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period, the RBP will not be affected by the step up.
(b) After the waiting period, the RBP will be reset to the increased GBP.
The ALP will be increased to the contract value on the rider anniversary
multiplied by the ALP Percentage (either 5% or 6% as described under "GBP
Percentage and ALP Percentage" heading above), if greater than the current
ALP.
The RALP will be reset as follows:
(a) During the waiting period, the RALP will not be affected by the step up.
(b) After the waiting period, the RALP will be reset to the increased ALP.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource 20 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
20 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that a) the RBP will be calculated as the GBP after
the step-up less all prior withdrawals taken during the current contract year,
but not less than zero, and b) the RALP will be calculated as the ALP after the
step-up less all prior withdrawals taken during the current contract year, but
not less than zero. The spousal continuation step-up is processed on the
valuation date spousal continuation is effective.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be taken from the variable subaccounts, guarantee period
accounts (where available), the one-year fixed account (if applicable) and the
DCA fixed account in the same proportion as your interest in each bears to the
contract value. You cannot specify from which accounts the withdrawal is to be
taken.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero, you
will be paid in the following scenarios:
1) The ALP has not yet been established, the total RBA is greater than zero and
the contract value is reduced to zero as a result of fees or charges or a
withdrawal that is less than or equal to the RBP. In this scenario, you can
choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 181
JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established, the total RBA is greater than zero and the
contract value reduces to zero as a result of fees or charges, or a
withdrawal that is less than or equal to both the RBP and the RALP. In this
scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero.
JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in monthly installments. If the
monthly payment is less than $100, we have the right to change the frequency
but no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate;
In determining the remaining schedule of GBPs, the current GBP is fixed for as
long as payments are made.
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero; and
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource 20 rider and the contract will terminate under either of the
following two scenarios:
If the ALP is established and the RBA is zero, and if the contract value falls
to zero as a result of a withdrawal that is greater than the RALP. This is
full withdrawal of the contract value.
If the ALP is not established and the RBA is zero, and if the contract value
falls to zero as a result of fees, charges or a withdrawal.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the RBA payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract which terminates the rider.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
--------------------------------------------------------------------------------
182 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the RBA payout option available under this rider, or 3)
continue the contract under the spousal continuation provision of the contract.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
REMAINING BENEFIT AMOUNT (RBA) PAYOUT OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource 20 rider after
the waiting period.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid will not exceed the current total
RBA at the time you begin this fixed annuity payout option. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequently
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary (see
"The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary when the death
benefit is payable. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource 20 rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
2. SINGLE LIFE: After the death benefit is payable, continuation of the contract
will terminate the rider.
3. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
4. Annuity payouts under an annuity payout plan will terminate the rider.
5. You may terminate the rider if your annual rider fee after any fee increase
is more than 0.25 percentage points higher than your fee before the increase
(See "Charges -- SecureSource 20 rider fee").
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 183
6. When the RBA and contract value is reduced to zero and either the withdrawal
is taken when the ALP is not established or an excess withdrawal of the RALP
is taken, the rider will terminate.
7. Termination of the contract for any reason will terminate the rider.
8. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
For an example, see Appendix D.
--------------------------------------------------------------------------------
184 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX O: SECURESOURCE STAGES RIDER DISCLOSURE
SECURESOURCE STAGES RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary gains. The SecureSource Stages
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw income over your lifetime.
This benefit is intended for assets you plan to hold and let accumulate for at
least three years. Your benefits under the rider can be reduced if any of the
following occurs:
If you take any withdrawals during the 3-year waiting period, your benefits
will be set to zero until the end of the waiting period when they will be re-
established based on your contract value at that time;
If you take a withdrawal after the waiting period and if you withdraw more
than the allowed withdrawal amount in a contract year, or you take withdrawals
before the lifetime benefit is available;
If you take a withdrawal and later choose to allocate your contract value to
an investment option that is more aggressive than the target investment
option.
If the contract value is 20% or more below purchase payments increased by any
step ups or rider credits and adjusted for withdrawals (see withdrawal
adjustment base described below).
The SecureSource Stages rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year that the lifetime benefit is available. The lifetime benefit
amount can vary based on your attained age and based on the relationship of your
contract value to the withdrawal adjustment base. Each contract year after the
waiting period, the percentage used to determine the benefit amount is set when
the first withdrawal is taken and fixed for the remainder of that year.
At any time after the waiting period, as long as your total withdrawals during
the current year do not exceed the lifetime benefit amount, you will not be
assessed a surrender charge and no market value adjustment will be applied. If
you withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and any applicable market value adjustment. At any time, you
may withdraw any amount up to your entire surrender value, subject to excess
withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages riders available under your contract:
SecureSource Stages - Single Life
SecureSource Stages - Joint Life
The information in this section applies to both SecureSource Stages riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages -- Single Life rider covers one person. The SecureSource
Stages -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource Stages -- Single Life rider or the
SecureSource Stages -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource Stages rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if you purchase your
contract on or after Nov. 30, 2009; and
SINGLE LIFE: you are 80 or younger on the date the contract is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource Stages riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 185
The SecureSource Stages rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
SINGLE LIFE: death (see "At Death" heading below).
JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages rider are:
AGE BANDS: Each age band is associated with a set of lifetime payment
percentages. The covered person (JOINT LIFE: the younger covered spouse) must be
at least the youngest age shown in the first age band for the annual lifetime
payment to be established. After the annual lifetime payment is established,
other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
the younger covered spouse) has reached the youngest age in the first age band.
When the ALP is available, the annual withdrawal amount guaranteed by the rider
can vary each contract year.
ANNUAL STEP-UP: an increase in the benefit base or the principal back guarantee
and a possible increase in the lifetime payment percentage that is available
each rider anniversary if your contract value increases, subject to certain
conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken after the waiting period and before
the annual lifetime payment is established, or (2) a withdrawal that is greater
than the remaining annual lifetime payment when the annual lifetime payment is
available.
EXCESS WITHDRAWAL PROCESSING: after the waiting period, a reduction in benefits
if a withdrawal is taken before the annual lifetime payment is established or if
a withdrawal exceeds the remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. Whenever the annual lifetime payment is
available, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten rider anniversaries, based on a rider credit percentage of 8% in year
one and 6% for years two through ten, as long as no withdrawals have been taken
since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and withdrawals in the waiting period may
reduce or eliminate the benefit of any rider credits. Rider credits may result
in higher rider charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage. The WAB cannot be withdrawn or annuitized and is
not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
--------------------------------------------------------------------------------
186 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be reestablished based on your contract value at that time. Although your
benefits will be set to zero until the end of waiting period, we will deduct
rider fees, based on the anniversary contract value for the remainder of the
waiting period. Any withdrawal request within the 3-year waiting period must
be submitted in writing. In addition, any withdrawals in the first 10 years
will terminate the rider credits. Also, after the waiting period if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model portfolio changes per contract
year. The target investment option is currently the Moderate investment
option. We reserve the right to change the target investment option to an
investment option that is more aggressive than the target investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target or investment option, you will be in the
accumulation phase again. If this is done after the waiting period, your rider
benefit will be reset as follows: the BB, PBG and WAB will be reset to the
contract value, if less than their current amount; and the ALP and RALP, if
available, will be recalculated. You may request to change your investment
option by written request on an authorized form or by another method agreed to
by us.
NON-CANCELABLE: Once elected, the SecureSource Stages rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
fee will continue to be deducted until the contract or rider is terminated or
the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of
nonnatural or revocable trust ownership). The rider will terminate at the
death of the contract owner because the original covered spouse will be unable
to elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of
the trust must be the annuitant and the beneficiary must either be the
annuitant's spouse or a trust that names the annuitant's spouse
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 187
as the sole primary beneficiary. You are responsible for establishing
ownership arrangements that will allow for spousal continuation.
If you select the SecureSource Stages -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawal of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person (e.g., an irrevocable trust or corporation) or a revocable
trust, the covered spouses are the annuitant and the legally married spouse of
the annuitant. The covered spouses lives are used to determine when the annual
lifetime payment is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
younger covered spouses) has reached age 50. When the ALP is established and at
all times thereafter, the ALP is equal to the BB multiplied by the lifetime
payment percentage. Anytime the lifetime payment percentage or BB changes as
described below, the ALP will be recalculated. When the ALP is available, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
--------------------------------------------------------------------------------
188 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50. The ALP will be available on later of the rider anniversary
after the waiting period, or the date the covered person's attained age equals
age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
The ALP will be available on later of the rider anniversary after the waiting
period, or the date the ALP is established.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the remaining annual lifetime payment
guaranteed for withdrawal after any withdrawals are made. The RALP is
established at the same time as the ALP. The RALP will be zero during the
waiting period. After the waiting period, the RALP equals the ALP less all
withdrawals in the current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band for the lifetime payment percentage
used to calculate the initial ALP is the percentage for the covered person's
attained age (JOINT LIFE: younger covered spouses attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouses subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouses attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any annual
rider fee increase or if a withdrawal has been taken since the ALP was made
available, then the lifetime payment percentage will not change on subsequent
birthdays.)
Upon annual step-ups (see "Annual step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was available and no annual rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether Percentage A or Percentage B is used for each
applicable age band:
During the waiting period, percentage A will be used to determine the amount
payable to beneficiaries under the principal back guarantee (PBG).
After the waiting period, a comparison of your contract value and the withdrawal
adjustment base (WAB) determines whether percentage A or percentage B is used to
calculate the ALP unless the percentage is fixed as described below.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 189
On each valuation date, if the benefit determining percentage is less than the
20% adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (A/B) where:
A = Contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
After the ALP is available, the first withdrawal taken in each contract year
will set and fix the lifetime payment percentage for the remainder of the
contract year. Beginning on the next rider anniversary, the lifetime payment
percentage can change on each valuation day as described above until a
withdrawal is taken in that contract year.
Under certain limited situations, your Lifetime Payment Percentage will not vary
each contract year. Percentage A or percentage B will be determined at the
earliest of (1), (2) or (3) below and remain fixed for as long as the benefit is
payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum benefit base (BB), credit base (CB), withdrawal adjustment
base (WAB) and PBG amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: Before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB, CB
(unless it has been permanently set to zero), BB and PBG will be increased by
the amount of each additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits. If the first withdrawal is taken during the
waiting period, the WAB, BB and PBG will be set equal to zero until the end of
the waiting period.
Whenever a withdrawal is taken after the waiting period:
(a) the WAB will be reduced by the "adjustment for withdrawal," as defined
below.
(b) if the ALP is established and the withdrawal is less than or equal to
the RALP, the BB does not change and the PBG is reduced by the amount of
the withdrawal, but it will not be less than zero.
(c) if the ALP is not established, excess withdrawal processing will occur
as follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not
be less than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the
withdrawal and further reduced by an amount calculated as follows, but it
will not be less than zero:
A = the amount of the withdrawal minus the RALP
B = the PBG minus the RALP on the date of (but prior to) the
withdrawal
C = the contract value on the date of (but prior to) the withdrawal
minus the RALP
--------------------------------------------------------------------------------
190 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
The BB will be reduced by an amount as calculated below:
D = the amount of the withdrawal minus the RALP
E = the BB on the date of (but prior to) the withdrawal
F = the contract value on the date of (but prior to) the withdrawal
minus the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is
reduced by a withdrawal in the same proportion as the contract value
is reduced, the proportional amount deducted is the "adjustment for
withdrawal." The "adjustment for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PGB (as applicable) on the date of (but prior to)
the withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
On the rider anniversary following the waiting period: If a withdrawal was
taken during the waiting period and you did not decline any annual rider fee
increase as described in the rider charges provision, the BB, WAB and PBG are
reset to the contract value. If a withdrawal was taken during the waiting
period and you declined any annual rider fee increase, the BB and PBG are
reset to the lesser of (1) the BB or PBG (as applicable) at the time of the
first withdrawal, plus any additional purchase payments since the time of the
first withdrawal, minus all withdrawals, or (2) the contract value. The WAB
will be reset to the BB.
The WAB on rider anniversaries: Unless you decline any annual rider fee
increase or take a withdrawal during the waiting period, the WAB (after any
rider credit is added) will be increased to the contract value, if the
contract value is greater. If a withdrawal was taken during the waiting
period, the WAB will be increased to the contract value, if the contract value
is greater, starting on the rider anniversary following the waiting period.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
annual rider fee increase, a rider credit may be available for the first ten
rider anniversaries. On the first rider anniversary, the rider credit equals the
credit base (CB) 180 days following the rider effective date multiplied by 8%.
On any subsequent rider credit anniversaries, the rider credit equals the CB as
of the prior rider anniversary multiplied by 6%. On the first rider anniversary
the BB and WAB will be set to the greater of the current BB, or the BB 180 days
following the contract date increased by the rider credit and any additional
purchase payments since 180 days following the rider effective date. On any
subsequent rider credit anniversaries the BB and WAB will be set to the greater
of the current BB, or the BB on the prior rider anniversary increased by the
rider credit and any additional purchase payments since the prior rider
anniversary. If the CB is greater than zero, the CB will be permanently reset to
zero on the 10(th) rider anniversary after any adjustment to the WAB and BB, and
there will be no additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you take any withdrawals during the waiting period, the
annual step-up will not be available until the 3(rd) rider anniversary. If you
decline any annual rider fee increase, future annual step-ups will no longer be
available.
The annual step-up will be executed on any rider anniversary where the contract
value is greater than the PBG or the BB after any rider credit is added. If an
annual step-up is executed, the PBG, BB and lifetime payment percentage will be
adjusted as follows: The PBG will be increased to the contract value, if the
contract value is greater. The BB (after any rider credit is added) will be
increased to the contract value, if the contract value is greater. If the
covered person's attained age (Joint Life: younger covered spouses attained age)
on the rider anniversary is in a higher age band and (1) there is an increase to
BB due to a step-up or (2) the BB is at the maximum of $10,000,000 so there was
no step-up of the BB, then the higher age band will be used to determine the
appropriate lifetime payment percentage, regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 191
your RMD that exceeds the benefit amount will not be subject to excess
withdrawal processing provided that the following conditions are met:
The withdrawal is after the waiting period;
The annual lifetime payment is available;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. A withdrawal during the waiting period
will reset the benefit base, the withdrawal adjustment base and the principal
back guarantee to the contract value at the end of the waiting period. After the
waiting period, a withdrawal taken before the annual lifetime payment is
established or withdrawing amounts greater than the remaining annual lifetime
payment that do not meet these conditions will result in excess withdrawal
processing. The amount in excess of the RALP that is not subject to excess
withdrawal processing will be recalculated if the ALP changes due to lifetime
payment percentage changes. See Appendix E for additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
Stages -- Joint Life rider also continues. The surviving covered spouse can name
a new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Rider Anniversary Processing -- Annual Step-Up" heading above)
also apply to the spousal continuation step-up. The WAB will be increased to the
contract value if the contract value is greater. The spousal continuation step-
up is processed on the valuation date spousal continuation is effective.
RULES FOR SURRENDER: Minimum account values following a surrender no longer
apply to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
--------------------------------------------------------------------------------
192 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
elect to take the death benefit under the terms of the contract, or
elect to take the principal back guarantee available under this rider, or
continue the contract and the SecureSource Stages rider under the spousal
continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are equal
to the PBG on the date of death.
If the PBG is greater than zero and the ALP is not established, the BB on the
date of death multiplied by the lifetime payment percentage used for the
youngest age of the covered spouses in the first age band shown on the
contract data page will be paid annually until total payments to the
beneficiary are equal to the PBG on the date of death.
In either of the above cases:
After the date of death, there will be no additional rider credits or annual
step-ups.
The lifetime payment percentage used will be set as of the date of death.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
On the date of death (JOINT LIFE: remaining covered spouse's date of death), if
the CB is greater than zero, the CB will be permanently reset to zero, and there
will be no additional rider credits.
If the PBG equals zero, the benefit terminates. No further payments are made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: You can choose one of the payout options available under the
contract or an alternative fixed annuity payout option available under the
SecureSource Stages rider. Under the rider's payout option, the minimum amount
payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages rider cannot be terminated either by you or us except as
follows:
SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
SINGLE LIFE: after the death benefit is payable, the rider will terminate.
SINGLE LIFE: spousal continuation will terminate the rider.
JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a beneficiary
of a participant in an employer sponsored retirement plan, the rider will
terminate.
On the annuitization start date, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 193
- You may terminate the rider if your annual rider fee would increase more
than 0.25 percentage points (See "Charges -- SecureSource Stages rider fee")
When the contract value is reduced to zero and either the withdrawal taken
when the annual lifetime payment is not established or a withdrawal in excess
of the remaining annual lifetime payment is taken, the rider will terminate.
Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
--------------------------------------------------------------------------------
194 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX P: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS BALANCED WEALTH STRATEGY PORTFOLIO (CLASS B) (09/26/2008)
Accumulation unit
value at beginning
of period $1.10 $1.01 $0.82 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.10 $1.01 $0.82 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 16 40 43 67 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (11/06/2003)
Accumulation unit
value at beginning
of period $1.22 $1.05 $0.69 $1.34 $1.13 $1.06 $1.04 $1.00 $1.00 --
Accumulation unit
value at end of
period $0.92 $1.22 $1.05 $0.69 $1.34 $1.13 $1.06 $1.04 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 114 144 126 108 110 112 113 114 5 --
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (11/06/2003)
Accumulation unit
value at beginning
of period $1.11 $1.00 $0.85 $1.45 $1.40 $1.21 $1.18 $1.07 $1.00 --
Accumulation unit
value at end of
period $1.17 $1.11 $1.00 $0.85 $1.45 $1.40 $1.21 $1.18 $1.07 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 183 201 201 210 226 247 256 243 23 --
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.19 $1.16 $0.88 $1.91 $1.83 $1.38 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $0.95 $1.19 $1.16 $0.88 $1.91 $1.83 $1.38 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,866 1,831 6,541 7,308 4,293 2,708 1,766 209 -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.24 $1.20 $1.10 $1.14 $1.06 $1.05 $1.05 $1.00 -- --
Accumulation unit
value at end of
period $1.37 $1.24 $1.20 $1.10 $1.14 $1.06 $1.05 $1.05 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,696 2,227 2,371 2,313 3,777 4,080 3,512 509 -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INTERNATIONAL, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.42 $1.28 $0.97 $1.78 $1.54 $1.25 $1.12 $1.00 -- --
Accumulation unit
value at end of
period $1.23 $1.42 $1.28 $0.97 $1.78 $1.54 $1.25 $1.12 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 8 10 10 25 25 20 7 7 -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $1.00 $0.86 $0.67 $0.90 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.98 $1.00 $0.86 $0.67 $0.90 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.06 $0.92 $0.70 $1.21 $1.02 $1.07 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.05 $1.06 $0.92 $0.70 $1.21 $1.02 $1.07 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,157 2,614 2,924 3,189 3,364 7,580 3,015 376 -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.16 $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 29 34 33 2 1 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.05 $1.06 $1.08 $1.07 $1.03 $1.00 $0.99 $1.00 $1.00 --
Accumulation unit
value at end of
period $1.03 $1.05 $1.06 $1.08 $1.07 $1.03 $1.00 $0.99 $1.00 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,536 2,911 5,788 1,365 513 401 106 18 15 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.24 $1.17 $1.03 $1.12 $1.08 $1.05 $1.04 $1.01 $1.00 --
Accumulation unit
value at end of
period $1.31 $1.24 $1.17 $1.03 $1.12 $1.08 $1.05 $1.04 $1.01 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,322 2,221 22,157 16,780 14,001 8,025 1,298 1,598 146 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.68 $1.46 $1.16 $1.98 $1.86 $1.57 $1.41 $1.21 $0.87 $1.09
Accumulation unit
value at end of
period $1.57 $1.68 $1.46 $1.16 $1.98 $1.86 $1.57 $1.41 $1.21 $0.87
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,844 3,253 15,601 12,449 8,833 6,769 3,606 1,251 828 608
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 195
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51 $0.67
Accumulation unit
value at end of
period $0.69 $0.66 $0.57 $0.47 $0.82 $0.81 $0.71 $0.68 $0.65 $0.51
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,709 3,592 4,017 4,256 4,540 5,152 3,969 2,410 453 194
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.56 $2.17 $1.27 $2.77 $2.04 $1.54 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.99 $2.56 $2.17 $1.27 $2.77 $2.04 $1.54 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 716 670 2,782 3,582 2,132 1,922 1,178 160 -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.16 $1.13 $1.08 $1.09 $1.03 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.26 $1.16 $1.13 $1.08 $1.09 $1.03 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 383 489 15,152 6,045 5,763 4,338 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.24 $1.13 $0.79 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit
value at end of
period $1.30 $1.24 $1.13 $0.79 $1.07 $1.07 -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 626 790 834 1,009 1,242 2,212 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.60 $1.42 $0.94 $1.27 $1.27 $1.16 $1.13 $1.03 $0.84 $0.91
Accumulation unit
value at end of
period $1.66 $1.60 $1.42 $0.94 $1.27 $1.27 $1.16 $1.13 $1.03 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 583 678 755 746 910 1,056 970 715 521 389
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.51 $1.35 $0.96 $1.20 $1.19 $1.12 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.58 $1.51 $1.35 $0.96 $1.20 $1.19 $1.12 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 215 256 9,864 5,119 4,197 1,896 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.44 $1.29 $1.02 $1.74 $1.57 $1.28 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.44 $1.29 $1.02 $1.74 $1.57 $1.28 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- 4 4 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.14 $0.99 $0.73 $1.33 $1.31 $1.20 $1.12 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.09 $1.14 $0.99 $0.73 $1.33 $1.31 $1.20 $1.12 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 4 4 72 55 4 -- -- 56 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $1.00 $0.84 $0.67 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.96 $1.00 $0.84 $0.67 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 512 577 20,058 11,908 7,074 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.88 $0.78 $0.58 $1.14 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.73 $0.88 $0.78 $0.58 $1.14 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 20 20 20 25 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.43 $1.15 $0.72 $1.32 $1.17 $1.19 $1.10 $1.02 $1.00 --
Accumulation unit
value at end of
period $1.20 $1.43 $1.15 $0.72 $1.32 $1.17 $1.19 $1.10 $1.02 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 59 40 41 31 32 32 29 29 29 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.90 $0.75 $0.54 $1.00 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.82 $0.90 $0.75 $0.54 $1.00 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 44 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (11/06/2003)
Accumulation unit
value at beginning
of period $1.21 $1.07 $0.86 $1.39 $1.34 $1.18 $1.15 $1.06 $1.00 --
Accumulation unit
value at end of
period $1.21 $1.21 $1.07 $0.86 $1.39 $1.34 $1.18 $1.15 $1.06 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 366 375 327 259 266 256 250 302 59 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SELECT LARGE-CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.15 $0.97 $0.78 $1.31 $1.33 $1.14 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.12 $1.15 $0.97 $0.78 $1.31 $1.33 $1.14 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 5 9 9 17 17 9 4 4 -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit
value at beginning
of period $1.23 $1.22 $1.17 $1.22 $1.17 $1.15 $1.15 $1.15 $1.15 $1.10
Accumulation unit
value at end of
period $1.23 $1.23 $1.22 $1.17 $1.22 $1.17 $1.15 $1.15 $1.15 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 944 1,141 3,618 1,927 1,780 2,023 2,009 2,283 2,513 2,555
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
196 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.49 $1.20 $0.97 $1.37 $1.43 $1.22 $1.17 $1.00 -- --
Accumulation unit
value at end of
period $1.38 $1.49 $1.20 $0.97 $1.37 $1.43 $1.22 $1.17 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 218 239 10,188 6,327 4,714 4 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.97 $0.85 $0.72 $1.10 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.84 $0.97 $0.85 $0.72 $1.10 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 26 24 22 1 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS MIDCAP STOCK PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.26 $1.01 $0.76 $1.29 $1.29 $1.22 $1.13 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.26 $1.01 $0.76 $1.29 $1.29 $1.22 $1.13 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 1 11 11 13 15 17 10 -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.39 $1.09 $0.70 $1.22 $1.08 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.26 $1.39 $1.09 $0.70 $1.22 $1.08 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 415 473 599 748 769 1,668 735 99 -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.06 $0.88 $1.27 $1.21 $1.05 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.29 $1.20 $1.06 $0.88 $1.27 $1.21 $1.05 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 14 14 14 14 14 14 14 13 -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.83 $0.76 $0.62 $1.09 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.69 $0.83 $0.76 $0.62 $1.09 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 84 59 57 26 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.27 $1.23 $0.96 $1.55 $1.52 $1.26 $1.14 $1.00 -- --
Accumulation unit
value at end of
period $1.01 $1.27 $1.23 $0.96 $1.55 $1.52 $1.26 $1.14 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- 2 2 8 8 4 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.08 $1.00 $0.71 $0.98 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.08 $1.00 $0.71 $0.98 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 348 447 7,675 4,506 3,095 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.50 $1.30 $0.97 $1.72 $1.49 $1.36 $1.18 $1.04 $1.00 --
Accumulation unit
value at end of
period $1.43 $1.50 $1.30 $0.97 $1.72 $1.49 $1.36 $1.18 $1.04 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,207 5,203 8,488 13,235 12,095 12,306 6,320 2,509 211 --
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP GROWTH PORTFOLIO SERVICE CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.14 $0.93 $0.74 $1.42 $1.14 $1.08 $1.04 $1.03 $1.00 --
Accumulation unit
value at end of
period $1.12 $1.14 $0.93 $0.74 $1.42 $1.14 $1.08 $1.04 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 277 297 307 324 356 370 352 303 50 --
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.25 $1.18 $1.04 $1.09 $1.07 $1.04 $1.03 $1.00 -- --
Accumulation unit
value at end of
period $1.32 $1.25 $1.18 $1.04 $1.09 $1.07 $1.04 $1.03 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,880 2,375 11,682 8,946 9,111 3,611 3,067 321 -- --
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit
value at beginning
of period $2.40 $1.89 $1.38 $2.31 $2.03 $1.83 $1.58 $1.28 $0.94 $1.06
Accumulation unit
value at end of
period $2.11 $2.40 $1.89 $1.38 $2.31 $2.03 $1.83 $1.58 $1.28 $0.94
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,297 1,658 4,341 5,011 3,849 3,086 2,479 2,101 1,221 723
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (11/06/2003)
Accumulation unit
value at beginning
of period $1.44 $1.30 $1.04 $1.89 $1.64 $1.41 $1.21 $1.08 $1.00 --
Accumulation unit
value at end of
period $1.18 $1.44 $1.30 $1.04 $1.89 $1.64 $1.41 $1.21 $1.08 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 466 480 518 572 558 841 705 311 11 --
-----------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.73 $1.56 $1.16 $1.68 $1.64 $1.41 $1.41 $1.25 $0.97 $0.99
Accumulation unit
value at end of
period $1.74 $1.73 $1.56 $1.16 $1.68 $1.64 $1.41 $1.41 $1.25 $0.97
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,647 1,877 2,165 2,664 3,166 3,383 3,865 4,021 3,071 2,665
-----------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN RISING DIVIDENDS SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.03 $0.89 $1.23 $1.29 $1.11 $1.09 $1.00 -- --
Accumulation unit
value at end of
period $1.27 $1.22 $1.03 $0.89 $1.23 $1.29 $1.11 $1.09 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 11 13 13 22 23 21 10 -- -- --
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 197
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN SMALL-MID CAP GROWTH SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $0.70 $0.55 $0.39 $0.69 $0.63 $0.59 $0.57 $0.52 $0.38 $0.55
Accumulation unit
value at end of
period $0.65 $0.70 $0.55 $0.39 $0.69 $0.63 $0.59 $0.57 $0.52 $0.38
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,480 1,935 2,168 2,355 2,757 3,378 3,793 4,520 3,979 3,832
-----------------------------------------------------------------------------------------------------------------
FTVIPT MUTUAL SHARES SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit
value at beginning
of period $1.53 $1.40 $1.12 $1.81 $1.78 $1.52 $1.40 $1.26 $1.02 $1.17
Accumulation unit
value at end of
period $1.49 $1.53 $1.40 $1.12 $1.81 $1.78 $1.52 $1.40 $1.26 $1.02
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,863 2,360 2,595 2,854 3,403 5,058 3,652 3,861 1,702 1,165
-----------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.86 $1.65 $1.41 $1.35 $1.23 $1.11 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.82 $1.86 $1.65 $1.41 $1.35 $1.23 $1.11 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 883 932 7,523 5,803 5,914 3,641 1,249 195 -- --
-----------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.07 $0.83 $1.46 $1.45 $1.20 $1.12 $1.00 -- --
Accumulation unit
value at end of
period $1.04 $1.13 $1.07 $0.83 $1.46 $1.45 $1.20 $1.12 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 241 215 211 232 168 19 23 15 -- --
-----------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $2.99 $2.43 $1.85 $2.98 $2.93 $2.56 $2.30 $1.86 $1.47 $1.56
Accumulation unit
value at end of
period $2.76 $2.99 $2.43 $1.85 $2.98 $2.93 $2.56 $2.30 $1.86 $1.47
Number of
accumulation units
outstanding at end
of period (000
omitted) 967 1,131 2,893 3,112 3,200 2,732 2,047 1,426 1,312 1,266
-----------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.83 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61 $0.79
Accumulation unit
value at end of
period $0.85 $0.83 $0.74 $0.62 $1.00 $1.03 $0.93 $0.88 $0.78 $0.61
Number of
accumulation units
outstanding at end
of period (000
omitted) 629 876 1,023 1,018 1,360 1,467 1,568 1,667 1,619 1,894
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (11/06/2003)
Accumulation unit
value at beginning
of period $1.02 $0.90 $0.75 $1.33 $1.21 $1.16 $1.08 $1.03 $1.00 --
Accumulation unit
value at end of
period $0.92 $1.02 $0.90 $0.75 $1.33 $1.21 $1.16 $1.08 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 12 12 63 62 62 40 10 38 22 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (11/06/2003)
Accumulation unit
value at beginning
of period $1.35 $1.16 $0.83 $1.58 $1.45 $1.27 $1.18 $1.04 $1.00 --
Accumulation unit
value at end of
period $1.23 $1.35 $1.16 $0.83 $1.58 $1.45 $1.27 $1.18 $1.04 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 116 103 108 114 108 108 89 87 -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.94 $0.91 $0.72 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.96 $0.94 $0.91 $0.72 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 48 33 14 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.90 $0.81 $0.61 $1.04 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.83 $0.90 $0.81 $0.61 $1.04 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 359 385 15,819 5,951 3,303 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. MID CAP CORE EQUITY FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.21 $0.94 $1.34 $1.25 $1.14 $1.08 $1.00 -- --
Accumulation unit
value at end of
period $1.25 $1.35 $1.21 $0.94 $1.34 $1.25 $1.14 $1.08 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 168 188 206 229 285 322 357 141 -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.29 $1.13 $0.89 $1.41 $1.46 $1.28 $1.25 $1.08 $1.00 --
Accumulation unit
value at end of
period $1.24 $1.29 $1.13 $0.89 $1.41 $1.46 $1.28 $1.25 $1.08 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,854 4,490 9,591 10,469 9,083 8,762 5,134 894 37 --
-----------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. VALUE OPPORTUNITIES FUND, SERIES II SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $0.98 $0.93 $0.64 $1.35 $1.35 $1.22 $1.17 $1.07 $1.00 --
Accumulation unit
value at end of
period $0.94 $0.98 $0.93 $0.64 $1.35 $1.35 $1.22 $1.17 $1.07 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,182 1,467 1,562 1,691 1,576 1,684 1,876 1,178 149 --
-----------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.94 $0.84 $0.63 $1.06 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.88 $0.94 $0.84 $0.63 $1.06 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 409 448 17,145 12,315 8,645 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
198 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.05 $0.85 $0.60 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.05 $0.85 $0.60 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 55 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
MFS(R) INVESTORS GROWTH STOCK SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $1.23 $1.11 $0.81 $1.30 $1.19 $1.13 $1.10 $1.02 $1.00 --
Accumulation unit
value at end of
period $1.21 $1.23 $1.11 $0.81 $1.30 $1.19 $1.13 $1.10 $1.02 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 21 22 25 63 56 55 46 86 39 --
-----------------------------------------------------------------------------------------------------------------
MFS(R) NEW DISCOVERY SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $1.53 $1.14 $0.71 $1.19 $1.19 $1.07 $1.03 $0.98 $1.00 --
Accumulation unit
value at end of
period $1.35 $1.53 $1.14 $0.71 $1.19 $1.19 $1.07 $1.03 $0.98 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 55 79 88 104 111 112 109 109 10 --
-----------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $1.26 $1.16 $1.00 $1.31 $1.28 $1.16 $1.15 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.26 $1.26 $1.16 $1.00 $1.31 $1.28 $1.16 $1.15 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 866 1,476 1,492 1,568 1,781 1,861 1,916 1,655 80 --
-----------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (11/06/2003)
Accumulation unit
value at beginning
of period $2.34 $2.09 $1.60 $2.60 $2.07 $1.60 $1.40 $1.09 $1.00 --
Accumulation unit
value at end of
period $2.45 $2.34 $2.09 $1.60 $2.60 $2.07 $1.60 $1.40 $1.09 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 40 56 56 49 53 71 68 67 10 --
-----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.78 $0.65 $0.47 $0.85 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.69 $0.78 $0.65 $0.47 $0.85 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 134 174 3,671 4,330 1,772 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.19 $0.91 $0.59 $1.12 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.09 $1.19 $0.91 $0.59 $1.12 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1 5 5 6 8 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF U.S. REAL ESTATE PORTFOLIO, CLASS II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.73 $1.36 $1.07 $1.75 $2.15 $1.58 $1.38 $1.00 -- --
Accumulation unit
value at end of
period $1.80 $1.73 $1.36 $1.07 $1.75 $2.15 $1.58 $1.38 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 53 66 86 120 119 150 75 15 -- --
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.11 $1.04 $0.73 $1.36 $1.21 $1.14 $1.11 $1.05 $1.00 --
Accumulation unit
value at end of
period $1.08 $1.11 $1.04 $0.73 $1.36 $1.21 $1.14 $1.11 $1.05 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,933 2,305 2,318 2,536 2,419 2,780 2,447 574 24 --
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.60 $1.40 $1.02 $1.73 $1.66 $1.43 $1.27 $1.09 $0.77 $1.00
Accumulation unit
value at end of
period $1.44 $1.60 $1.40 $1.02 $1.73 $1.66 $1.43 $1.27 $1.09 $0.77
Number of
accumulation units
outstanding at end
of period (000
omitted) 627 986 964 930 941 968 903 803 299 6
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.63 $1.44 $1.23 $1.46 $1.36 $1.28 $1.27 $1.19 $1.03 $1.00
Accumulation unit
value at end of
period $1.62 $1.63 $1.44 $1.23 $1.46 $1.36 $1.28 $1.27 $1.19 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,236 2,721 14,510 11,434 9,968 5,557 3,403 1,659 415 83
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (11/06/2003)
Accumulation unit
value at beginning
of period $1.43 $1.18 $0.88 $1.43 $1.48 $1.31 $1.21 $1.03 $1.00 --
Accumulation unit
value at end of
period $1.38 $1.43 $1.18 $0.88 $1.43 $1.48 $1.31 $1.21 $1.03 --
Number of
accumulation units
outstanding at end
of period (000
omitted) 286 342 389 373 359 380 407 389 72 --
-----------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.14 $1.03 $0.86 $1.03 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $1.15 $1.14 $1.03 $0.86 $1.03 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 254 274 8,749 10,160 8,295 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit
value at beginning
of period $1.17 $1.16 $0.93 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 $1.00
Accumulation unit
value at end of
period $1.14 $1.17 $1.16 $0.93 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84
Number of
accumulation units
outstanding at end
of period (000
omitted) 164 203 188 228 215 272 259 290 120 30
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL EQUITY FUND - CLASS IB SHARES (03/03/2000)
Accumulation unit
value at beginning
of period $0.76 $0.70 $0.57 $1.03 $0.96 $0.76 $0.69 $0.60 $0.48 $0.59
Accumulation unit
value at end of
period $0.62 $0.76 $0.70 $0.57 $1.03 $0.96 $0.76 $0.69 $0.60 $0.48
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,058 2,733 2,965 3,093 3,625 4,123 4,898 5,780 5,252 5,517
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 199
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT MULTI-CAP GROWTH FUND - CLASS IB SHARES (09/24/2010)
Accumulation unit
value at beginning
of period $1.13 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.13 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 738 864 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $0.96 $0.74 $1.24 $1.45 $1.25 $1.19 $1.00 -- --
Accumulation unit
value at end of
period $1.12 $1.20 $0.96 $0.74 $1.24 $1.45 $1.25 $1.19 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 17 17 17 18 20 1,199 4 4 -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,958 2,845 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 29,473 35,540 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,906 2,696 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 20,689 20,921 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.85 $0.78 $0.60 $0.99 $1.00 -- -- -- -- --
Accumulation unit
value at end of
period $0.81 $0.85 $0.78 $0.60 $0.99 -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 565 622 21,293 10,481 6,624 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.31 $1.09 $0.81 $1.30 $1.24 $1.09 $1.10 $1.00 -- --
Accumulation unit
value at end of
period $1.21 $1.31 $1.09 $0.81 $1.30 $1.24 $1.09 $1.10 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 33,733 30,458 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 127,883 131,141 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 26,527 25,767 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 66,149 77,624 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,018 6,557 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 25,656 24,507 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit
value at beginning
of period $1.64 $1.33 $0.99 $1.47 $1.57 $1.32 $1.27 $1.07 $0.79 $1.00
Accumulation unit
value at end of
period $1.54 $1.64 $1.33 $0.99 $1.47 $1.57 $1.32 $1.27 $1.07 $0.79
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,423 1,652 1,946 2,163 2,437 2,461 2,507 735 158 35
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
200 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.45% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.18 $1.77 $1.20 $2.24 $1.95 $1.44 $1.20 $1.00 -- --
Accumulation unit
value at end of
period $1.83 $2.18 $1.77 $1.20 $2.24 $1.95 $1.44 $1.20 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 936 968 4,062 4,898 2,928 2,562 1,712 264 -- --
-----------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.42 $1.17 $0.83 $1.40 $1.35 $1.27 $1.16 $1.00 -- --
Accumulation unit
value at end of
period $1.35 $1.42 $1.17 $0.83 $1.40 $1.35 $1.27 $1.16 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 828 999 4,279 3,607 2,886 1,545 1,215 162 -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit
value at beginning
of period $1.04 $0.89 $0.59 $1.15 $1.00 -- -- --
Accumulation unit
value at end of
period $0.78 $1.04 $0.89 $0.59 $1.15 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 28 28 28 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.03 $0.99 $0.90 $0.76 $1.30 $1.27 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 130 124 89 113 168 170 126 90
-----------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19 $1.00
Accumulation unit
value at end of
period $0.92 $1.16 $1.13 $0.86 $1.87 $1.81 $1.36 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 6,871 7,882 19,909 27,146 17,556 13,071 8,418 3,162
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.85 $0.66 $0.90 $1.00 -- -- --
Accumulation unit
value at end of
period $0.96 $0.99 $0.85 $0.66 $0.90 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- 9 -- -- --
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06 $1.00
Accumulation unit
value at end of
period $1.01 $1.02 $0.90 $0.68 $1.19 $1.01 $1.06 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,936 4,147 5,039 6,040 6,538 19,124 6,266 2,495
-----------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09 $1.00
Accumulation unit
value at end of
period $1.12 $1.13 $1.02 $0.87 $1.21 $1.30 $1.12 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 87 16 16 19 24 29 15 26
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99 $1.00
Accumulation unit
value at end of
period $1.00 $1.02 $1.04 $1.06 $1.05 $1.03 $1.00 $0.99
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,045 2,910 11,536 5,320 3,584 1,771 839 136
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.25 $1.20 $1.13 $1.00 $1.09 $1.06 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,517 3,451 52,732 52,913 49,906 27,709 237 220
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15 $1.00
Accumulation unit
value at end of
period $1.25 $1.34 $1.17 $0.93 $1.60 $1.51 $1.29 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 7,706 10,251 47,600 45,615 31,206 25,297 8,506 34
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05 $1.00
Accumulation unit
value at end of
period $1.03 $1.00 $0.86 $0.71 $1.25 $1.24 $1.09 $1.05
Number of
accumulation units
outstanding at end
of period (000
omitted) 5,131 7,801 9,323 10,215 10,759 11,734 14,054 9,019
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17 $1.00
Accumulation unit
value at end of
period $1.93 $2.49 $2.12 $1.24 $2.73 $2.01 $1.53 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,042 2,330 8,001 12,125 7,826 7,742 4,979 2,159
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit
value at beginning
of period $1.14 $1.12 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit
value at end of
period $1.23 $1.14 $1.12 $1.06 $1.08 $1.02 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,527 2,123 39,552 22,934 24,803 19,914 -- --
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 201
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit
value at beginning
of period $1.22 $1.11 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit
value at end of
period $1.27 $1.22 $1.11 $0.78 $1.06 $1.06 -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,238 1,849 2,437 3,077 4,084 8,585 -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08 $1.00
Accumulation unit
value at end of
period $1.54 $1.49 $1.33 $0.88 $1.20 $1.20 $1.10 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,037 1,429 3,043 3,808 4,514 5,751 3,150 830
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit
value at beginning
of period $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09 $1.00
Accumulation unit
value at end of
period $1.52 $1.46 $1.32 $0.94 $1.18 $1.18 $1.11 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 724 967 23,958 16,287 14,534 6,780 8 8
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14 $1.00
Accumulation unit
value at end of
period $1.20 $1.40 $1.25 $1.00 $1.71 $1.55 $1.27 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 2 2 2 2 2 2 1 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07 $1.00
Accumulation unit
value at end of
period $1.01 $1.06 $0.92 $0.69 $1.26 $1.24 $1.14 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 258 361 910 3,801 2,883 38 38 --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit
value at beginning
of period $0.99 $0.83 $0.66 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $0.94 $0.99 $0.83 $0.66 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,287 1,574 44,625 33,416 21,154 -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit
value at beginning
of period $0.86 $0.78 $0.57 $1.13 $1.00 -- -- --
Accumulation unit
value at end of
period $0.71 $0.86 $0.78 $0.57 $1.13 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 70 70 70 21 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.74 $0.54 $0.99 $1.00 -- -- --
Accumulation unit
value at end of
period $0.80 $0.89 $0.74 $0.54 $0.99 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 145 167 3 98 69 -- -- --
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08 $1.00
Accumulation unit
value at end of
period $1.11 $1.11 $0.99 $0.80 $1.29 $1.25 $1.11 $1.08
Number of
accumulation units
outstanding at end
of period (000
omitted) 198 211 155 94 147 142 132 48
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00 $1.00
Accumulation unit
value at end of
period $1.04 $1.04 $1.03 $1.00 $1.05 $1.01 $0.99 $1.00
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,924 2,722 10,350 5,772 5,294 3,802 1,781 218
-----------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit
value at beginning
of period $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17 $1.00
Accumulation unit
value at end of
period $1.33 $1.45 $1.17 $0.95 $1.35 $1.41 $1.21 $1.17
Number of
accumulation units
outstanding at end
of period (000
omitted) 585 721 23,264 17,911 14,170 -- -- --
-----------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit
value at beginning
of period $0.96 $0.84 $0.71 $1.10 $1.00 -- -- --
Accumulation unit
value at end of
period $0.82 $0.96 $0.84 $0.71 $1.10 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 47 33 32 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.81 $0.75 $0.62 $1.09 $1.00 -- -- --
Accumulation unit
value at end of
period $0.68 $0.81 $0.75 $0.62 $1.09 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 8 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14 $1.00
Accumulation unit
value at end of
period $0.98 $1.23 $1.20 $0.94 $1.53 $1.50 $1.25 $1.14
Number of
accumulation units
outstanding at end
of period (000
omitted) 24 21 19 38 24 24 26 7
-----------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit
value at beginning
of period $1.06 $0.99 $0.70 $0.98 $1.00 -- -- --
Accumulation unit
value at end of
period $1.07 $1.06 $0.99 $0.70 $0.98 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 562 719 17,706 14,635 11,432 -- -- --
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
202 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11 $1.00
Accumulation unit
value at end of
period $1.30 $1.37 $1.19 $0.90 $1.59 $1.38 $1.27 $1.11
Number of
accumulation units
outstanding at end
of period (000
omitted) 10,938 14,844 26,124 44,134 42,111 45,962 19,309 6,485
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit
value at end of
period $1.28 $1.22 $1.15 $1.02 $1.08 $1.05 $1.03 $1.03
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,767 5,353 28,571 28,234 30,874 10,450 8,474 3,024
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21 $1.00
Accumulation unit
value at end of
period $1.57 $1.79 $1.42 $1.04 $1.75 $1.55 $1.40 $1.21
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,681 2,112 10,749 15,569 9,998 6,670 2,154 194
-----------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10 $1.00
Accumulation unit
value at end of
period $1.04 $1.28 $1.16 $0.93 $1.70 $1.48 $1.28 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,343 2,808 4,655 4,812 4,606 5,282 5,025 3,210
-----------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12 $1.00
Accumulation unit
value at end of
period $1.35 $1.34 $1.21 $0.91 $1.32 $1.30 $1.12 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,057 1,140 1,013 1,631 1,849 1,382 1,066 516
-----------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16 $1.00
Accumulation unit
value at end of
period $1.76 $1.81 $1.61 $1.38 $1.33 $1.22 $1.10 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,114 4,186 21,774 22,313 26,747 18,800 7,744 2,656
-----------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit
value at beginning
of period $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12 $1.00
Accumulation unit
value at end of
period $1.00 $1.10 $1.04 $0.81 $1.44 $1.43 $1.20 $1.12
Number of
accumulation units
outstanding at end
of period (000
omitted) 103 119 114 115 148 112 57 25
-----------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19 $1.00
Accumulation unit
value at end of
period $1.39 $1.51 $1.23 $0.94 $1.53 $1.51 $1.32 $1.19
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,562 4,764 13,524 16,698 17,019 14,517 6,833 2,746
-----------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.76 $0.69 $0.58 $0.94 $1.00 -- -- --
Accumulation unit
value at end of
period $0.78 $0.76 $0.69 $0.58 $0.94 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- 27 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06 $1.00
Accumulation unit
value at end of
period $0.88 $0.97 $0.86 $0.73 $1.29 $1.18 $1.13 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 96 107 2,537 2,458 2,494 2,008 3 3
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Capital Growth Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares changed its name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit
value at beginning
of period $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10 $1.00
Accumulation unit
value at end of
period $1.12 $1.23 $1.06 $0.76 $1.46 $1.35 $1.18 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 9 9 17 70 73 19 19 12
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I.
Mid Cap Growth Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.92 $0.90 $0.72 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $0.94 $0.92 $0.90 $0.72 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 25 25 45 3 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.89 $0.80 $0.61 $1.04 $1.00 -- -- --
Accumulation unit
value at end of
period $0.81 $0.89 $0.80 $0.61 $1.04 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 940 984 35,468 16,452 9,747 -- -- --
-----------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13 $1.00
Accumulation unit
value at end of
period $1.09 $1.13 $1.00 $0.79 $1.26 $1.31 $1.15 $1.13
Number of
accumulation units
outstanding at end
of period (000
omitted) 13,815 18,929 34,501 43,308 39,815 41,096 23,606 8,260
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 203
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.93 $0.83 $0.62 $1.05 $1.00 -- -- --
Accumulation unit
value at end of
period $0.86 $0.93 $0.83 $0.62 $1.05 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,082 1,257 38,185 34,319 25,309 -- -- --
-----------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit
value at beginning
of period $1.03 $0.84 $0.60 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.02 $1.03 $0.84 $0.60 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 54 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09 $1.00
Accumulation unit
value at end of
period $1.15 $1.16 $1.08 $0.93 $1.22 $1.20 $1.09 $1.09
Number of
accumulation units
outstanding at end
of period (000
omitted) 65 69 69 94 102 106 69 53
-----------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit
value at beginning
of period $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24 $1.00
Accumulation unit
value at end of
period $2.11 $2.02 $1.81 $1.39 $2.28 $1.82 $1.42 $1.24
Number of
accumulation units
outstanding at end
of period (000
omitted) 43 55 58 91 120 32 1 1
-----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $0.77 $0.64 $0.46 $0.85 $1.00 -- -- --
Accumulation unit
value at end of
period $0.68 $0.77 $0.64 $0.46 $0.85 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 249 265 8,046 11,790 4,909 -- -- --
-----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit
value at beginning
of period $1.17 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit
value at end of
period $1.07 $1.17 $0.90 $0.58 $1.12 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06 $1.00
Accumulation unit
value at end of
period $1.00 $1.04 $0.97 $0.69 $1.29 $1.15 $1.09 $1.06
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,615 6,424 7,178 8,981 8,700 10,182 8,509 3,218
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15 $1.00
Accumulation unit
value at end of
period $1.26 $1.40 $1.24 $0.90 $1.54 $1.48 $1.29 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 113 127 149 169 231 209 177 72
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07 $1.00
Accumulation unit
value at end of
period $1.32 $1.33 $1.18 $1.02 $1.21 $1.13 $1.07 $1.07
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,711 6,319 41,343 38,121 38,909 20,731 11,203 4,674
-----------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit
value at beginning
of period $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16 $1.00
Accumulation unit
value at end of
period $1.29 $1.35 $1.11 $0.83 $1.36 $1.41 $1.25 $1.16
Number of
accumulation units
outstanding at end
of period (000
omitted) 89 24 25 61 71 75 59 31
-----------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit
value at beginning
of period $1.12 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit
value at end of
period $1.12 $1.12 $1.01 $0.85 $1.03 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 718 853 20,192 30,027 26,289 -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 242 2,128 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 37,081 45,459 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 3,605 2,840 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.05 $1.04 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 37,774 34,075 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
204 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.90% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit
value at beginning
of period $0.84 $0.77 $0.59 $0.99 $1.00 -- -- --
Accumulation unit
value at end of
period $0.79 $0.84 $0.77 $0.59 $0.99 -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,246 1,481 47,054 29,241 19,856 -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10 $1.00
Accumulation unit
value at end of
period $1.17 $1.27 $1.06 $0.79 $1.28 $1.23 $1.08 $1.10
Number of
accumulation units
outstanding at end
of period (000
omitted) 8 8 -- 28 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,056 2,407 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.09 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.09 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 206,439 248,214 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.10 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,555 774 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.07 $1.11 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 118,725 154,365 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,095 1,480 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit
value at beginning
of period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit
value at end of
period $1.06 $1.06 -- -- -- -- -- --
Number of
accumulation units
outstanding at end
of period (000
omitted) 34,697 43,744 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit
value at beginning
of period $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15 $1.00
Accumulation unit
value at end of
period $1.35 $1.44 $1.18 $0.88 $1.31 $1.41 $1.19 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 4,585 6,248 9,697 11,631 12,674 11,121 10,647 4,456
-----------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit
value at beginning
of period $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20 $1.00
Accumulation unit
value at end of
period $1.77 $2.11 $1.72 $1.17 $2.20 $1.93 $1.43 $1.20
Number of
accumulation units
outstanding at end
of period (000
omitted) 1,529 1,843 8,675 12,927 7,675 6,793 3,916 1,854
-----------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit
value at beginning
of period $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15 $1.00
Accumulation unit
value at end of
period $1.30 $1.38 $1.14 $0.81 $1.38 $1.33 $1.26 $1.15
Number of
accumulation units
outstanding at end
of period (000
omitted) 2,605 3,655 12,068 12,713 11,339 6,970 5,234 2,030
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS 205
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
206 RIVERSOURCE SIGNATURE SELECT VARIABLE ANNUITY -- PROSPECTUS
(RIVERSOURCE INSURANCE LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45300 N (4/12)
PROSPECTUS
APRIL 30, 2012
RIVERSOURCE(R) BUILDER SELECT VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
ISSUED BY: RIVERSOURCE LIFE INSURANCE COMPANY (RIVERSOURCE LIFE)
829 Ameriprise Financial Center
Minneapolis, MN 55474
Telephone: 1-800-333-3437
(Corporate Office)
RIVERSOURCE VARIABLE ANNUITY ACCOUNT/RIVERSOURCE MVA ACCOUNT
New contracts are not currently being offered.
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The information in this
prospectus applies to both contracts unless stated otherwise.
This prospectus contains information that you should know before investing.
Prospectuses are also available for:
AllianceBernstein Variable Products Series Fund, Inc. (Class B)
American Century(R) Variable Portfolios, Inc., Class II
Columbia Funds Variable Insurance Trust
Columbia Funds Variable Series Trust II
Credit Suisse Trust
Dreyfus Variable Investment Fund, Service Share Class
Eaton Vance Variable Trust (VT)
Fidelity(R) Variable Insurance Products Service Class 2
Franklin(R) Templeton(R) Variable Insurance Products
Trust (FTVIPT) - Class 2
Goldman Sachs Variable Insurance Trust (VIT)
Invesco Van Kampen Variable Insurance Funds
Invesco Variable Insurance Funds
Janus Aspen Series: Service Shares
Legg Mason Variable Portfolios I, Inc.
MFS(R) Variable Insurance Trust(SM) - Service Class
Morgan Stanley Universal Investment Funds (UIF)
Oppenheimer Variable Account Funds, Service Shares
PIMCO Variable Investment Trust (VIT)
Putnam Variable Trust - Class IB Shares
Wanger Advisors Trust
Wells Fargo Variable Trust
Some funds may not be available in your contract. Please read the prospectuses
carefully and keep them for future reference.
The contract provides for purchase payment credits. Expense charges from
contracts with purchase payment credits may be higher than charges for contracts
without such credits. The amount of the credit may be more than offset by
additional fees and charges associated with the credit. The credits may be
reversed. (See "Buying Your Contract -- Purchase Payment Credits").
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS
CONTRACT INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and is available without charge by contacting RiverSource Life at the
telephone number and address listed above. The table of contents of the SAI is
on the last page of this prospectus. The SEC maintains an Internet site. This
prospectus, the SAI and other information about the product are available on the
EDGAR Database on the SEC's Internet site at (http://www.sec.gov).
Variable annuities are insurance products that are complex investment vehicles.
Before you invest, be sure to ask your investment professional about the
variable annuity's features, benefits, risks and fees, and whether the variable
annuity is appropriate for you, based upon your financial situation and
objectives.
The contracts and/or certain optional benefits described in this prospectus may
not be available in all jurisdictions. This prospectus constitutes an offering
or solicitation only in those jurisdictions where such offering or solicitation
may lawfully be made. State variations are covered in a special contract form
used in that state. This prospectus provides a general description of the
contract. Your actual contract and any riders or endorsements are the
controlling documents.
RiverSource Life has not authorized any person to give any information or to
make any representations regarding the contract other than those contained in
this prospectus or the fund prospectuses. Do not rely on any such information or
representations.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 1
RiverSource Life offers other variable annuity contracts in addition to the
contracts described in this prospectus which your investment professional may or
may not be authorized to offer to you. Each annuity has different features and
optional benefits that may be appropriate for you based on your individual
financial situation and needs, your age and how you intend to use the annuity.
The different features and benefits may include the investment and fund manager
options, variations in interest rate amount and guarantees, credits, surrender
charge schedules and access to your annuity account values. The fees and charges
you will pay when buying, owning and surrendering money from the contracts we
describe in this prospectus may be more or less than the fees and charges of
other variable annuities we issue. A securities broker dealer authorized to sell
the contracts described in this prospectus (selling firm) may not offer all the
variable annuities we issue. In addition, some selling firms may not permit
their investment professionals to sell the contracts and/or optional benefits
described in this prospectus to persons over a certain age (which may be lower
than age limits we set), or may otherwise restrict the sale of the optional
benefits described in this prospectus by their investment professionals. You
should ask your investment professional about his or her selling firm's ability
to offer you other variable annuities we issue (which might have lower fees and
charges than the contracts described in this prospectus), and any limits the
selling firm has placed on your investment professional's ability to offer you
the contracts and/or optional riders described in this prospectus.
TABLE OF CONTENTS
KEY TERMS................................... 3
THE CONTRACTS IN BRIEF...................... 5
EXPENSE SUMMARY............................. 8
CONDENSED FINANCIAL INFORMATION............. 19
FINANCIAL STATEMENTS........................ 19
THE VARIABLE ACCOUNT AND THE FUNDS.......... 19
GUARANTEE PERIOD ACCOUNTS (GPAS)............ 32
THE FIXED ACCOUNT........................... 34
BUYING YOUR CONTRACT........................ 37
CHARGES..................................... 42
VALUING YOUR INVESTMENT..................... 52
MAKING THE MOST OF YOUR CONTRACT............ 54
SURRENDERS.................................. 62
TSA -- SPECIAL PROVISIONS................... 63
CHANGING THE ANNUITANT...................... 64
CHANGING OWNERSHIP.......................... 64
BENEFITS IN CASE OF DEATH................... 65
OPTIONAL BENEFITS........................... 73
THE ANNUITY PAYOUT PERIOD................... 88
TAXES....................................... 90
VOTING RIGHTS............................... 94
SUBSTITUTION OF INVESTMENTS................. 94
ABOUT THE SERVICE PROVIDERS................. 95
ADDITIONAL INFORMATION...................... 96
APPENDICES TABLE OF CONTENTS AND
CROSS-REFERENCE TABLE..................... 98
APPENDIX A: EXAMPLE --
MARKET VALUE ADJUSTMENT (MVA)............. 99
APPENDIX B: EXAMPLE -- SURRENDER CHARGES.... 101
APPENDIX C: EXAMPLE -- DEATH BENEFITS....... 110
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES
OF RIDERS................................. 116
APPENDIX E: SECURESOURCE SERIES OF
RIDERS -- ADDITIONAL RMD DISCLOSURE...... 124
APPENDIX F: EXAMPLE --
BENEFIT PROTECTOR DEATH BENEFIT RIDER..... 126
APPENDIX G: EXAMPLE --
BENEFIT PROTECTOR PLUS DEATH BENEFIT
RIDER..................................... 128
APPENDIX H: ASSET ALLOCATION PROGRAM FOR
CONTRACTS
WITH APPLICATIONS SIGNED BEFORE MAY 1,
2006...................................... 130
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR
LIFE RIDER DISCLOSURE.................... 131
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT
RIDER DISCLOSURE.......................... 143
APPENDIX K: INCOME ASSURER BENEFIT RIDERS... 151
APPENDIX L: EXAMPLE -- ACCUMULATION
PROTECTOR BENEFIT RIDER................... 160
APPENDIX M: SECURESOURCE RIDER DISCLOSURE... 161
APPENDIX N: SECURESOURCE 20 RIDER
DISCLOSURE................................ 174
APPENDIX O: SECURESOURCE STAGES RIDER
DISCLOSURE................................ 188
APPENDIX P: CONDENSED FINANCIAL INFORMATION
(UNAUDITED)............................... 198
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION.................... 209
--------------------------------------------------------------------------------
2 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
KEY TERMS
These terms can help you understand details about your contract.
ACCUMULATION UNIT: A measure of the value of each subaccount prior to the
application of amounts to an annuity payment plan.
ANNUITANT: The person or persons on whose life or life expectancy the annuity
payouts are based.
ANNUITIZATION START DATE: The date when annuity payments begin according to the
applicable annuity payment plan (referred to as "Retirement date" in the
Original Contract). Throughout this prospectus when we use the term
"Annuitization start date," it includes the term "Retirement date."
ANNUITY PAYOUTS: An amount paid at regular intervals under one of several plans.
ASSUMED INVESTMENT RATE: The rate of return we assume your investments will earn
when we calculate your initial annuity payout amount using the annuity table in
your contract. The standard assumed investment rate we use is 5% but you may
request we substitute an assumed investment rate of 3.5%.
BENEFICIARY: The person you designate to receive benefits in case of the owner's
death (Current Contract), or owner's or annuitant's death (Original Contract)
while the contract is in force.
CLOSE OF BUSINESS: The time the New York Stock Exchange (NYSE) closes (4 p.m.
Eastern time unless the NYSE closes earlier).
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT (CURRENT CONTRACT): The person who becomes the annuitant
when the current annuitant dies prior to the annuitization start date. In the
case of joint ownership, one owner must also be the contingent annuitant.
CONTRACT: A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE: The total value of your contract before we deduct any applicable
charges.
CONTRACT YEAR: A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
FIXED ACCOUNT: Our general account which includes the regular fixed account and
the Special DCA fixed account (Current Contract) or the one-year fixed account
and the DCA fixed account (Original Contract). Amounts you allocate to the fixed
account earn interest rates we declare periodically.
FUNDS: Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of the funds.
GOOD ORDER: We cannot process your transaction request relating to the contract
until we have received the request in good order at our corporate office. "Good
order" means the actual receipt of the requested transaction in writing, along
with all information, forms and supporting legal documentation necessary to
effect the transaction. To be in "good order," your instructions must be
sufficiently clear so that we do not need to exercise any discretion to follow
such instructions. This information and documentation generally includes your
completed request; the contract number; the transaction amount (in dollars); the
names of and allocations to and/or from the subaccounts and the fixed account
affected by the requested transaction; the signatures of all contract owners,
exactly as registered on the contract, if necessary; Social Security Number or
Taxpayer Identification Number; and any other information, forms or supporting
documentation that we may require. With respect to purchase requests, "good
order" also generally includes receipt of sufficient payment by us to effect the
purchase. We may, in our sole discretion, determine whether any particular
transaction request is in good order, and we reserve the right to change or
waive any good order requirements at any time.
GUARANTEE PERIOD: The number of successive 12-month periods that a guaranteed
interest rate is credited.
GUARANTEE PERIOD ACCOUNTS (GPAS): These accounts have guaranteed interest rates
for guarantee periods we declare when you allocate purchase payments and any
purchase payment credits or transfer contract value to a GPA. These guaranteed
rates and periods of time may vary by state. Unless an exception applies,
transfers or surrenders from a GPA done more than 30 days before the end of the
guarantee period will receive a market value adjustment, which may result in a
gain or loss of principal.
MARKET VALUE ADJUSTMENT (MVA): A positive or negative adjustment assessed if any
portion of a Guarantee Period Account is surrendered or transferred more than 30
days before the end of its guarantee period.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 3
OWNER (YOU, YOUR): The person or persons identified in the contract as owners(s)
of the contract, who has or have the right to control the contract (to decide on
investment allocations, transfers, payout options, etc.). Usually, but not
always, the owner is also the annuitant. The owner is responsible for taxes,
regardless of whether he or she receives the contract's benefits. The owner or
any joint owner may be a nonnatural person (e.g. irrevocable trust or
corporation) or a revocable trust. In this case, the annuitant will be deemed to
be the owner for contract provisions that are based on the age or life of the
owner. When the contract is owned by a revocable trust, the annuitant selected
should be the grantor of the trust to qualify for income tax deferral. Any
contract provisions that are based on the age of the owner will be based on the
age of the oldest owner. Any ownership change, including continuation of the
contract by your spouse under the spousal continuation provision of the
contract, redefines "owner", "you" and "your".
PURCHASE PAYMENT CREDITS: An addition we make to your contract value. We
determine the credit percentage based on cumulative net payments (total payments
less surrenders). We apply the credit to your contract based on your current
payment.
QUALIFIED ANNUITY: A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
Individual Retirement Annuities (IRAs) including inherited IRAs under Section
408(b) of the Code
Roth IRAs including inherited Roth IRAs under Section 408A of the Code
Simplified Employee Pension IRA (SEP) plans under Section 408(k) of the Code
Custodial and investment only plans under Section 401(a) of the Code
Tax-Sheltered Annuity (TSA) rollovers under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
RIDER EFFECTIVE DATE: The date a rider becomes effective as stated in the rider.
RIVERSOURCE LIFE: In this prospectus, "we," "us," "our" and "RiverSource Life"
refer to RiverSource Life Insurance Company.
SURRENDER VALUE: The amount you are entitled to receive if you make a full
surrender from your contract (referred to as "Withdrawal value" in the Original
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
VALUATION DATE: Any normal business day, Monday through Friday, on which the
NYSE is open, up to the close of business. At the close of business, the next
valuation date begins. We calculate the accumulation unit value of each
subaccount on each valuation date. If we receive your purchase payment or any
transaction request (such as a transfer or surrender request) in good order at
our corporate office before the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the valuation
date we received your payment or transaction request. On the other hand, if we
receive your purchase payment or transaction request in good order at our
corporate office at or after the close of business, we will process your payment
or transaction using the accumulation unit value we calculate on the next
valuation date. If you make a transaction request by telephone (including by
fax), you must have completed your transaction by the close of business in order
for us to process it using the accumulation unit value we calculate on that
valuation date. If you were not able to complete your transaction before the
close of business for any reason, including telephone service interruptions or
delays due to high call volume, we will process your transaction using the
accumulation unit value we calculate on the next valuation date.
VARIABLE ACCOUNT: Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
WITHDRAWAL VALUE: The amount you are entitled to receive if you make a full
withdrawal from your contract (referred to as "Surrender value" in the Current
Contract). It is the contract value minus any applicable charges and any
purchase payment credits subject to reversal, plus any positive or negative
market value adjustment. Throughout this prospectus when we use the term
"Surrender" it includes the term "Withdrawal".
--------------------------------------------------------------------------------
4 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
THE CONTRACTS IN BRIEF
This prospectus describes two versions of the contract: the Current Contract
(applications signed on or after Nov. 30, 2009, subject to state availability)
and the Original Contract (applications signed prior to Nov. 30, 2009, or in
states where the Current Contract was unavailable). The primary differences are
disclosed in the following sections: "Key Terms", "Expense Summary," "Buying
Your Contract", "Benefits in Case of Death", and "Optional Benefits."
PURPOSE: These contracts allow you to accumulate money for retirement or a
similar long-term goal. You do this by making one or more purchase payments. For
the Current Contract, you may allocate your purchase payments to the regular
fixed account, the Special DCA fixed account, GPAs and/or subaccounts of the
variable account under the contract. For the Original Contract, you may allocate
your purchase payments to the one-year fixed account (if part of your contract),
the DCA fixed account (if part of your contract), the GPAs and/or subaccounts of
the variable account under the contract. When you invest in the subaccounts of
the variable account, you risk losing amounts you invest. These accounts, in
turn, may earn returns that increase the value of the contract. If the contract
value goes to zero due to underlying fund's performance or deduction of fees,
the contract will no longer be in force and the contract (including any death
benefit riders) will terminate. You may be able to purchase an optional benefit
to reduce the investment risk you assume under the contract. Beginning at a
specified time in the future called the annuitization start date, these
contracts provide lifetime or other forms of payout of your contract value (less
any applicable premium tax and/or other charges).
BUYING A CONTRACT: We no longer offer new contracts. However, you have the
option of making additional purchase payments in the future, subject to certain
limitations. Purchase payment amounts and purchase payment timing may be limited
under the terms of your contract and/or pursuant to state requirements. (See
"Buying Your Contract").
It may have not been advantageous for you to purchase this contract in exchange
for, or in addition to, an existing annuity or life insurance policy. Generally,
you can exchange one annuity for another or for a long-term care policy in a
"tax-free" exchange under Section 1035 of the Code. You can also do a partial
exchange from one annuity contract to another annuity contract, subject to IRS
rules. You also generally can exchange a life insurance policy for an annuity.
However, before making an exchange, you should compare both contracts carefully
because the features and benefits may be different. Fees and charges may be
higher or lower on your old contract than on this contract. You may have to pay
a withdrawal charge when you exchange out of your old contract and a new
withdrawal charge period will begin when you exchange into this contract. If the
exchange does not qualify for Section 1035 treatment, you also may have to pay
federal income tax on the distribution. State income taxes may also apply. You
should not exchange your old contract for this contract, or buy this contract in
addition to your old contract, unless you determine it is in your best interest.
(See "Taxes-1035 Exchanges".)
TAX-DEFERRED RETIREMENT PLANS: Most annuities have a tax-deferred feature. So do
many retirement plans under the Code. As a result, when you use a qualified
annuity to fund a retirement plan that is tax-deferred, your contract will not
provide any necessary or additional tax deferral for that retirement plan. A
qualified annuity has features other than tax deferral that may help you reach
your retirement goals. In addition, the Code subjects retirement plans to
required withdrawals triggered at a certain age. These mandatory withdrawals are
called required minimum distributions ("RMDs"). RMDs may reduce the value of
certain death benefits and optional riders (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). You should consult your tax
advisor before you purchase the contract as a qualified annuity for an
explanation of the tax implications to you.
FREE LOOK PERIOD: You may return your contract to your investment professional
or to our corporate office within the time stated on the first page of your
contract and receive a full refund of the contract value, less any purchase
payment credits subject to reversal. (See "Buying Your Contract -- Purchase
Payment Credits"). We will not deduct any contract charges or fees. However, you
bear the investment risk from the time of purchase until you return the contract
and any positive or negative market value adjustment will apply; the refund
amount may be more or less than the payment you made. (EXCEPTION: If the law
requires, we will refund all of your purchase payments.)
ACCOUNTS: Generally, you may allocate purchase payments among the:
subaccounts of the variable account, each of which invests in a fund with a
particular investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at the annuitization start date will equal or exceed the total
purchase payments you allocate to the subaccounts. (See "The Variable Account
and the Funds").
GPAs which earn interest at rates declared when you make an allocation to that
account. The required minimum investment in each GPA is $1,000. These accounts
may not be available in all states. (See "The Guarantee Period Accounts
(GPAs)")
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 5
for the Current Contract:
- regular fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on transfers from this account and may
be restrictions on the amount you can allocate to this account (see "Buying
Your Contract", "Transfer policies" and "The Regular Fixed Account").
- Special DCA fixed account, which earns interest at rates that we adjust
periodically. There are restrictions on how long contract value can remain
in this account. (See "Special DCA Fixed Account").
for the Original Contract:
- one-year fixed account, if part of your contract, which earns interest at
rates that we adjust periodically. There are restrictions on the amount you
can allocate to this account as well as on transfers from this account (see
"Buying Your Contract", "Transfer policies" and "The One-Year Fixed
Account").
- DCA fixed account, if part of your contract, which earns interest at rates
that we adjust periodically. There are restrictions on how long contract
value can remain in this account. (See "DCA Fixed Account").
TRANSFERS: Subject to certain restrictions, you currently may redistribute your
contract value among the accounts without charge at any time until the
annuitization start date, and once per contract year among the subaccounts after
the annuitization start date. Transfers out of the GPAs done more than 30 days
before the end of the guarantee period will be subject to an MVA, unless an
exception applies. You may establish automated transfers among the accounts.
Transfers into the Special DCA fixed account (Current Contract) and DCA fixed
account (Original Contract) are not permitted. GPAs, the regular fixed account
(Current Contract) and the one-year fixed account (Original Contract) are
subject to special restrictions. (See "Making the Most of Your
Contract -- Transferring Among Accounts").
SURRENDERS: You may surrender all or part of your contract value at any time
before the annuitization start date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and income taxes (including a
10% IRS penalty if you make surrenders prior to your reaching age 59 1/2) and
may have other tax consequences. If you have elected the SecureSource Stages
rider or the SecureSource 20 rider, please consider carefully when you take
withdrawals. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be reset based on your contract value at that time and you will no longer be
eligible to receive the 20% credit available under the SecureSource 20 rider or
any future rider credits under the SecureSource Stages. Certain other
restrictions may apply. (See "Surrenders").
OPTIONAL BENEFITS: You can buy optional benefits with your contract for an
additional charge if you meet certain criteria. We offer optional death benefits
and optional living benefits. Optional living benefits include: different
versions of the guaranteed minimum withdrawal benefits, which permit you to
withdraw a guaranteed amount from the contract over a period of time,
Accumulation Protector Benefit rider, which provides you with a guaranteed
contract value at the end of specified waiting period regardless of the
volatility inherent in the investments in the subaccounts, and Income Assurer
Benefit rider, which provides you with a guaranteed minimum income regardless of
the volatility inherent in the investments in the subaccounts . Guaranteed
minimum withdrawal benefits are SecureSource series riders, Guarantor Withdrawal
Benefit rider and Guarantor Withdrawal Benefit for Life rider. When used in this
prospectus, the term "SecureSource series" includes: the SecureSource Stages 2
riders, the SecureSource Stages riders, the SecureSource 20 riders and the
SecureSource riders, except where the SecureSource Stages 2 riders, the
SecureSource Stages riders, SecureSource 20 riders and SecureSource riders are
specifically referenced and distinguished from other riders in the SecureSource
series.
Optional living benefits require the use of a Portfolio Navigator program (PN
program) investment option which may limit transfers and allocations; may limit
the timing, amount and allocation of purchase payments; and may limit the amount
of surrenders that can be taken under the optional benefit during a contract
year. For more information on optional living benefits, please see "Optional
Benefits -- Optional Living Benefits". Optional benefits vary by state and may
have eligibility requirements.
We offer the following optional death benefits: MAV Death Benefit, 5%
Accumulation Death Benefit, Enhanced Death Benefit, Benefit Protector Death
Benefit rider and Benefit Protector Plus Death Benefit rider. Benefit Protector
Death Benefit rider and Benefit Protector Plus Death Benefit rider are intended
to provide an additional benefit to your beneficiary to help offset expenses
after your death such as funeral expenses or federal and state taxes.
BENEFITS IN CASE OF DEATH: For the Current Contract, if you die before the
annuitization start date, we will pay the beneficiary an amount based on the
applicable death benefit. For the Original Contract, if you or the annuitant die
before the annuitization start date, we will pay the beneficiary an amount based
on the applicable death benefit. (See "Benefits in Case of Death").
ANNUITY PAYOUTS: You can apply your contract value, after reflecting any
adjustments, to an annuity payout plan that begins on the annuitization start
date. You may choose from a variety of plans to make sure that payouts continue
as long as you like. If you buy a qualified annuity, the payout schedule must
meet IRS requirements. We can make payouts on a fixed or variable
--------------------------------------------------------------------------------
6 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
basis, or both. During the annuity payout period, your choices for subaccounts
may be limited. The GPAs, the Special DCA fixed account (Current Contract) and
the DCA fixed accounts (Original Contract) are not available after the
annuitization start date. (See "The Annuity Payout Period").
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 7
EXPENSE SUMMARY
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING AND MAKING A SURRENDER FROM THESE CONTRACTS. THE FIRST TABLE
DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE
CONTRACT OR MAY PAY WHEN YOU MAKE A SURRENDER FROM ONE OF THESE CONTRACTS. STATE
PREMIUM TAXES ALSO MAY BE DEDUCTED.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
CONTRACT OWNER TRANSACTION EXPENSES
SURRENDER CHARGE
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
You select either a six-year or eight-year surrender charge schedule at the time
of application.
SIX-YEAR SCHEDULE EIGHT-YEAR SCHEDULE
SURRENDER CHARGE SURRENDER CHARGE
NUMBER OF COMPLETED PERCENTAGE NUMBER OF COMPLETED PERCENTAGE
YEARS FROM DATE OF APPLIED TO EACH YEARS FROM DATE OF APPLIED TO EACH
EACH PURCHASE PAYMENT PURCHASE PAYMENT EACH PURCHASE PAYMENT PURCHASE PAYMENT
0 8% 0 8%
1 8 1 8
2 8 2 8
3 6 3 7
4 4 4 6
5 2 5 5
Thereafter 0 6 4
7 2
Thereafter 0
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
8 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE MAXIMUM: $50 CURRENT: $40
ANNUAL CONTRACT ADMINISTRATIVE CHARGE IF YOUR CONTRACT VALUE MAXIMUM: $20 CURRENT: $0
EQUALS OR EXCEEDS $50,000
CONTRACT ADMINISTRATIVE CHARGE AT FULL SURRENDER MAXIMUM: $50 CURRENT: $40
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE THE SIX-YEAR OR EIGHT-YEAR SURRENDER CHARGE SCHEDULE AND ONE OF
THE DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE
MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE DEATH BENEFIT
GUARANTEES AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE
CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
SIX-YEAR SURRENDER CHARGE SCHEDULE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.50% 0.15% 1.65%
ROPP Death Benefit 1.50 0.15 1.65
MAV Death Benefit 1.75 0.15 1.90
5% Accumulation Death Benefit 1.90 0.15 2.05
Enhanced Death Benefit 1.95 0.15 2.10
EIGHT-YEAR SURRENDER CHARGE
MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
CV Death Benefit* 1.25% 0.15% 1.40%
ROPP Death Benefit 1.25 0.15 1.40
MAV Death Benefit 1.50 0.15 1.65
5% Accumulation Death Benefit 1.65 0.15 1.80
Enhanced Death Benefit 1.70 0.15 1.85
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 9
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROPP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living benefits
if available in your state. The optional living benefits require participation
in the PN program. The fees apply only if you have selected one of these
benefits.
SECURESOURCE STAGES 2(SM) - SINGLE LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
SECURESOURCE STAGES 2(SM) - JOINT LIFE RIDER FEE MAXIMUM: 2.25% CURRENT: 1.15%
(Charged annually on the contract anniversary as a percentage of contract value
or the total Benefit Base, whichever is greater.)
ACCUMULATION PROTECTOR BENEFIT(R) RIDER FEE MAXIMUM: 1.75% CURRENT: 1.50%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contract applications signed after July 18, 2010, but prior to Oct. 4,
2010, the current fee is 1.10%.
SECURESOURCE(R) STAGES - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) STAGES - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.35%
(Charged annually on the contract anniversary as a percentage of the contract
value or the Benefit Base, whichever is greater.)
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009, subject to state availability)
CONTRACT OWNER TRANSACTION EXPENSES:
SURRENDER CHARGE(1)
(Contingent deferred sales charge as a percentage of purchase payments
surrendered)
You selected either a six-year or eight-year surrender charge schedule at the
time of application.
SIX-YEAR SCHEDULE EIGHT-YEAR SCHEDULE
SURRENDER CHARGE SURRENDER CHARGE
NUMBER OF COMPLETED PERCENTAGE NUMBER OF COMPLETED PERCENTAGE
YEARS FROM DATE OF APPLIED TO EACH YEARS FROM DATE OF APPLIED TO EACH
EACH PURCHASE PAYMENT PURCHASE PAYMENT EACH PURCHASE PAYMENT PURCHASE PAYMENT
0 8% 0 8%
1 8 1 8
2 8 2 8
3 6 3 8
4 4 4 8
5 2 5 6
Thereafter 0 6 4
7 2
Thereafter 0
(1) For the Original Contract Alaska, Arizona, Colorado, Connecticut, Florida,
Georgia, Illinois, Michigan, Mississippi, New Jersey, Oregon, Utah and
Washington contracts, the eight-year surrender charge schedule is modified
as follows: Years 1-3 - 8%; Year 4 - 7%; Year 5 - 6%; Year 6 - 5%; Year
7 - 4%; Year 8 - 2%; and Years 9+ - 0%.
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5%. The surrender charge equals the present
value of the remaining payouts using the assumed investment return minus the
present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
--------------------------------------------------------------------------------
10 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY
DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES AND EXPENSES.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE AND AT FULL SURRENDER $40
(We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary except at full surrender.)
ANNUAL VARIABLE ACCOUNT EXPENSES
(As a percentage of average daily subaccount value.)
YOU MUST CHOOSE THE SIX-YEAR OR EIGHT-YEAR SURRENDER CHARGE SCHEDULE AND ONE OF
THE DEATH BENEFIT GUARANTEES. THE COMBINATION YOU CHOOSE DETERMINES THE
MORTALITY AND EXPENSE RISK FEE YOU PAY. THE TABLE BELOW SHOWS THE DEATH BENEFIT
GUARANTEES AVAILABLE TO YOU AND THEIR COST. THE VARIABLE ACCOUNT ADMINISTRATIVE
CHARGE IS IN ADDITION TO THE MORTALITY AND EXPENSE RISK FEE.
IF YOU SELECT A SIX-YEAR SURRENDER CHARGE MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
SCHEDULE AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.50% 0.15% 1.65%
MAV Death Benefit 1.70 0.15 1.85
5% Accumulation Death Benefit 1.85 0.15 2.00
Enhanced Death Benefit 1.90 0.15 2.05
IF YOU SELECT AN EIGHT-YEAR SURRENDER MORTALITY AND VARIABLE ACCOUNT TOTAL VARIABLE
CHARGE SCHEDULE AND: EXPENSE RISK FEE ADMINISTRATIVE CHARGE ACCOUNT EXPENSE
ROP Death Benefit 1.25% 0.15% 1.40%
MAV Death Benefit 1.45 0.15 1.60
5% Accumulation Death Benefit 1.60 0.15 1.75
Enhanced Death Benefit 1.65 0.15 1.80
OTHER ANNUAL EXPENSES
OPTIONAL DEATH BENEFITS
If eligible, you may have selected an optional death benefit in addition to the
ROP and MAV Death Benefits. The fees apply only if you have selected one of
these benefits.
BENEFIT PROTECTOR(R) DEATH BENEFIT RIDER FEE 0.25%
BENEFIT PROTECTOR(R) PLUS DEATH BENEFIT RIDER FEE 0.40%
(As a percentage of the contract value charged annually on the contract
anniversary.)
OPTIONAL LIVING BENEFITS
If eligible, you may have selected one of the following optional living
benefits, if available in your state. The fees apply only if you elected one of
these benefits when you purchased your contract. Each optional living benefit
requires participation in the PN program.
ACCUMULATION PROTECTOR BENEFIT RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%(1)
(Charged annually on the contract anniversary as a percentage of the contract
value or the Minimum Contract Accumulation Value, whichever is greater.)
(1) For contracts with applications signed prior to Jan. 26, 2009, the current
charge is 0.55% and for contracts with applications signed between Jan. 26,
2009 and May 30, 2009, the current fee is 0.80%.
FOR APPLICATIONS SIGNED ON OR AFTER AUG. 10, 2009 BUT PRIOR TO NOV. 30, 2009,
SUBJECT TO STATE AVAILABILITY, OR IN STATES WHERE THE CURRENT CONTRACT WAS NOT
AVAILABLE:
SECURESOURCE(R) 20 - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.25%
SECURESOURCE(R) 20 - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.55%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED ON OR AFTER JAN. 26, 2009, BUT PRIOR TO AUG. 10, 2009,
OR IN STATES WHERE THE CURRENT CONTRACT AND SECURESOURCE 20 WERE NOT AVAILABLE:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 2.00% CURRENT: 1.10%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 2.50% CURRENT: 1.40%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 11
FOR APPLICATIONS SIGNED ON OR AFTER JUNE 1, 2008, BUT PRIOR TO JAN. 26, 2009:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.75%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.95%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
FOR APPLICATIONS SIGNED PRIOR TO JUNE 1, 2008:
SECURESOURCE(R) - SINGLE LIFE RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
SECURESOURCE(R) - JOINT LIFE RIDER FEE MAXIMUM: 1.75% CURRENT: 0.85%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE(R) RIDER FEE MAXIMUM: 1.50% CURRENT: 0.65%
(Charged annually on the contract anniversary as a percentage of the contract
value or the total Remaining Benefit Amount, whichever is greater.)
GUARANTOR(R) WITHDRAWAL BENEFIT RIDER FEE MAXIMUM: 1.50% CURRENT: 0.55%
(As a percentage of contract value charged annually on the contract
anniversary.)
INCOME ASSURER BENEFIT(R) - MAV RIDER FEE MAXIMUM: 1.50% CURRENT: 0.30%(1)
INCOME ASSURER BENEFIT(R) - 5% ACCUMULATION BENEFIT BASE RIDER MAXIMUM: 1.75% CURRENT: 0.60%(1)
FEE
INCOME ASSURER BENEFIT(R) - GREATER OF MAV OR 5% ACCUMULATION MAXIMUM: 2.00% CURRENT: 0.65%(1)
BENEFIT BASE RIDER FEE
(As a percentage of the guaranteed income benefit base charged annually on the
contract anniversary.)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit - 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
--------------------------------------------------------------------------------
12 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
ANNUAL OPERATING EXPENSES OF THE FUNDS
THE NEXT TWO TABLES DESCRIBE THE OPERATING EXPENSES OF THE FUNDS THAT YOU MAY
PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. THESE OPERATING
EXPENSES ARE FOR THE FISCAL YEAR ENDED DEC. 31, 2011, UNLESS OTHERWISE NOTED.
THE FIRST TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED
BY THE FUNDS. THE SECOND TABLE SHOWS THE TOTAL OPERATING EXPENSES CHARGED BY
EACH FUND. MORE DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN
THE PROSPECTUS FOR EACH FUND.
MINIMUM AND MAXIMUM ANNUAL OPERATING EXPENSES FOR THE FUNDS
(Including management fee, distribution and/or service (12b-1) fees and other
expenses)(1)
MINIMUM MAXIMUM
Total expenses before fee waivers and/or expense
reimbursements 0.50% 1.67%
(1) Each fund deducts management fees and other expenses from fund assets. Fund
assets include amounts you allocate to a particular fund. Funds may also
charge 12b-1 fees that are used to finance any activity that is primarily
intended to result in the sale of fund shares. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, you may pay more if you select
subaccounts investing in funds that have adopted 12b-1 plans than if you
select subaccounts investing in funds that have not adopted 12b-1 plans. The
fund or the fund's affiliates may pay us or our affiliates for promoting and
supporting the offer, sale and servicing of fund shares. In addition, the
fund's distributor and/or investment adviser, transfer agent or their
affiliates may pay us or our affiliates for various services we or our
affiliates provide. The amount of these payments will vary by fund and may
be significant. See "The Variable Account and the Funds" for additional
information, including potential conflicts of interest these payments may
create. For a more complete description of each fund's fees and expenses and
important disclosure regarding payments the fund and/or its affiliates make,
please review the fund's prospectus and SAI.
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND*
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
AllianceBernstein VPS Global 0.75% 0.25% 0.19% --% 1.19%
Thematic Growth Portfolio
(Class B)
AllianceBernstein VPS Growth 0.55 0.25 0.05 -- 0.85
and Income Portfolio (Class
B)
AllianceBernstein VPS 0.75 0.25 0.07 -- 1.07
International Value Portfolio
(Class B)
American Century VP Inflation 0.47 0.25 0.01 -- 0.73
Protection, Class II
American Century VP Mid Cap 0.90 0.25 0.01 -- 1.16
Value, Class II
American Century VP Ultra(R), 0.90 0.25 0.01 -- 1.16
Class II
American Century VP Value, 0.88 0.25 -- -- 1.13
Class II
Columbia Variable 0.33 0.13 0.14 -- 0.60(1)
Portfolio - Cash Management
Fund (Class 3)
Columbia Variable 0.41 0.13 0.13 -- 0.67
Portfolio - Diversified Bond
Fund (Class 3)
Columbia Variable 0.57 0.13 0.13 -- 0.83
Portfolio - Diversified
Equity Income Fund (Class 3)
Columbia Variable 0.66 0.13 0.16 0.01 0.96
Portfolio - Dynamic Equity
Fund (Class 3)
Columbia Variable 1.07 0.13 0.25 -- 1.45(1)
Portfolio - Emerging Markets
Opportunity Fund (Class 3)
Columbia Variable 0.42 0.13 0.14 -- 0.69
Portfolio - Global Inflation
Protected Securities Fund
(Class 3)
Columbia Variable 0.63 0.25 0.15 -- 1.03(1),(2)
Portfolio - High Income Fund
(Class 2)
Columbia Variable 0.58 0.13 0.17 -- 0.88(1)
Portfolio - High Yield Bond
Fund (Class 3)
Columbia Variable 0.57 0.13 0.14 -- 0.84
Portfolio - Income
Opportunities Fund (Class 3)
Columbia Variable 0.79 0.13 0.21 -- 1.13
Portfolio - International
Opportunity Fund (Class 3)
Columbia Variable 0.71 0.13 0.17 -- 1.01(1)
Portfolio - Large Cap Growth
Fund (Class 3)
Columbia Variable 0.97 -- 0.13 -- 1.10(1),(2)
Portfolio - Marsico Growth
Fund (Class 1)
Columbia Variable 1.02 0.25 0.20 -- 1.47(1),(2)
Portfolio - Marsico
International Opportunities
Fund (Class 2)
Columbia Variable 0.76 0.13 0.17 -- 1.06(1)
Portfolio - Mid Cap Growth
Opportunity Fund (Class 3)
Columbia Variable 0.74 0.13 0.14 -- 1.01
Portfolio - Mid Cap Value
Opportunity Fund (Class 3)
Columbia Variable 0.10 0.13 0.27 -- 0.50
Portfolio - S&P 500 Index
Fund (Class 3)
Columbia Variable 0.36 0.13 0.15 -- 0.64
Portfolio - Short Duration
U.S. Government Fund (Class
3)
Columbia Variable 0.87 0.25 0.12 0.02 1.26(1),(3)
Portfolio - Small Cap Value
Fund (Class 2)
Credit Suisse 0.50 0.25 0.31 -- 1.06(4)
Trust - Commodity Return
Strategy Portfolio
Dreyfus Investment Portfolios 0.75 0.25 0.08 -- 1.08
Technology Growth Portfolio,
Service Shares
Dreyfus Variable Investment 0.75 0.25 0.05 -- 1.05
Fund Appreciation Portfolio,
Service Shares
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 13
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Dreyfus Variable Investment 0.75% 0.25% 0.35% --% 1.35%
Fund International Equity
Portfolio, Service Shares
Dreyfus Variable Investment 1.00 0.25 0.25 -- 1.50
Fund International Value
Portfolio, Service Shares
Eaton Vance VT Floating-Rate 0.57 0.50 0.08 -- 1.15
Income Fund
Fidelity(R) VIP Contrafund(R) 0.56 0.25 0.09 -- 0.90
Portfolio Service Class 2
Fidelity(R) VIP Investment 0.32 0.25 0.10 -- 0.67
Grade Bond Portfolio Service
Class 2
Fidelity(R) VIP Mid Cap 0.56 0.25 0.10 -- 0.91
Portfolio Service Class 2
Fidelity(R) VIP Overseas 0.71 0.25 0.14 -- 1.10
Portfolio Service Class 2
FTVIPT Franklin Global Real 0.80 0.25 0.32 -- 1.37
Estate Securities
Fund - Class 2
FTVIPT Franklin Income 0.45 0.25 0.02 -- 0.72
Securities Fund - Class 2
FTVIPT Templeton Global Bond 0.46 0.25 0.10 -- 0.81
Securities Fund - Class 2
FTVIPT Templeton Growth 0.74 0.25 0.04 -- 1.03
Securities Fund - Class 2
Goldman Sachs VIT Mid Cap 0.80 -- 0.06 -- 0.86(5)
Value Fund - Institutional
Shares
Goldman Sachs VIT Structured 0.62 -- 0.08 -- 0.70(6)
U.S. Equity
Fund - Institutional Shares
Invesco V.I. Global Health 0.75 0.25 0.37 -- 1.37
Care Fund, Series II Shares
Invesco V.I. International 0.71 0.25 0.32 -- 1.28
Growth Fund, Series II Shares
Invesco Van Kampen V.I. 0.67 0.25 0.28 -- 1.20(7)
American Franchise Fund,
Series II Shares
Invesco Van Kampen V.I. 0.56 0.25 0.24 -- 1.05(8)
Comstock Fund, Series II
Shares
Invesco Van Kampen V.I. Mid 0.75 0.25 0.33 -- 1.33(9)
Cap Growth Fund, Series II
Shares
Janus Aspen Series Janus 0.56 0.25 0.07 -- 0.88
Portfolio: Service Shares
Legg Mason ClearBridge 0.75 -- 0.14 -- 0.89
Variable Small Cap Growth
Portfolio - Class I
MFS(R) Total Return 0.75 0.25 0.06 -- 1.06(10)
Series - Service Class
MFS(R) Utilities 0.73 0.25 0.08 -- 1.06
Series - Service Class
Morgan Stanley UIF Global 0.85 0.35 0.47 -- 1.67(11)
Real Estate Portfolio, Class
II Shares
Morgan Stanley UIF Mid Cap 0.75 0.35 0.30 -- 1.40(11)
Growth Portfolio, Class II
Shares
Oppenheimer Capital 0.68 0.25 0.12 -- 1.05
Appreciation Fund/VA, Service
Shares
Oppenheimer Global Securities 0.63 0.25 0.13 -- 1.01
Fund/VA, Service Shares
Oppenheimer Global Strategic 0.58 0.25 0.13 0.07 1.03(12)
Income Fund/VA, Service
Shares
Oppenheimer Main Street 0.69 0.25 0.14 -- 1.08(13)
Small- & Mid-Cap Fund(R)/VA,
Service Shares
PIMCO VIT All Asset 0.43 0.25 -- 0.74 1.42(14)
Portfolio, Advisor Share
Class
Putnam VT Global Health Care 0.63 0.25 0.21 -- 1.09
Fund - Class IB Shares
Putnam VT Small Cap Value 0.63 0.25 0.15 0.11 1.14
Fund - Class IB Shares
Variable -- 0.25 0.02 0.79 1.06
Portfolio - Aggressive
Portfolio (Class 2)
Variable -- 0.25 0.02 0.79 1.06
Portfolio - Aggressive
Portfolio (Class 4)
Variable -- 0.25 0.02 0.61 0.88
Portfolio - Conservative
Portfolio (Class 2)
Variable -- 0.25 0.02 0.61 0.88
Portfolio - Conservative
Portfolio (Class 4)
Variable Portfolio - Davis 0.71 0.13 0.13 -- 0.97(15)
New York Venture Fund (Class
3)
Variable Portfolio - Goldman 0.77 0.13 0.13 -- 1.03(15)
Sachs Mid Cap Value Fund
(Class 3)
Variable Portfolio - Moderate -- 0.25 0.02 0.71 0.98
Portfolio (Class 2)
Variable Portfolio - Moderate -- 0.25 0.02 0.71 0.98
Portfolio (Class 4)
Variable -- 0.25 0.02 0.75 1.02
Portfolio - Moderately
Aggressive Portfolio (Class
2)
Variable -- 0.25 0.02 0.75 1.02
Portfolio - Moderately
Aggressive Portfolio (Class
4)
Variable -- 0.25 0.02 0.66 0.93
Portfolio - Moderately
Conservative Portfolio (Class
2)
Variable -- 0.25 0.02 0.66 0.93
Portfolio - Moderately
Conservative Portfolio (Class
4)
Variable Portfolio - Partners 0.91 0.13 0.15 0.02 1.21(15)
Small Cap Value Fund (Class
3)
Wanger International 0.89 -- 0.13 -- 1.02(2)
--------------------------------------------------------------------------------
14 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
TOTAL ANNUAL OPERATING EXPENSES FOR EACH FUND* (CONTINUED)
(Before fee waivers and/or expense reimbursements, if applicable, as a
percentage of average daily net assets)
ACQUIRED FUND GROSS TOTAL
MANAGEMENT 12b-1 OTHER FEES AND ANNUAL
FUND NAME FEES FEES EXPENSES EXPENSES** EXPENSES
Wanger USA 0.86% --% 0.08% --% 0.94(2)%
Wells Fargo Advantage VT 0.55 0.25 0.26 -- 1.06(16)
Index Asset Allocation
Fund - Class 2
Wells Fargo Advantage VT 0.75 0.25 0.22 0.01 1.23(17)
International Equity
Fund - Class 2
Wells Fargo Advantage VT 0.55 0.25 0.37 0.01 1.18(17)
Intrinsic Value Fund - Class
2
Wells Fargo Advantage VT 0.55 0.25 0.25 -- 1.05(17)
Omega Growth Fund - Class 2
Wells Fargo Advantage VT 0.65 0.25 0.17 -- 1.07(18)
Opportunity Fund - Class 2
Wells Fargo Advantage VT 0.75 0.25 0.20 0.01 1.21
Small Cap Growth Fund - Class
2
Wells Fargo Advantage VT 0.40 0.25 0.26 0.01 0.92(17)
Total Return Bond
Fund - Class 2
* The Funds provided the information on their expenses and we have not
independently verified the information.
** Includes fees and expenses incurred indirectly by the Fund as a result of
its investment in other investment companies (also referred to as acquired
funds).
(1) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive and/or to reimburse expenses (excluding
certain fees and expenses, such as transaction costs and certain other
investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.585% for Columbia Variable
Portfolio - Cash Management Fund (Class 3), 1.385% for Columbia Variable
Portfolio - Emerging Markets Opportunity Fund (Class 3), 0.97% for Columbia
Variable Portfolio - High Income Fund (Class 2), 0.845% for Columbia
Variable Portfolio - High Yield Bond Fund (Class 3), 0.915% for Columbia
Variable Portfolio - Large Cap Growth Fund (Class 3), 0.79% for Columbia
Variable Portfolio - Marsico Growth Fund (Class 1), 1.44% for Columbia
Variable Portfolio - Marsico International Opportunities Fund (Class 2),
1.005% for Columbia Variable Portfolio - Mid Cap Growth Opportunity Fund
(Class 3) and 1.03% for Columbia Variable Portfolio - Small Cap Value Fund
(Class 2).
(2) Other expenses have been restated to reflect contractual changes to certain
other fees.
(3) Management fees have been restated to reflect contractual changes to the
investment advisory and/or administration fee rates. Other expenses have
been restated to reflect contractual changes to certain fees paid by the
Fund.
(4) Credit Suisse will waive fees and reimburse expenses so that the
Portfolio's annual operating expenses will not exceed 1.05% of the
Portfolio's average daily net assets. Waivers and expense reimbursements or
credits are voluntary and may be discontinued at any time.
(5) Effective June 30, 2011, the Investment Advisor agreed to waive a portion
of its management fee in order to achieve an effective net management rate
of 0.77%. Other expenses include transfer agency fees equal on an
annualized basis to 0.02% of the average daily net assets of the Fund's
Institutional Shares, plus all other ordinary expenses not detailed above.
The Investment Adviser has voluntarily agreed to reduce or limit other
expenses (excluding management fees, distribution and service fees,
transfer agent fees and expenses, taxes, interest, brokerage fees and
litigation, indemnification, shareholder meetings and other extraordinary
expenses, exclusive of any custody and transfer agent fee credit
reductions) to the extent such expenses exceed, on an annual basis, 0.054%
of the average daily net assets of the Fund. These arrangements will remain
in effect through at least April 27, 2013 and prior to such date the
Investment Advisor may not terminate the arrangement without the approval
of the trustees. After fee waivers and reimbursements, net expenses would
be 0.85%.
(6) Other expenses include transfer agency fees equal on an annualized basis to
0.02% of the average daily net assets of the Fund's Institutional Shares,
plus all other ordinary expenses not detailed above. The Investment Adviser
has voluntarily agreed to reduce or limit other expenses (excluding
management fees, distribution and service fees, transfer agent fees and
expenses, taxes, interest, brokerage fees and litigation, indemnification,
shareholder meetings and other extraordinary expenses, exclusive of any
custody and transfer agent fee credit reductions) to the extent such
expenses exceed, on an annual basis, 0.004% of the average daily net assets
of the Fund. These arrangements will remain in effect through at least
April 27, 2013 and prior to such date the Investment Advisor may not
terminate the arrangement without the approval of the trustees. After fee
waivers and reimbursements, net expenses would be 0.64%.
(7) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund. In addition, the Adviser has contractually agreed, through at least
June 30, 2014, to waive advisory fees and/or reimburse expenses of Series
II shares to the extent necessary to limit total annual fund operating
expenses after fee waivers and/or expense reimbursements (excluding
interest, taxes, dividend expense on short sales, extraordinary or non-
routine items, including litigation expenses and expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement)
of Series II shares to 1.15% of average daily net assets. Unless the Board
of Trustees and Invesco Advisers, Inc. mutually agree to amend or continue
the fee waiver agreement, it will terminate on June 30, 2014.
(8) The Adviser has contractually agreed, through at least April 30, 2013, to
waive advisory fees and/or reimburse expenses of Series II shares to the
extent necessary to limit total annual fund operating expenses after fee
waivers and/or expense reimbursements (excluding interest, taxes, dividend
expense on short sales, extraordinary or non-routine items, including
litigation expenses and expenses that the Fund has incurred but did not
actually pay because of an expense offset arrangement) of Series II shares
to 0.97% of average daily net assets. Unless the Board of Trustees and
Invesco Advisers, Inc. mutually agree to amend or continue the fee waiver
agreement, it will terminate on April 30, 2013.
(9) Total annual fund operating expenses have been restated and reflect the
reorganization of one or more affiliated investment companies into the
Fund.
(10) MFS has agreed in writing to reduce its management fee to 0.70% of the
fund's average daily net assets annually in excess of $1 billion and 0.65%
of the fund's average daily net assets annually in excess of $2.5 billion
to $3 billion. This written agreement will remain in effect until modified
by the fund's Board of Trustees, but such agreement will continue until at
least April 30, 2013. After fee waivers, net expenses would be 1.03%.
(11) The Portfolios' Adviser, Morgan Stanley Investment Management Inc., has
agreed to reduce its advisory fee and/or reimburse each Portfolio so that
total annual portfolio operating expenses, excluding certain investment
related expenses (such as foreign country tax expense and interest expense
on amounts borrowed) (but including any 12b-1 fee paid to each Portfolios
Distributor, Morgan Stanley Distribution, Inc.), will not exceed 1.40% for
Morgan Stanley UIF Global Real Estate Portfolio, Class II Shares and 1.15%
for Morgan Stanley UIF Mid Cap Growth Portfolio, Class II Shares. The fee
waivers and/or expense reimbursements will continue for at least one year
or until such time as the Fund's Board of Directors acts to discontinue all
or a portion of such waivers and/or reimbursements when it deems that such
action is appropriate.
(12) The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's
investments in Oppenheimer Institutional Money Market Fund, Oppenheimer
Short Duration Fund and the Master Funds. The Manager has also
contractually agreed to waive the
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 15
management fee it receives from the Fund in an amount equal to the
management fee it receives from the Subsidiary. This undertaking will
continue in effect for so long as the Fund invests in the Subsidiary, and
may not be terminated by the Manager unless termination is approved by the
Fund's Board of Trustees. After fee waivers, net expenses would be 0.97%.
(13) The Manager has voluntarily agreed to limit the Fund's total annual
operating expenses so that those expenses, as percentages of daily net
assets, will not exceed the annual rate of 1.05%.
(14) PIMCO has contractually agreed, through May 1, 2013, to reduce its advisory
fee to the extent that the Underlying PIMCO Fund Expenses attributable to
advisory and supervisory and administrative fees exceed 0.64% of the total
assets invested in Underlying PIMCO Funds. PIMCO may recoup these waivers
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. The fee
reduction is implemented based on a calculation of Underlying PIMCO Fund
Expenses attributable to advisory and supervisory and administrative fees
that is different from the calculation of Acquired fund fees and expenses
listed in the table above. After fee waivers, net expenses would be 1.345%.
(15) Columbia Management Investment Advisers, LLC and certain of its affiliates
have contractually agreed to waive fees and/or to reimburse expenses
(excluding certain fees and expenses, such as transaction costs and certain
other investment related expenses, interest, taxes, acquired fund fees and
expenses, and extraordinary expenses) until April 30, 2013, unless sooner
terminated at the sole discretion of the Fund's Board of Trustees. Under
this agreement, the Fund's net operating expenses, subject to applicable
exclusions, will not exceed the annual rate of 0.905% for Variable
Portfolio - Davis New York Venture Fund (Class 3), 0.985% for Variable
Portfolio - Goldman Sachs Mid Cap Value Fund (Class 3) and 1.035% for
Variable Portfolio - Partners Small Cap Value Fund (Class 3).
(16) The Adviser has committed through April 30, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
1.00%. After this time, such cap may be changed or the commitment to
maintain the cap may be terminated only with the approval of the Board of
Trustees.
(17) The Adviser has committed through July 18, 2013 to waive fees and/or
reimburse expenses to the extent necessary to cap the Fund's total annual
fund operating expenses after fee waiver, excluding certain expenses, at
0.94% for Wells Fargo Advantage VT International Equity Fund - Class 2,
1.00% for Wells Fargo Advantage VT Intrinsic Value Fund - Class 2, 1.00%
for Wells Fargo Advantage VT Omega Growth Fund - Class 2 and 0.90% for
Wells Fargo Advantage VT Total Return Bond Fund - Class 2.
(18) Expenses have been adjusted from amounts incurred during the Fund's most
recent fiscal year to reflect current fees and expenses. The Adviser has
committed through July 18, 2013 to waive fees and/or reimburse expenses to
the extent necessary to cap the Fund's total annual fund operating expenses
after fee waiver, excluding certain expenses, at 1.00%. After this time,
such cap may be changed or the commitment to maintain the cap may be
terminated only with the approval of the Board of Trustees.
--------------------------------------------------------------------------------
16 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLES
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THESE
CONTRACTS WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE YOUR TRANSACTION EXPENSES, CONTRACT ADMINISTRATIVE CHARGES,
VARIABLE ACCOUNT ANNUAL EXPENSES AND FUND FEES AND EXPENSES.
THESE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME
PERIODS INDICATED. THESE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5%
RETURN EACH YEAR.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered. They assume that you select the MAV Death Benefit, the
SecureSource Stages 2 - Joint Life rider and the Benefit Protector Plus Death
Benefit.(1),(4) Although your actual costs may be lower, based on the
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Eight-year
surrender charge
schedule $1,380 $2,676 $3,770 $6,308 $660 $1,954 $3,226 $6,308
Six-year
surrender charge
schedule 1,404 2,749 3,704 6,503 684 2,026 3,341 6,503
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROPP Death Benefit and do not select any
optional benefits.(3) Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Eight-year
surrender charge
schedule $ 976 $1,501 $1,827 $2,600 $235 $720 $1,227 $2,600
Six-year
surrender charge
schedule 1,000 1,572 1,756 2,860 260 797 1,356 2,860
ORIGINAL CONTRACT(2):
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM EXPENSES. These examples assume the most expensive combination of
contract features and benefits and the maximum fees and expenses of any of the
funds offered on or after May 1, 2007. They assume that you select the MAV Death
Benefit, the SecureSource - Joint Life rider or SecureSource 20 - Joint Life
rider and the Benefit Protector Plus Death Benefit.(3),(4) Although your actual
costs may be lower, based on the assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Eight-year
surrender charge
schedule $1,390 $2,706 $3,999 $6,395 $670 $1,983 $3,274 $6,395
Six-year
surrender charge
schedule 1,415 2,779 3,751 6,589 695 2,055 3,388 6,589
MINIMUM EXPENSES. These examples assume the least expensive combination of
contract features and benefits and the minimum fees and expenses of any of the
funds. They assume that you select the ROP Death Benefit and do not select any
optional benefits.(3) Although your actual costs may be higher, based on these
assumptions your costs would be:
IF YOU DO NOT SURRENDER YOUR CONTRACT
IF YOU SURRENDER YOUR CONTRACT AT THE END OR IF YOU SELECT AN ANNUITY PAYOUT PLAN
OF THE APPLICABLE TIME PERIOD: AT THE END OF THE APPLICABLE TIME PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Eight-year
surrender charge
schedule $ 975 $1,501 $2,027 $2,600 $235 $720 $1,227 $2,600
Six-year
surrender charge
schedule 1,000 1,572 1,756 2,860 260 797 1,356 2,860
(1) In these examples, the contract administrative charge is $50.
(2) For the Original Contract in Alaska, Arizona, Colorado, Connecticut,
Florida, Georgia, Illinois, Michigan, Mississippi, New Jersey, Oregon,
Pennsylvania, Utah and Washington contract holders, your expenses would be
slightly lower due to the modified eight-year surrender charge schedule.
(3) In these examples, the contract administrative charge is $40.
(4) Because these examples are intended to illustrate the most expensive
combination of contract features, the maximum annual fee for each optional
rider is reflected rather than the fee that is currently being charged.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 17
THE EXAMPLES ARE ILLUSTRATIVE ONLY. YOU SHOULD NOT CONSIDER THESE EXAMPLES AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES WILL BE HIGHER OR
LOWER THAN THOSE SHOWN DEPENDING UPON WHICH OPTIONAL BENEFIT YOU ELECT OTHER
THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE CONTRACT VALUE TO ANY OTHER
AVAILABLE SUBACCOUNTS.
--------------------------------------------------------------------------------
18 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONDENSED FINANCIAL INFORMATION
You can find unaudited condensed financial information for the subaccounts
representing the lowest and highest total annual variable account expense
combinations in Appendix P.
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the divisions, which are comprised of subaccounts, in the SAI. The
SAI does not include audited financial statements for divisions that are new (if
any) and have no activity as of the financial statements date.
THE VARIABLE ACCOUNT AND THE FUNDS
VARIABLE ACCOUNT. The variable account was established under Indiana law on July
15, 1987, and the subaccounts are registered together as a single unit
investment trust under the Investment Company Act of 1940 (the 1940 Act). This
registration does not involve any supervision of our management or investment
practices and policies by the SEC. All obligations arising under the contracts
are general obligations of RiverSource Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
Although the Internal Revenue Service (IRS) has issued some guidance on investor
control, the U.S. Treasury and the IRS may continue to examine this aspect of
variable contracts and provide additional guidance on investor control. At this
time, we do not know what the additional guidance will be or when action will be
taken. We reserve the right to modify the contract, as necessary, so that the
owner will not be subject to current taxation as the owner of the subaccount
assets.
We intend to comply with all federal tax laws so that the contract continues to
qualify as an annuity for federal income tax purposes. We reserve the right to
modify the contract as necessary to comply with any new tax laws.
THE FUNDS. This contract currently offers subaccounts investing in shares of the
funds listed in the table below.
INVESTMENT OBJECTIVES: The investment managers and advisers cannot guarantee
that the funds will meet their investment objectives. Please read the funds'
prospectuses for facts you should know before investing. These prospectuses
are available by contacting us at the address or telephone number on the first
page of this prospectus.
FUND NAME AND MANAGEMENT: A fund underlying your contract in which a
subaccount invests may have a name, portfolio manager, objectives, strategies
and characteristics that are the same or substantially similar to those of a
publicly-traded retail mutual fund. Despite these similarities, an underlying
fund is not the same as any publicly-traded retail mutual fund. Each
underlying fund will have its own unique portfolio holdings, fees, operating
expenses and operating results. The results of each underlying fund may differ
significantly from any publicly-traded retail mutual fund.
ELIGIBLE PURCHASERS: All funds are available to serve as the underlying
investments for variable annuities and variable life insurance policies. The
funds are not available to the public (see "Fund Name and Management" above).
Some funds also are available to serve as investment options for tax-deferred
retirement plans. It is possible that in the future for tax, regulatory or
other reasons, it may be disadvantageous for variable annuity accounts and
variable life insurance accounts and/or tax-deferred retirement plans to
invest in the available funds simultaneously. Although we and the funds do not
currently foresee any such disadvantages, the boards of directors or trustees
of each fund will monitor events in order to identify any material conflicts
between annuity owners, policy owners and tax-deferred retirement plans and to
determine what action, if any, should be taken in response to a conflict. If a
board were to conclude that it should establish separate fund providers for
the variable annuity, variable life insurance and tax-deferred retirement plan
accounts, you would not bear any expenses associated with establishing
separate funds. Please refer to the funds' prospectuses for risk disclosure
regarding simultaneous investments by variable annuity, variable life
insurance and tax-deferred retirement plan accounts. Each fund intends to
comply with the diversification requirements under Section 817(h) of the Code.
PRIVATE LABEL: This contract is a "private label" variable annuity. This means
the contract includes funds affiliated with the distributor of this contract.
Purchase payments and contract values you allocate to subaccounts investing in
any of the Wells Fargo Variable Trust funds available under this contract are
generally more profitable for the distributor and its affiliates than
allocations you make to other subaccounts. In contrast, purchase payments and
contract values you allocate to subaccounts investing in any of the affiliated
funds are generally more profitable for us and our affiliates. (See "Revenue
we receive from the funds may create potential conflicts of interest.") These
relationships may influence recommendations your
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 19
investment professional makes regarding whether you should invest in the
contract, and whether you should allocate purchase payments or contract values
to a particular subaccount.
ASSET ALLOCATION PROGRAMS MAY IMPACT FUND PERFORMANCE: Asset allocation
programs in general may negatively impact the performance of an underlying
fund. Even if you do not participate in an asset allocation program, a fund in
which your subaccount invests may be impacted if it is included in an asset
allocation program. Rebalancing or reallocation under the terms of the asset
allocation program may cause a fund to lose money if it must sell large
amounts of securities to meet a redemption request. These losses can be
greater if the fund holds securities that are not as liquid as others, for
example, various types of bonds, shares of smaller companies and securities of
foreign issuers. A fund may also experience higher expenses because it must
sell or buy securities more frequently than it otherwise might in the absence
of asset allocation program rebalancing or reallocations. Because asset
allocation programs include periodic rebalancing and may also include
reallocation, these effects may occur under the asset allocation program we
offer (see "Making the Most of Your Contract -- Portfolio Navigator Program")
or under asset allocation programs used in conjunction with the contracts and
plans of other eligible purchasers of the funds.
FUNDS AVAILABLE UNDER THE CONTRACT: We seek to provide a broad array of
underlying funds taking into account the fees and charges imposed by each fund
and the contract charges we impose. We select the underlying funds in which
the subaccounts initially invest and when there is substitution (see
"Substitution of Investments"). We also make all decisions regarding which
funds to retain in a contract, which funds to add to a contract and which
funds will no longer be offered in a contract. In making these decisions, we
may consider various objective and subjective factors. Objective factors
include, but are not limited to fund performance, fund expenses, classes of
fund shares available, size of the fund and investment objectives and
investing style of the fund. Subjective factors include, but are not limited
to, investment sub-styles and process, management skill and history at other
funds and portfolio concentration and sector weightings. We also consider the
levels and types of revenue a fund, its distributor, investment adviser,
subadviser, transfer agent or their affiliates pay us and our affiliates. This
revenue includes, but is not limited to compensation for administrative
services provided with respect to the fund and support of marketing and
distribution expenses incurred with respect to the fund.
REVENUE WE RECEIVE FROM THE FUNDS MAY CREATE POTENTIAL CONFLICTS OF INTEREST:
We or our affiliates receive from each of the funds, or the funds' affiliates,
varying levels and types of revenue including but not limited to expense
payments and non-cash compensation. The amount of this revenue and how it is
computed varies by fund, may be significant and may create potential conflicts
of interest. The greatest amount and percentage of revenue we and our
affiliates receive comes from assets allocated to subaccounts investing in the
funds that are managed by our affiliates Columbia Management Investment
Advisers, LLC (Columbia Management Investment Advisers) or Columbia Wanger
Asset Management, LLC (Columbia Wanger Asset Management) (affiliated funds).
Employee compensation and operating goals at all levels are tied to the
success of Ameriprise Financial, Inc. and its affiliates, including us.
Certain employees may receive higher compensation and other benefits based, in
part, on contract values that are invested in the affiliated funds. We or our
affiliates receive revenue which ranges up to 0.64% of the average daily net
assets invested in the underlying funds through this and other contracts we
and our affiliate issue. We or our affiliates may also receive revenue which
ranges up to 0.04% of aggregate, net or anticipated sales of underlying funds
through this and other contracts we and our affiliate issue. Please see the
SAI for a table that ranks the underlying funds according to total dollar
amounts they and their affiliates paid us or our affiliates in the prior
calendar year.
Expense payments, non-cash compensation and other forms of revenue may
influence recommendations your investment professional makes regarding whether
you should invest in one of these contracts and whether you should allocate
purchase payments or contract value to a subaccount that invests in a
particular fund (see "About the Service Providers").
The revenue we or our affiliates receive from a fund or its affiliates is in
addition to revenue we receive from the charges you pay when buying, owning
and surrendering from the contract (see "Expense Summary"). However, the
revenue we or our affiliates receive from a fund or its affiliates may come,
at least in part, from the fund's fees and expenses you pay indirectly when
you allocate contract value to the subaccount that invests in that fund.
WHY REVENUES ARE PAID TO US: In accordance with applicable laws, regulations
and the terms of the agreements under which such revenue is paid, we or our
affiliates may receive these revenues including, but not limited to expense
payments and non-cash compensation for various purposes:
- Compensating, training and educating investment professionals who sell the
contracts.
- Granting access to our employees whose job it is to promote sales of the
contracts by authorized selling firms and their investment professionals,
and granting access to investment professionals of our affiliated selling
firms.
- Activities or services we or our affiliates provide that assist in the
promotion and distribution of the contracts including promoting the funds
available under the contracts to prospective and existing contract owners,
authorized selling firms and investment professionals.
--------------------------------------------------------------------------------
20 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
- Providing sub-transfer agency and shareholder servicing to contract owners.
- Promoting, including and/or retaining the fund's investment portfolios as
underlying investment options in the contracts.
- Advertising, printing and mailing sales literature, and printing and
distributing prospectuses and reports.
- Furnishing personal services to contract owners, including education of
contract owners, answering routine inquiries regarding a fund, maintaining
accounts or providing such other services eligible for service fees as
defined under the rules of the Financial Industry Regulatory Authority
(FINRA).
- Subaccounting, transaction processing, recordkeeping and administration.
SOURCES OF REVENUE RECEIVED FROM AFFILIATED FUNDS: The affiliated funds are
managed by Columbia Management Investment Advisers or Columbia Wanger Asset
Management. The sources of revenue we receive from these affiliated funds, or
from affiliates of these funds, may include, but are not necessarily limited
to, the following:
- Assets of the fund's adviser and transfer agent or an affiliate. The revenue
resulting from these sources may be based either on a percentage of average
daily net assets of the fund or on the actual cost of certain services we
provide with respect to the fund. We may receive this revenue either in the
form of a cash payment or it may be allocated to us.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
SOURCES OF REVENUE RECEIVED FROM UNAFFILIATED FUNDS: The unaffiliated funds
are not managed by an affiliate of ours. The sources of revenue we receive
from these unaffiliated funds, or the funds' affiliates, may include, but are
not necessarily limited to, the following:
- Assets of the fund's adviser, subadviser, transfer agent or an affiliate of
these and assets of the fund's distributor or an affiliate. The revenue
resulting from these sources usually is based on a percentage of average
daily net assets of the fund but there may be other types of payment
arrangements.
- Compensation paid out of 12b-1 fees that are deducted from fund assets and
disclosed in the "12b-1 fees" column of the "Annual Operating Expenses of
the Funds" table.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 21
UNLESS THE PN PROGRAM IS IN EFFECT, YOU MAY ALLOCATE PAYMENTS AND TRANSFERS TO
ANY OR ALL OF THE SUBACCOUNTS OF THE VARIABLE ACCOUNT THAT INVEST IN SHARES OF
THE FOLLOWING FUNDS:
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Global Thematic capital.
Growth Portfolio
(Class B)
--------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS Growth and capital.
Income Portfolio
(Class B)
--------------------------------------------------------------------------------------------------------------------------
AllianceBernstein Y Y Seeks long-term growth of AllianceBernstein L.P.
VPS International capital.
Value Portfolio
(Class B)
--------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term total American Century
Inflation return using a strategy Investment Management,
Protection, Class II that seeks to protect Inc.
against U.S. inflation.
--------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century
Mid Cap Value, Class growth. Income is a Investment Management,
II secondary objective. Inc.
--------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century
Ultra(R), Class II growth. Investment Management,
Inc.
--------------------------------------------------------------------------------------------------------------------------
American Century VP Y Y Seeks long-term capital American Century
Value, Class II growth. Income is a Investment Management,
secondary objective. Inc.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks maximum current Columbia Management
Portfolio - Cash income consistent with Investment Advisers, LLC
Management Fund liquidity and stability of
(Class 3) principal.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of Columbia Management
Portfolio - Diversi- current income while Investment Advisers, LLC
fied Bond Fund attempting to conserve the
(Class 3) value of the investment
for the longest period of
time.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of Columbia Management
Portfolio - Diversi- current income and, as a Investment Advisers, LLC
fied Equity Income secondary goal, steady
Fund (Class 3) growth of capital.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital Columbia Management
Portfolio - Dynamic appreciation. Investment Advisers, LLC
Equity Fund (Class
3)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
22 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Emerging growth. Investment Advisers, LLC,
Markets Opportunity adviser; Threadneedle
Fund (Class 3) International Limited, an
indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Non-diversified fund that Columbia Management
Portfolio - Global seeks total return that Investment Advisers, LLC
Inflation Protected exceeds the rate of
Securities Fund inflation over the long
(Class 3) term.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks total return, Columbia Management
Portfolio - High consisting of a high level Investment Advisers, LLC
Income Fund (Class of income and capital
2) appreciation.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high current income, Columbia Management
Portfolio - High with capital growth as a Investment Advisers, LLC
Yield Bond Fund secondary objective.
(Class 3)
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high total return Columbia Management
Portfolio - Income through current income and Investment Advisers, LLC
Opportunities Fund capital appreciation.
(Class 3)
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks capital Columbia Management
Portfolio - In- appreciation. Investment Advisers, LLC,
ternational adviser; Threadneedle
Opportunity Fund International Limited, an
(Class 3) indirect wholly-owned
subsidiary of Ameriprise
Financial, sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Large growth. Investment Advisers, LLC
Cap Growth Fund
(Class 3)
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
Growth Fund (Class adviser; Marsico Capital
1) Management, LLC,
subadviser.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Marsico capital. Investment Advisers, LLC,
International adviser; Marsico Capital
Opportunities Fund Management, LLC,
(Class 2) subadviser.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable N Y Seeks growth of capital. Columbia Management
Portfolio - Mid Cap Investment Advisers, LLC
Growth Opportunity
Fund (Class 3)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 23
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Mid Cap capital. Investment Advisers, LLC
Value Opportunity
Fund (Class 3)
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - S&P 500 appreciation. Investment Advisers, LLC
Index Fund (Class 3)
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks high level of Columbia Management
Portfolio - Short current income and safety Investment Advisers, LLC
Duration U.S. of principal consistent
Government Fund with investment in U.S.
(Class 3) government and government
agency securities.
--------------------------------------------------------------------------------------------------------------------------
Columbia Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Small appreciation. Investment Advisers, LLC
Cap Value Fund
(Class 2)
--------------------------------------------------------------------------------------------------------------------------
Credit Suisse Y Y Seeks total return. Credit Suisse Asset
Trust - Commodity Management, LLC
Return Strategy
Portfolio
--------------------------------------------------------------------------------------------------------------------------
Dreyfus Investment N Y Seeks capital The Dreyfus Corporation
Portfolios appreciation.
Technology Growth
Portfolio, Service
Shares
--------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable N Y Seeks long-term capital The Dreyfus Corporation,
Investment Fund growth consistent with the adviser; Fayez Sarofim &
Appreciation preservation of capital. Co., sub-adviser.
Portfolio, Service
Shares
--------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks capital growth. The Dreyfus Corporation,
Investment Fund adviser; Newton Capital
International Equity Management Limited, sub-
Portfolio, Service adviser
Shares
--------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Y Y Seeks long-term capital The Dreyfus Corporation
Investment Fund growth.
International Value
Portfolio, Service
Shares
--------------------------------------------------------------------------------------------------------------------------
Eaton Vance VT Y Y Seeks high level of Eaton Vance Management
Floating-Rate Income current income.
Fund
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
24 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term capital Fidelity Management &
Contrafund(R) appreciation. Normally Research Company (FMR) is
Portfolio Service invests primarily in the fund's manager. FMR
Class 2 common stocks. Invests in Co., Inc. (FMRC) and other
securities of companies investment advisers serve
whose value it believes is as sub-advisers for the
not fully recognized by fund.
the public. Invests in
either "growth" stocks or
"value" stocks or both.
The fund invests in
domestic and foreign
issuers.
--------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks as high level of Fidelity Management &
Investment Grade current income as is Research Company (FMR) is
Bond Portfolio consistent with the the fund's manager.
Service Class 2 preservation of capital. Fidelity Investments Money
Normally invests at least Management, Inc. (FIMM)
80% of assets in and other investment
investment-grade debt advisers serve as sub-
securities (those of advisers for the fund.
medium and high quality)
of all types and
repurchase agreements for
those securities.
--------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Mid Y Y Seeks long-term growth of Fidelity Management &
Cap Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common the fund's manager. FMR
stocks. Normally invests Co., Inc. (FMRC) and other
at least 80% of assets in investment advisers serve
securities of companies as sub-advisers for the
with medium market fund.
capitalizations. May
invest in companies with
smaller or larger market
capitalizations. Invests
in domestic and foreign
issuers. The Fund invests
in either "growth" or
"value" common stocks or
both.
--------------------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Y Y Seeks long-term growth of Fidelity Management &
Overseas Portfolio capital. Normally invests Research Company (FMR) is
Service Class 2 primarily in common stocks the fund's manager. FMR
allocating investments Co., Inc. (FMRC) and other
across different countries investment advisers serve
and regions. Normally as sub-advisers for the
invests at least 80% of fund.
assets in non-U.S.
securities.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 25
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin N Y Seeks high total return. Franklin Templeton
Global Real Estate The fund normally invests Institutional, LLC
Securities at least 80% of its net
Fund - Class 2 assets in investments of
companies located anywhere
in the world that operate
in the real estate sector.
--------------------------------------------------------------------------------------------------------------------------
FTVIPT Franklin Y Y Seeks to maximize income Franklin Advisers, Inc.
Income Securities while maintaining
Fund - Class 2 prospects for capital
appreciation. The fund
normally invests in both
equity and debt
securities.
--------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks high current income, Franklin Advisers, Inc.
Global Bond consistent with
Securities preservation of capital,
Fund - Class 2 with capital appreciation
as a secondary
consideration. The fund
normally invests at least
80% of its net assets in
bonds, which include debt
securities of any
maturity, such as bonds,
notes, bills and
debentures.
--------------------------------------------------------------------------------------------------------------------------
FTVIPT Templeton Y Y Seeks long-term capital Templeton Global Advisors
Growth Securities growth. The fund normally Limited
Fund - Class 2 invests primarily in
equity securities of
companies located anywhere
in the world, including
those in the U.S. and
emerging markets.
--------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term capital Goldman Sachs Asset
Mid Cap Value appreciation. Management, L.P.
Fund - Institutional
Shares
--------------------------------------------------------------------------------------------------------------------------
Goldman Sachs VIT Y Y Seeks long-term growth of Goldman Sachs Asset
Structured U.S. capital. Management, L.P.
Equity
Fund - Institutional
Shares
--------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Global Y Y Seeks long-term growth of Invesco Advisers, Inc.
Health Care Fund, capital.
Series II Shares
--------------------------------------------------------------------------------------------------------------------------
Invesco V.I. Y Y Seeks long-term growth of Invesco Advisers, Inc.
International Growth capital.
Fund, Series II
Shares
--------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. American
Franchise Fund,
Series II Shares
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
26 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth and Invesco Advisers, Inc.
V.I. Comstock Fund, income through investments
Series II Shares in equity securities,
including common stocks,
preferred stocks and
securities convertible
into common and preferred
stocks.
--------------------------------------------------------------------------------------------------------------------------
Invesco Van Kampen Y Y Seeks capital growth. Invesco Advisers, Inc.
V.I. Mid Cap Growth
Fund, Series II
Shares
--------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Y Y Seeks long-term growth of Janus Capital Management
Janus Portfolio: capital. LLC
Service Shares
--------------------------------------------------------------------------------------------------------------------------
Legg Mason Y Y Seeks long-term growth of Legg Mason Partners Fund
ClearBridge Variable capital. Advisor, LLC, adviser;
Small Cap Growth ClearBridge Advisors, LLC,
Portfolio - Class I sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
MFS(R) Total Return Y Y Seeks total return. MFS(R) Investment
Series - Service Management
Class
--------------------------------------------------------------------------------------------------------------------------
MFS(R) Utilities Y Y Seeks total return. MFS(R) Investment
Series - Service Management
Class
--------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks to provide current Morgan Stanley Investment
Global Real Estate income and capital Management Inc., adviser;
Portfolio, Class II appreciation. Morgan Stanley Investment
Shares Management Limited and
Morgan Stanley Investment
Management Company,
subadvisers.
--------------------------------------------------------------------------------------------------------------------------
Morgan Stanley UIF Y Y Seeks long-term capital Morgan Stanley Investment
Mid Cap Growth growth by investing Management Inc.
Portfolio, Class II primarily in common stocks
Shares and other equity
securities.
--------------------------------------------------------------------------------------------------------------------------
Oppenheimer Capital Y Y Seeks capital appreciation OppenheimerFunds, Inc.
Appreciation by investing in securities
Fund/VA, Service of well-known, established
Shares companies.
--------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks long-term capital OppenheimerFunds, Inc.
Securities Fund/VA, appreciation by investing
Service Shares a substantial portion of
its assets in securities
of foreign issuers,
"growth-type" companies,
cyclical industries and
special situations that
are considered to have
appreciation
possibilities.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 27
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Y Y Seeks a high level of OppenheimerFunds, Inc.
Strategic Income current income principally
Fund/VA, Service derived from interest on
Shares debt securities.
--------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Y Y Seeks capital OppenheimerFunds, Inc.
Street Small- & Mid- appreciation.
Cap Fund(R)/VA,
Service Shares
--------------------------------------------------------------------------------------------------------------------------
PIMCO VIT All Asset Y Y Seeks maximum real return Pacific Investment
Portfolio, Advisor consistent with Management Company LLC
Share Class preservation of real (PIMCO)
capital and prudent
investment management.
--------------------------------------------------------------------------------------------------------------------------
Putnam VT Global N Y Seeks capital Putnam Investment
Health Care appreciation. Management, LLC, adviser;
Fund - Class IB Putnam Advisory Company,
Shares LLC, sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap N Y Seeks capital Putnam Investment
Value Fund - Class appreciation. Management, LLC
IB Shares
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level
2) of risk. This is a "fund
of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in equity
securities and also
invests a small amount in
underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Aggress- return that is consistent Investment Advisers, LLC
ive Portfolio (Class with an aggressive level
4) of risk. This is a "fund
of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in equity
securities and also
invests a small amount in
underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
28 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level
(Class 2) of risk. This is a "fund
of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Conserv- return that is consistent Investment Advisers, LLC
ative Portfolio with a conservative level
(Class 4) of risk. This is a "fund
of funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Davis growth. Investment Advisers, LLC,
New York Venture adviser; Davis Selected
Fund (Class 3) Advisers, L.P.,
subadviser.
--------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term growth of Columbia Management
Portfolio - Goldman capital. Investment Advisers, LLC,
Sachs Mid Cap Value adviser; Goldman Sachs
Fund (Class 3) Asset Management, L.P.,
subadviser.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 2) with a moderate level of
risk. This is a "fund of
funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
a balance of underlying
funds that invest in fixed
income securities and
underlying funds that
invest in equity
securities.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 29
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderate return that is consistent Investment Advisers, LLC
Portfolio (Class 4) with a moderate level of
risk. This is a "fund of
funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
a balance of underlying
funds that invest in fixed
income securities and
underlying funds that
invest in equity
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately
Portfolio (Class 2) aggressive level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in
a combination of
underlying funds. The fund
invests primarily in
underlying funds that
invest in equity
securities and also
invests a moderate amount
in underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Aggressive with a moderately
Portfolio (Class 4) aggressive level of risk.
This is a "fund of funds"
and seeks to achieve its
objective by investing in
a combination of
underlying funds. The fund
invests primarily in
underlying funds that
invest in equity
securities and also
invests a moderate amount
in underlying funds that
invest in fixed income
securities.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
30 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 2) conservative level of
risk. This is a "fund of
funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in fixed income
securities and also
invests a moderate amount
in underlying funds that
invest in equity
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y N Seeks high level of total Columbia Management
Portfolio - Moderat- return that is consistent Investment Advisers, LLC
ely Conservative with a moderately
Portfolio (Class 4) conservative level of
risk. This is a "fund of
funds" and seeks to
achieve its objective by
investing in a combination
of underlying funds. The
fund invests primarily in
underlying funds that
invest in fixed income
securities and also
invests a moderate amount
in underlying funds that
invest in equity
securities.
--------------------------------------------------------------------------------------------------------------------------
Variable Y Y Seeks long-term capital Columbia Management
Portfolio - Partners appreciation. Investment Advisers, LLC,
Small Cap Value Fund adviser; Barrow, Hanley,
(Class 3) Mewhinney & Strauss, Inc.,
Denver Investment Advisors
LLC, Donald Smith & Co.,
Inc., River Road Asset
Management, LLC and Turner
Investment Partners, Inc.,
subadvisers.
--------------------------------------------------------------------------------------------------------------------------
Wanger International Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
--------------------------------------------------------------------------------------------------------------------------
Wanger USA Y Y Seeks long-term capital Columbia Wanger Asset
appreciation. Management, LLC
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term total Wells Fargo Funds
Advantage VT Index return, consisting of Management, LLC, adviser;
Asset Allocation capital appreciation and Wells Capital Management
Fund - Class 2 current income. Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 31
--------------------------------------------------------------------------------------------------------------------------
AVAILABLE UNDER AVAILABLE UNDER
CONTRACTS WITH CONTRACTS WITH
APPLICATIONS SIGNED APPLICATIONS SIGNED
ON OR AFTER MAY 1, PRIOR TO MAY 1, INVESTMENT OBJECTIVE AND
INVESTING IN 2007 2007 POLICIES INVESTMENT ADVISER
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term capital Wells Fargo Funds
Advantage VT appreciation. Management, LLC, adviser;
International Equity Wells Capital Management
Fund - Class 2 Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term capital Wells Fargo Funds
Advantage VT appreciation. Management, LLC, adviser;
Intrinsic Value Metropolitan West Capital
Fund - Class 2 Management, LLC, sub-
adviser.
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term capital Wells Fargo Funds
Advantage VT Omega appreciation. Management, LLC, adviser;
Growth Fund - Class Wells Capital Management
2 Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term capital Wells Fargo Funds
Advantage VT appreciation. Management, LLC, adviser;
Opportunity Wells Capital Management
Fund - Class 2 Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks long-term capital Wells Fargo Funds
Advantage VT Small appreciation. Management, LLC, adviser;
Cap Growth Wells Capital Management
Fund - Class 2 Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
Wells Fargo N Y Seeks total return Wells Fargo Funds
Advantage VT Total consisting of income and Management, LLC, adviser;
Return Bond capital appreciation. Wells Capital Management
Fund - Class 2 Inc., sub-adviser.
--------------------------------------------------------------------------------------------------------------------------
THE GUARANTEE PERIOD ACCOUNTS (GPAS)
The GPAs may not be available for contracts in some states.
Currently, unless the PN program is in effect, you may allocate purchase
payments and purchase payment credits to one or more of the GPAs with guarantee
periods declared by us. These periods of time vary by state. The required
minimum investment in each GPA is $1,000. (Exception: if a PN program model
portfolio includes one or more GPAs, the required minimum investment does not
apply.) These accounts are not offered after the annuitization start date.
Each GPA pays an interest rate that is declared when you make an allocation to
that account. That interest rate is then fixed for the guarantee period that you
chose. We will periodically change the declared interest rate for any future
allocations to these accounts, but we will not change the rate paid on contract
value currently in a GPA.
The interest rates that we will declare as guaranteed rates in the future are
determined by us at our discretion (future rates). We will determine future
rates based on various factors including, but not limited to, the interest rate
environment, returns we earn on investments in the nonunitized separate account
we have established for the GPAs, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition and RiverSource
Life's revenues and other expenses. WE CANNOT PREDICT NOR CAN WE GUARANTEE WHAT
FUTURE RATES WILL BE.
We hold amounts you allocate to the GPAs in a "nonunitized" separate account.
This separate account provides an additional measure of assurance that we will
make full payment of amounts due under the GPAs. State insurance law prohibits
us from charging this separate account with liabilities of any other separate
account or of our general business. We own the assets of this separate account
as well as any favorable investment performance of those assets. You do not
participate in the performance of the assets held in this separate account. We
guarantee all benefits relating to your value in the GPAs. This guarantee is
based on the continued claims-paying ability of the company's general account.
You should be aware that our
--------------------------------------------------------------------------------
32 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
general account is exposed to the risks normally associated with a portfolio of
fixed-income securities, including interest rate, option, liquidity and credit
risk. You should also be aware that we issue other types of insurance and
financial products as well, and we also pay our obligations under these products
from assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
We intend to construct and manage the investment portfolio relating to the
separate account in such a way as to minimize the impact of fluctuations by
interest rates. We seek to achieve this by constructing a portfolio of assets
with a price sensitivity to interest rate changes (i.e., price duration) that is
similar to the price duration of the corresponding portfolio of liabilities.
We must invest this portfolio of assets in accordance with requirements
established by applicable state laws regarding the nature and quality of
investments that life insurance companies may make and the percentage of their
assets that they may commit to any particular type of investment. Our investment
strategy will incorporate the use of a variety of debt instruments having price
durations tending to match the applicable guarantee periods. These instruments
include, but are not necessarily limited to, the following:
Securities issued by the U.S. government or its agencies or instrumentalities,
which issues may or may not be guaranteed by the U.S. government;
Debt securities that have an investment grade, at the time of purchase, within
the four highest grades assigned by any of three nationally recognized rating
agencies -- Standard & Poor's, Moody's Investors Service or Fitch -- or are
rated in the two highest grades by the National Association of Insurance
Commissioners;
Other debt instruments which are unrated or rated below investment grade,
limited to 10% of assets at the time of purchase; and
Real estate mortgages, limited to 45% of portfolio assets at the time of
acquisition.
In addition, options and futures contracts on fixed income securities will be
used from time to time to achieve and maintain appropriate investment and
liquidity characteristics on the overall asset portfolio.
While this information generally describes our investment strategy, we are not
obligated to follow any particular strategy except as may be required by federal
law and Indiana and other state insurance laws.
MARKET VALUE ADJUSTMENT (MVA)
We will not apply an MVA to contract value you transfer or surrender out of the
GPAs within 30 days before the end of the guarantee period. During this 30 day
window, you may choose to start a new guarantee period of the same length,
transfer the contract value from the specified GPA to a GPA of another length,
transfer the contract value from the specified GPA to any of the subaccounts,
the regular fixed account (Current Contract) or the one-year fixed account
(Original Contract), or surrender the value from the specified GPA (all subject
to applicable surrender and transfer provisions). If we do not receive any
instructions by the end of your guarantee period, our current practice is to
automatically transfer the contract value from the specified GPA into the
shortest GPA term offered in your state. If no GPAs are offered, we will
transfer the value to the regular fixed account (Current Contract) or the one-
year fixed account (Original Contract), if available. If the regular fixed
account (Current Contract) or the one-year fixed account (Original Contract) is
not available, we will transfer the value to the money market or cash management
variable subaccount we designate.
We guarantee the contract value allocated to the GPAs, including the interest
credited, if you do not make any transfers or surrenders from the GPAs prior to
30 days before the end of the guarantee period (30-day rule). At all other
times, and unless one of the exceptions to the 30-day rule described below
applies, we will apply an MVA if you surrender or transfer contract value from a
GPA including surrenders under the SecureSource series of riders, the Guarantor
Withdrawal Benefit for Life rider or the Guarantor Withdrawal Benefit, or you
elect an annuity payout plan while you have contract value invested in a GPA. We
will refer to these transactions as "early surrenders." The application of an
MVA may result in either a gain or loss of principal.
For the Current Contract, the 30-day rule does not apply and no MVA will apply
to:
amounts surrendered under contract provisions that waive surrender charges for
Hospital or Nursing Home Confinement and Terminal Illness Disability
Diagnosis;
amounts transferred automatically under the PN program; and
amounts deducted for fees and charges.
Amounts we pay as death claims will not be reduced by any MVA.
For the Original Contract, the 30-day rule does not apply and no MVA will apply
to:
transfers from a one-year GPA occurring under an automated dollar-cost
averaging program or interest sweep strategy;
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 33
automatic rebalancing under any PN program model portfolio we offer which
contains one or more GPAs. However, an MVA may apply if you transfer to a new
PN program investment option;
amounts applied to an annuity payout plan while a PN program model portfolio
containing one or more GPAs is in effect;
amounts deducted for fees and charges; or
amounts we pay as death claims.
When you request an early surrender, we adjust the early surrender amount by an
MVA formula. The early surrender amount reflects the relationship between the
guaranteed interest rate you are earning in your current GPA and the interest
rate we are crediting on new GPAs that end at the same time as your current GPA.
The MVA is sensitive to changes in current interest rates. The magnitude of any
applicable MVA will depend on our current schedule of guaranteed interest rates
at the time of the early surrender, the time remaining in your guarantee period
and your guaranteed interest rate. The MVA is negative, zero or positive
depending on how the guaranteed interest rate on your GPA compares to the
interest rate of a new GPA for the same number of years as the guarantee period
remaining on your GPA. This is summarized in the following table:
IF YOUR GPA RATE IS: THE MVA IS:
Less than the new GPA rate + 0.10% Negative
Equal to the new GPA rate + 0.10% Zero
Greater than the new GPA rate + 0.10% Positive
For examples, see Appendix A.
THE FIXED ACCOUNT (APPLIES TO CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER MAY
1, 2006 AND IF AVAILABLE IN YOUR STATE)
Amounts allocated to the fixed account become part of our general account. For
the Current Contract, the fixed account includes the regular fixed account and
the Special DCA fixed account. For the Original Contract, the fixed account
includes the one-year fixed account and the DCA fixed account. We credit
interest on amounts you allocate to the fixed account at rates we determine from
time to time in our discretion. These rates will be based on various factors
including, but not limited to, the interest rate environment, returns we earn on
our general account investments, the rates currently in effect for new and
existing RiverSource Life annuities, product design, competition, and
RiverSource Life's revenues and expenses. The guaranteed minimum interest rate
on amounts invested in the fixed account may vary by state but will not be lower
than state law allows. We back the principal and interest guarantees relating to
the fixed account. These guarantees are based on the continued claims-paying
ability of RiverSource Life. You should be aware that our general account is
exposed to the risks normally associated with a portfolio of fixed-income
securities, including interest rate, option, liquidity and credit risk. You
should also be aware that we issue other types of insurance and financial
products as well, and we also pay our obligations under these products from
assets in our general account. Our general account is not segregated or
insulated from the claims of our creditors. The financial statements contained
in the SAI include a further discussion of the risks inherent within the
investments of the general account.
The fixed account is not required to be registered with the SEC. The SEC staff
does not review the disclosures in this prospectus on the fixed account,
however, disclosures regarding the fixed account may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
THE REGULAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the regular fixed account. The value of the
regular fixed account increases as we credit interest to the regular fixed
account. We credit and compound interest daily based on a 365-day year (366 in a
leap year) so as to produce the annual effective rate which we declare. The
interest rate we apply to each purchase payment or transfer to the regular fixed
account is guaranteed for one year. Thereafter, we will change the rates from
time to time at our discretion, but your interest rate for each purchase payment
or transfer will never change more frequently than annually. There are
restrictions on transfers from this account and may be restrictions on the
amount you can allocate to this account (see "Making the Most of Your
Contract -- Transfer policies").
THE SPECIAL DCA FIXED ACCOUNT
You may allocate purchase payments to the Special DCA fixed account. You may not
transfer contract value to the Special DCA fixed account.
--------------------------------------------------------------------------------
34 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
You may allocate your entire initial purchase payment to the Special DCA fixed
account for a term of six or twelve months. We reserve the right to offer
shorter or longer terms for the Special DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the Special DCA fixed account to the subaccounts or PN program investment
option you select monthly so that, at the end of the Special DCA fixed account
term, the balance of the Special DCA fixed account is zero. The first Special
DCA monthly transfer occurs one day after we receive your payment. You may not
use the regular fixed account or any GPA as a destination for the Special DCA
monthly transfer. (Exception: if a PN program is in effect, and the PN program
investment option you selected, if applicable, includes the regular fixed
account or any GPA, amounts will be transferred from the Special DCA fixed
account to the regular fixed account or GPA according to the allocation
percentage established for the PN program investment option you have selected.)
The value of the Special DCA fixed account increases when we credit interest to
the Special DCA fixed account, and decreases when we make monthly transfers from
the Special DCA fixed account. When you allocate a purchase payment to the
Special DCA fixed account, the interest rates applicable to that purchase
payment will be the rates in effect for the Special DCA fixed account term you
choose on the date we receive your purchase payment. The applicable interest
rate is guaranteed for the length of the term for the Special DCA fixed account
term you choose. We credit and compound interest daily based on a 365-day year
(366 in a leap year) so as to produce the annual effective rate which we
declare. We credit interest only on the declining balance of the Special DCA
fixed account; we do not credit interest on amounts that have been transferred
from the Special DCA fixed account. As a result, the net effective interest
rates we credit will be less than the declared annual effective rates.
Generally, we will credit the Special DCA fixed account with interest at the
same annual effective rate we apply to the regular fixed account on the date we
receive your purchase payment, regardless of the length of the term you select.
From time to time, we may credit interest to the Special DCA fixed account at
promotional rates that are higher than those we credit to the regular fixed
account. We reserve the right to declare different annual effective rates:
for the Special DCA fixed account and the regular fixed account; and
for the Special DCA fixed accounts with terms of differing length.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the Special DCA fixed account for a six month term;
the Special DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the regular fixed account,
the GPAs and/or the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the regular account and the GPAs.
Once you establish a Special DCA fixed account, you cannot allocate additional
purchase payments to it. However, you may establish another Special DCA fixed
account and allocate new purchase payments to it.
If you participate in a PN program, and you change to a different PN program
investment option while a Special DCA fixed account term is in progress, we will
allocate transfers from the Special DCA fixed account to your newly-elected PN
program investment option.
If your contract permits, and you discontinue your participation in a PN program
while a Special DCA fixed account term is in progress, we will allocate
transfers from your Special DCA fixed account for the remainder of the term to
the subaccounts in accordance with your current Special DCA fixed account
allocation instructions. If your current Special DCA fixed account allocation
instructions include a fund to which allocations are restricted and you do not
provide new instructions, we will transfer prorated amounts to the valid portion
of your allocation instruction.
You may discontinue any Special DCA fixed account before the end of its term by
giving us notice. If you do so, we will transfer the remaining balance of the
Special DCA fixed account to the PN program investment option in effect, or if
no PN program investment option is in effect, in accordance with your investment
instructions to us to the regular fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the regular fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the Special DCA fixed account does not guarantee that
any subaccount will gain in value nor will it protect against a decline in value
if market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 35
ONE-YEAR FIXED ACCOUNT
Unless the PN program we offer is in effect, you may allocate purchase payments
or transfer contract value to the one-year fixed account if part of your
contract. The value of the one-year fixed account increases as we credit
interest to the one-year fixed account. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit the one-year fixed account with the
current guaranteed annual rate that is in effect on the date we receive your
purchase payment or you transfer contract value to the one-year fixed account.
The interest rate we apply to each purchase payment or transfer to the one-year
fixed account is guaranteed for one year. There are restrictions on the amount
you can allocate to the one-year fixed account as well as on transfers from this
account (see "Making the Most of Your Contract -- Transfer policies").
DCA FIXED ACCOUNT
You may allocate purchase payments to the DCA fixed account. You may not
transfer contract value to the DCA fixed account.
You may allocate your entire initial purchase payment to the DCA fixed account
for a term of six or twelve months. We reserve the right to offer shorter or
longer terms for the DCA fixed account.
In accordance with your investment instructions, we transfer a pro rata amount
from the DCA fixed account to your investment allocations monthly so that, at
the end of the DCA fixed account term, the balance of the DCA fixed account is
zero. The first DCA monthly transfer occurs one day after we receive your
payment.
The value of the DCA fixed account increases when we credit interest to the DCA
fixed account, and decreases when we make monthly transfers from the DCA fixed
account. When you allocate a purchase payment to the DCA fixed account, the
interest rates applicable to that purchase payment will be the rates in effect
for the DCA fixed account term you choose on the date we receive your purchase
payment. The applicable interest rate is guaranteed for the length of the term
for the DCA fixed account term you choose. We credit and compound interest daily
based on a 365-day year (366 in a leap year) so as to produce the annual
effective rate which we declare. We credit interest only on the declining
balance of the DCA fixed account; we do not credit interest on amounts that have
been transferred from the DCA fixed account. As a result, the net effective
interest rates we credit will be less than the declared annual effective rates.
Generally, we will credit the DCA fixed account with interest at the same annual
effective rate we apply to the one-year fixed account on the date we receive
your purchase payment, regardless of the length of the term you select. From
time to time, we may credit interest to the DCA fixed account at promotional
rates that are higher than those we credit to the one-year fixed account. We
reserve the right to declare different annual effective rates:
for the DCA fixed account and the one-year fixed account;
for the DCA fixed accounts with terms of differing length;
for amounts in the DCA fixed account that are transferred to the one-year
fixed account;
for amounts in the DCA fixed account that are transferred to the GPAs;
for amounts in the DCA fixed account that are transferred to the subaccounts.
Alternatively, you may allocate your initial purchase payment to any combination
of the following which equals one hundred percent of the amount you invest:
the DCA fixed account for a six month term;
the DCA fixed account for a twelve month term;
the PN program investment option in effect;
if no PN program investment option is in effect, to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
If you make a purchase payment while a DCA fixed account term is in progress,
you may allocate your purchase payment among the following:
to the DCA fixed account term(s) then in effect. Amounts you allocate to an
existing DCA fixed account term will be transferred out of the DCA fixed
account over the remainder of the term. For example, if you allocate a new
purchase payment to an existing DCA fixed account term of six months when only
two months remains in the six month term, the amount you allocate will be
transferred out of the DCA fixed account over the remaining two months of the
term;
to the PN program investment option then in effect;
if no PN program investment option is in effect, then to the one-year fixed
account, the GPAs and/or the subaccounts, subject to investment minimums and
other restrictions we may impose on investments in the one-year fixed account
and the GPAs.
--------------------------------------------------------------------------------
36 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
If no DCA fixed account term is in progress when you make an additional purchase
payment, you may allocate it according to the rules above for the allocation of
your initial purchase payment.
If you participate in a PN program, and you change to a different PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account to your newly-elected PN program
investment option.
If your contract permits, and you discontinue your participation in a PN program
investment option while a DCA fixed account term is in progress, we will
allocate transfers from the DCA fixed account for the remainder of the term in
accordance with your investment instructions to us to the one-year fixed
account, the GPAs and the subaccounts, subject to investment minimums and other
restrictions we may impose on investments in the one-year fixed account and the
GPAs, including but not limited to, any limitations described in this prospectus
on transfers (see "Transfer policies").
You may discontinue any DCA fixed account before the end of its term by giving
us notice. If you do so, we will transfer the remaining balance of the DCA fixed
account whose term you are ending to the PN program investment option in effect,
or if no PN program investment option is in effect, in accordance with your
investment instructions to us to the one-year fixed account, the GPAs and/or the
subaccounts, subject to investment minimums and other restrictions we may impose
on investments in the one-year fixed account and the GPAs, including but not
limited to, any limitations described in this prospectus on transfers (see
"Transfer policies").
Dollar-cost averaging from the DCA fixed account does not guarantee that any
subaccount will gain in value nor will it protect against a decline in value if
market prices fall. For a discussion of how dollar-cost averaging works, see
"Making the Most of your Contract -- Automated Dollar-Cost Averaging."
BUYING YOUR CONTRACT
New contracts are not currently being offered. We are required by law to obtain
personal information from you which we will use to verify your identity. If you
do not provide this information we reserve the right to refuse to issue your
contract or take other steps we deem reasonable. As the owner, you have all
rights and may receive all benefits under the contract. You may select a
qualified or nonqualified annuity. You can own a nonqualified annuity in joint
tenancy with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. For the Current Contract, you can buy a
contract if you are 85 or younger. For the Original Contract, you can buy a
contract if you and the annuitant are age 85 or younger. (The age limit may be
younger for qualified annuities in some states.)
When you applied, you could have selected:
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
GPAs, the regular fixed account, the Special DCA fixed account and/or
subaccounts in which you want to invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition you could have also selected one of the following optional living
benefits (all require the use of the PN program):
SecureSource Stages 2 riders;
SecureSource Stages riders;
Accumulation Protector Benefit rider
The Current Contract provides for allocation of purchase payments to the GPAs,
the regular fixed account, the Special DCA fixed account and/or the subaccounts
of the variable account subject to the $1,000 required minimum investment for
the GPAs. We currently allow you to allocate the total amount of purchase
payment to the regular fixed account. We reserve the right to limit purchase
payment allocations to the regular fixed account at any time on a non-
discriminatory basis with notification, subject to state restrictions. You
cannot allocate purchase payments to the fixed account for six months following
a partial
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 37
surrender from the fixed account, a lump sum transfer from the regular fixed
account, or termination of automated transfers from the Special DCA fixed
account prior to the end of the Special DCA fixed account term.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
GPAs, the one-year fixed account, if part of your contract, the DCA fixed
account if part of your contract and/or subaccounts in which you want to
invest;
how you want to make purchase payments;
a beneficiary;
the optional PN program(1); and
one of the following optional death benefits:
- MAV Death Benefit;
- 5% Accumulation Death Benefit; or
- Enhanced Death Benefit.
one of the following additional optional death benefits:
- Benefit Protector Death Benefit rider(2); or
- Benefit Protector Plus Death Benefit rider(2).
In addition, if available in your state, could have also selected one of the
following optional living benefits (all require the use of the PN program):
SecureSource 20 riders;
SecureSource riders;
Accumulation Protector Benefit rider;
Guarantor Withdrawal Benefit for Life rider;
Guarantor Withdrawal Benefit rider;
Income Assurer Benefit - MAV rider;
Income Assurer Benefit - 5% Accumulation Benefit Base rider; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base rider.
(1) There is no additional charge for this feature.
(2) Not available with 5% Accumulation or Enhanced Death Benefit.
The Original Contract provides for allocation of purchase payments to the GPAs,
the one-year fixed account (if part of your contract), the DCA fixed account (if
part of your contract) and/or to the subaccounts of the variable account in even
1% increments subject to the $1,000 required minimum investment for the GPAs.
The amount of any purchase payment allocated to the one-year fixed account in
total cannot exceed 30% of the purchase payment. More than 30% of a purchase
payment may be so allocated if you establish an automated dollar-cost averaging
arrangement with respect to the purchase payment according to procedures
currently in effect. We reserve the right to further limit purchase payment
allocations to the one-year fixed account if the interest rate we are then
crediting on new purchase payments allocated to the one-year fixed account is
equal to the minimum interest rate stated in the contract.
FOR BOTH THE CURRENT CONTRACT AND THE ORIGINAL CONTRACT:
We will credit additional purchase payments you make to your accounts on the
valuation date we receive them. If we receive an additional purchase payment at
our corporate office before the close of business, we will credit any portion of
that payment allocated to the subaccounts using the accumulation unit value we
calculate on the valuation date we received the payment. If we receive an
additional purchase payment at our corporate office at or after the close of
business, we will credit any portion of that payment allocated to the
subaccounts using the accumulation unit value we calculate on the next valuation
date after we received the payment.
You may make monthly payments to your contract under a Systematic Investment
Plan (SIP). You must make an initial purchase payment of $10,000. Then, to begin
the SIP, you will complete and send a form and your first SIP payment along with
your application. There is no charge for SIP. You can stop your SIP payments at
any time.
In most states, you may make additional purchase payments to nonqualified and
qualified annuities until the annuitization start date.
--------------------------------------------------------------------------------
38 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
THE ANNUITIZATION START DATE
CURRENT CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments. If
your contract is annuitized, the contract goes into payout and only the annuity
payout provisions continue. Unless annuity payout Plan E is selected, you will
no longer have access to your contract value. This means that the death benefit
and any optional benefits you have elected will end. When we process your
application, we will establish the annuitization start date to be the maximum
age (or contract anniversary if applicable). You also can change the
annuitization start date, provided you send us written instructions at least 30
days before annuity payouts begin.
The annuitization start date must be:
no earlier than the 30th day after the contract's effective date; and no later
than
the owner's 95th birthday or the tenth contract anniversary, if later,
or such other date as agreed to by us.
Six months prior to your annuitization date, we will contact you with your
options including the option to postpone your annuitization start date to a
future date. You can also choose to delay the annuitization of your contract
beyond age 95 indefinitely, to the extent allowed by applicable tax laws.
If you do not make an election, annuity payouts using the contract's default
option of annuity payout Plan B - Life with 10 years certain will begin on the
annuitization start date and your monthly annuity payments will continue for as
long as the annuitant lives. If the annuitant does not survive 10 years,
beneficiaries will continue to receive payments until 10 years of payments have
been made. Some distributors require annuitization by age 95. In that case, the
option to continue to defer the annuitization start date after age 95 is not
available.
If you own a qualified annuity (for example, an IRA) and tax laws require that
you take distributions from your annuity prior to your new annuitization start
date, your contract will not be automatically annuitized. However, if you
choose, you can elect to request annuitization or take surrenders to meet your
required minimum distributions.
Please see "SecureSource Stages 2 -- Other Provisions" section regarding options
under this rider at the annuitization start date.
ORIGINAL CONTRACT:
Annuity payouts begin on the annuitization start date. This means that the
contract will be annuitized or converted to a stream of monthly payments and you
will receive the first payment on the annuitization start date. The first
annuity payment will be made as provided by the annuity payment plan you select.
When we process your application, we will establish the annuitization start date
to be the maximum age (or contract anniversary if applicable). You also can
change the annuitization start date, provided you send us written instructions
at least 30 days before annuity payouts begin.
The annuitization start date must be:
the annuitant's 90th(1) birthday or the tenth contract anniversary, if
purchased after age 80(1),
or such other date as agreed upon by us.
Prior to your annuitization start date, we will contact you with your options.
If you do not make an election, your annuitization start date will be deferred.
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to comply with IRS regulations, the
annuitization start date generally must be:
for IRAs by April 1 of the year following the calendar year when the annuitant
reaches age 70 1/2; or
for all other qualified annuities, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2 or, if later, retires
(except that 5% business owners may not select an annuitization start date
that is later than April 1 of the year following the calendar year when they
reach age 70 1/2).
If you satisfy your required minimum distributions in the form of partial
surrenders from this contract, annuity payouts can start:
As late as the annuitant's 90th(1) birthday or the tenth contract anniversary,
if later, or a date that has been otherwise agreed to by us.
Contract owners of IRAs and TSAs may also be able to satisfy required minimum
distributions using other IRAs or TSAs, and in that case, will delay the
annuitization start date for these contracts.
(1) Applies to contracts with applications signed on or after May 1, 2006, in
most states. For all other contracts, the annuitization start date must be
no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 39
BENEFICIARY
We will pay to your named beneficiary the death benefit if it becomes payable
while the contract is in force and before the annuitization start date. If there
is more than one beneficiary, we will pay each beneficiary's designated share
when we receive their completed claim. A beneficiary will bear the investment
risk of the variable account until we receive the beneficiary's completed claim.
If there is no named beneficiary, the default provisions of your contract will
apply. (See "Benefits in Case of Death" for more about beneficiaries.)
If you select one of the SecureSource series - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
PURCHASE PAYMENTS
Purchase payment amounts and purchase payment timing may vary by state and be
limited under the terms of your contract.
If we do not receive your initial purchase payment within 180 days from the
application signed date, we will consider your contract void from the start.
MINIMUM INITIAL PURCHASE PAYMENT
$10,000
MINIMUM ADDITIONAL PURCHASE PAYMENTS
$50 for SIPs
$100 for all other payment types
MAXIMUM TOTAL PURCHASE PAYMENTS (WITHOUT CORPORATE OFFICE APPROVAL)
- CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state
availability)
MAXIMUM TOTAL PURCHASE PAYMENTS* BASED ON YOUR AGE ON THE EFFECTIVE DATE OF
THE PAYMENT:
For the first year and
total:
through age 85 $1,000,000
age 86 or older $0
For each subsequent year:
through age 85 $100,000
age 86 or older $0
- ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MAXIMUM TOTAL PURCHASE PAYMENTS*
$1,000,000
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Jan. 26, 2009, after initial purchase payments are received, limited
additional purchase payments allowed for contracts with the Guarantor Withdrawal
Benefit rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource
riders, subject to state restrictions. Initial purchase payments are: 1)
payments received with the application, and 2) Tax Free Exchanges, rollovers,
and transfers listed on the annuity application, paper work initiated within 30
days from the application signed date and received within 180 days from the
application signed date.
For contracts issued in all states except those listed below, the only
additional purchase payments that will be allowed on/after Jan. 26, 2009 are the
maximum annual contribution permitted by the Code for qualified annuities.
For contracts issued in Florida, New Jersey, and Oregon, additional purchase
payments to your variable annuity contract with the Guarantor Withdrawal Benefit
rider, Guarantor Withdrawal Benefit for Life rider, or SecureSource riders will
be limited to $100,000 for the life of your contract. The limit does not apply
to initial purchase payments,
--------------------------------------------------------------------------------
40 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
Additional purchase payment restrictions for the SecureSource Stages 2 riders,
SecureSource Stages riders and SecureSource 20 riders
Effective Feb. 27, 2012, no additional purchase payments are allowed for
contracts with SecureSource Stages 2 riders, SecureSource Stages riders and
SecureSource 20 riders subject to certain exceptions listed below.
Certain exceptions apply and the following additional purchase payments will be
allowed on or after Feb. 27, 2012:
a. Current tax year contributions for TSAs and Custodial and investment only
plans under Section 401(a) of the Code, up to the annual limit set by the
IRS.
b. Prior and current tax year contributions up to the annual limit set up by the
IRS for any Qualified Accounts except TSAs and 401(a)s. This annual limit
applies to IRAs, Roth IRAs and SEP plans.
We reserve the right to change these current rules any time, subject to state
restrictions.
The riders also prohibit additional purchase payments while the rider is
effective, if (1) you decline a rider fee increase, or (2) the Annual Lifetime
Payment (ALP) is established and your contract value on an anniversary is less
than four times the ALP. (For the purpose of this calculation only, the ALP is
determined using percentage B, as described under "Optional Living
Benefits -- SecureSource Stages 2 Riders, SecureSource Stages Riders and
SecureSource 20 Riders.")
Additional purchase payment restrictions for the Accumulation Protector Benefit
rider
Additional purchase payments are prohibited during the waiting period after the
first 180 days immediately following the effective date of the Accumulation
Protector Benefit rider.
For the Current Contract, additional purchase payments are also allowed within
180 days from the last contract anniversary if you exercise the elective step up
option.
Subject to state restrictions, we reserve the right to change the above purchase
payment limitations, including making further restrictions, upon written notice.
* These limits apply in total to all RiverSource Life annuities you own unless
a higher maximum applies to your contract. We reserve the right to waive or
increase the maximum limit. For qualified annuities, the Code's limits on
annual contributions also apply. Additional purchase payments for inherited
IRA contracts cannot be made unless the payment is IRA money inherited from
the same decedent.
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER
Send your check along with your name and contract number to:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SIP
Contact your investment professional to complete the necessary SIP paperwork.
PURCHASE PAYMENT CREDITS
You will receive a purchase payment credit with every payment you make to your
contract. We apply this credit immediately. We allocate the credit to your
investment allocations in the same proportions as your purchase payment. We
apply the credit as a percentage of your current payment based on the following
schedule:
IF CUMULATIVE NET PAYMENTS*
MADE DURING THE LIFE OF THEN THE PURCHASE PAYMENT
THE CONTRACT EQUALS . . . CREDIT PERCENTAGE EQUALS . . .
$10,000 to less than $100,000 2%
$100,000 to less than $250,000 3
$250,000 and over 4
* Cumulative net purchase payments are total purchase payments less the total
amount of partial surrenders.
For the Current Contract, if in the first year you make any additional payments
that cause the contract to become eligible for a higher percentage credit, we
will add credits to your prior payments (less total surrenders). For the
Original Contract, if you make any additional payments in any year that cause
the contract to become eligible for a higher percentage credit, we will add
credits to your prior payments (less total surrenders). We allocate credits
according to the purchase payment allocation on the date we add the credits to
the contract.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 41
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We will reverse credits from the contract value for any purchase payment that is
not honored (if, for example, your purchase payment check is returned for
insufficient funds).
To the extent a death benefit, annuitization or withdrawal payment includes
purchase payment credits applied within twelve months preceding: (1) the date of
death that results in a death benefit payment under this contract; or (2) the
annuitization start date (for contracts with applications signed on or after May
1, 2006, and if available in your state); or (3) a request for surrender charge
waiver due to "Contingent events" (see "Charges -- Contingent events"), we will
assess a charge, similar to a surrender charge, equal to the amount of the
purchase payment credits. The amount we pay to you under these circumstances
will always equal or exceed your surrender value. The amount returned to you
under the free look provision also will not include any credits applied to your
contract.
This credit is available because of lower costs associated with larger sized
contracts and through revenue from a higher and longer surrender charge
schedule, a higher contract administrative charge and a higher mortality and
expense risk fee. In general, we do not profit from the higher charges assessed
to cover the cost of the purchase payment credit. We use all the revenue from
these higher charges to pay for the cost of the credits. However, we could
profit from the higher charges if market appreciation is higher than expected or
if contract owners hold their contracts for longer than expected.
Because of these higher charges, there may be circumstances where you may be
worse off for having received the credit than in other contracts. All things
being equal (such as guarantee availability or fund performance and
availability), this may occur if you hold your contract for 15 years or more.
You should consider these higher charges and other relevant factors before you
buy this contract or before you exchange a contract you currently own for this
contract.
LIMITATIONS ON USE OF CONTRACT
If mandated by applicable law, including, but not limited to, federal anti-money
laundering laws, we may be required to reject a purchase payment. We may also be
required to block an owner's access to contract values or to satisfy other
statutory obligations. Under these circumstances, we may refuse to implement
requests for transfers, surrenders or death benefits until instructions are
received from the appropriate governmental authority or a court of competent
jurisdiction.
CHARGES
ALL CONTRACTS
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $40
from the contract value on your contract anniversary or, if earlier, when the
contract is fully surrendered. We prorate this charge among the GPAs, the fixed
account and the subaccounts in the same proportion your interest in each account
bears to your total contract value. Some states also limit any contract charge
that applies to the fixed account. For the Current Contract, we reserve the
right to increase this charge after the first contract anniversary to a maximum
of $50.
We will waive this charge when your contract value is $50,000 or more on the
current contract anniversary. For the Current Contract, we reserve the right to
charge up to $20 after the first contract anniversary for contracts with
contract value of $50,000 or more.
If you take a full surrender from your contract, we will deduct the charge at
the time of surrender regardless of the contract value. We cannot increase the
annual contract administrative charge for the Original Contract. This charge
does not apply to amounts applied to an annuity payment plan or to the death
benefit (other than when deducted from the Full Surrender Value component of the
death benefit for the Current Contract).
VARIABLE ACCOUNT ADMINISTRATIVE CHARGE
We apply this charge daily to the subaccounts. It is reflected in the unit
values of your subaccounts and it totals 0.15% of their average daily net assets
on an annual basis. It covers certain administrative and operating expenses of
the subaccounts such as accounting, legal and data processing fees and expenses
involved in the preparation and distribution of reports and prospectuses. We
cannot increase the variable account administrative charge.
MORTALITY AND EXPENSE RISK FEE
We charge these fees daily to the subaccounts. The unit values of your
subaccounts reflect these fees. These fees cover the mortality and expense risk
that we assume. These fees do not apply to the GPAs or the fixed account. We
cannot increase these fees.
These fees are based on the death benefit guarantee and surrender charge
schedule that applies to your contract.
--------------------------------------------------------------------------------
42 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
MORTALITY AND
SIX-YEAR SURRENDER CHARGE SCHEDULE EXPENSE RISK FEE
CV Death Benefit* 1.50%
ROPP Death Benefit 1.50
MAV Death Benefit 1.75
5% Accumulation Death Benefit 1.90
Enhanced Death Benefit 1.95
MORTALITY AND
EIGHT-YEAR SURRENDER CHARGE EXPENSE RISK FEE
CV Death Benefit* 1.25%
ROPP Death Benefit 1.25
MAV Death Benefit 1.50
5% Accumulation Death Benefit 1.65
Enhanced Death Benefit 1.70
* CV Death Benefit is available only after an ownership change or spousal
continuation if any owner or spouse who continues the contract is over age
85 and therefore cannot qualify for the ROPP death benefit.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract was not available)
MORTALITY AND
IF YOU SELECT A SIX-YEAR SURRENDER CHARGE SCHEDULE AND: EXPENSE RISK FEE
ROP Death Benefit 1.50%
MAV Death Benefit 1.70
5% Accumulation Death Benefit 1.85
Enhanced Death Benefit 1.90
MORTALITY AND
IF YOU SELECT AN EIGHT-YEAR SURRENDER CHARGE SCHEDULE AND: EXPENSE RISK FEE
ROP Death Benefit 1.25%
MAV Death Benefit 1.45
5% Accumulation Death Benefit 1.60
Enhanced Death Benefit 1.65
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific owner or annuitant lives and no matter how long our
entire group of annuitants live. If, as a group, owners or annuitants outlive
the life expectancy we assumed in our actuarial tables, then we must take money
from our general assets to meet our obligations. If, as a group, owners or
annuitants do not live as long as expected, we could profit from the mortality
risk fee. We deduct the mortality risk fee from the subaccounts during the
annuity payout period even if the annuity payout plan does not involve a life
contingency.
Expense risk arises because we cannot increase the contract administrative
charge for the Original Contract, we are limited on how much we can increase the
contract administrative charge for the Current Contract, and we cannot increase
the variable account administrative charge and these charges may not cover our
expenses. We would have to make up any deficit from our general assets. We could
profit from the expense risk fee if future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
first, to the extent possible, the subaccounts pay this fee from any dividends
distributed from the funds in which they invest;
then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses. We do not expect that
the surrender charge will cover sales and distribution expenses.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 43
SURRENDER CHARGE
If you surrender all or part of your contract value before the annuitization
start date, we may deduct a surrender charge. As described below, a surrender
charge applies to each purchase payment you make. The surrender charge lasts for
6 years or 8 years from our receipt of each purchase payment, depending on which
surrender charge schedule you select when you purchase the contract (see
"Expense Summary"). The surrender charge percentages that apply to you are shown
in your contract.
You may surrender an amount during any contract year without a surrender charge.
We call this amount the total free amount (FA for the Current Contract, TFA for
the Original Contract). Throughout this prospectus when we use the acronym FA,
it includes TFA. The FA varies depending on whether your contract includes one
of the SecureSource series of riders, the Guarantor Withdrawal Benefit for Life
rider or the Guarantor Withdrawal Benefit rider:
CURRENT CONTRACT WITHOUT SECURESOURCE STAGES RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year; or
current contract earnings.
During the first contract year, the FA is the greater of:
10% of all purchase payments and purchase payment credits applied prior to
your surrender request, less any amounts surrendered prior to your surrender
request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITHOUT SECURESOURCE 20 RIDER, SECURESOURCE RIDER, GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER OR GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greater of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year; or
current contract earnings.
CURRENT CONTRACT WITH SECURESOURCE STAGES RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary, less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Annual Lifetime Payment (this amount will be zero during the
waiting period).
During the first contract year, the FA is the greatest of:
10% of all purchase payments and purchase payment credits applied prior to
your surrender request, less any amounts surrendered prior to your surrender
request that represent the FA; or
current contract earnings.
ORIGINAL CONTRACT WITH SECURESOURCE 20 RIDER, SECURESOURCE RIDER OR GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the greater of the Remaining Benefit Payment or the Remaining Annual Lifetime
Payment (for the SecureSource 20 rider, Remaining Benefit Payment and the
Remaining Annual Lifetime Payment are zero during the waiting period).
ORIGINAL CONTRACT WITH GUARANTOR WITHDRAWAL BENEFIT RIDER
The FA is the greatest of:
10% of the contract value on the prior contract anniversary(1), less any prior
surrenders taken in the current contract year;
current contract earnings; or
the Remaining Benefit Payment.
(1) We consider your initial purchase payment and any purchase payment credit to
be the prior contract anniversary's contract value during the first contract
year.
Amounts surrendered in excess of the FA may be subject to a surrender charge as
described below.
--------------------------------------------------------------------------------
44 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
A surrender charge will apply if the amount you surrender includes any of your
prior purchase payments that are still within their surrender charge schedule.
To determine whether your surrender includes any of your prior purchase payments
that are still within their surrender charge schedule, we surrender amounts from
your contract in the following order:
1. First, we surrender the FA. Contract earnings are surrendered first, followed
by purchase payments. We do not assess a surrender charge on the FA. We
surrender payments that are considered part of the FA on a first-in, first-
out (FIFO) basis for the Current Contract, and last-in, first-out (LIFO)
basis for the Original Contract.
2. Next, we surrender purchase payments received that are beyond the surrender
charge period shown in your contract. We surrender these payments on a FIFO
basis. We do not assess a surrender charge on these payments.
3. Finally, we surrender any additional purchase payments received that are
still within the surrender charge period shown in your contract. We surrender
these payments on a FIFO basis. We do assess a surrender charge on these
payments.
The amount of purchase payments surrendered is calculated using a prorated
formula based on the percentage of contract value being surrendered. As a
result, the amount of purchase payments surrendered may be greater than the
amount of contract value surrendered.
We determine your surrender charge by multiplying each of your payments
surrendered which could be subject to a surrender charge by the applicable
surrender charge percentage (see "Expense Summary"), and then adding the total
surrender charges.
For a partial surrender, we will determine the amount of contract value that
needs to be surrendered, which after any surrender charge and any positive or
negative market value adjustment, will equal the amount you request.
EXAMPLE: Each time you make a purchase payment under the contract, a surrender
charge schedule attaches to that purchase payment. The surrender charge
percentage for each purchase payment declines according to the surrender charge
schedule shown in your contract. (THE SURRENDER CHARGE PERCENTAGES FOR THE 6-
YEAR AND 8-YEAR SURRENDER CHARGE SCHEDULE ARE SHOWN IN A TABLE IN THE "EXPENSE
SUMMARY".) For example, if you select the 8-Year surrender charge schedule,
during the first three years after a purchase payment is made (Current Contract)
or during the first five years after the purchase payment is made (Original
Contract), the surrender charge percentage attached to that payment is 8%. The
surrender charge percentage for that payment during the seventh year after it is
made is 4%. At the beginning of the ninth year after that purchase payment is
made, and thereafter, there is no longer a surrender charge as to that payment.
For an example, see Appendix B.
WAIVER OF SURRENDER CHARGES
We do not assess surrender charges for:
surrenders each year that represent the total free amount for that year;
required minimum distributions from a qualified annuity to the extent that
they exceed the free amount. The amount on which surrender charges are waived
can be no greater than the RMD amount calculated under your specific contract
currently in force. (Please note that, if you are buying a new contract with
inherited IRA money, we will not waive surrender charges for a five-year
distribution and, therefore, if that option is selected, you should choose a
surrender charge period that is no longer than the time remaining in the five-
year period.);
amounts applied to an annuity payment plan* (EXCEPTION: As described below, if
you select annuity payout Plan E, and choose later to surrender the value of
your remaining annuity payments, we will assess a surrender charge.)
surrenders made as a result of one of the "Contingent events"* described below
to the extent permitted by state law (see your contract for additional
conditions and restrictions). For the Current Contract, waiver of surrender
charges for Contingent events will not apply to Tax Free Exchanges, rollovers
and transfers to another annuity contract;
amounts we refund to you during the free look period;* and
death benefits.*
* However, we will reverse certain purchase payment credits. (See "Buying Your
Contract -- Purchase Payment Credits.")
CURRENT CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you are confined to a hospital or nursing home and have
been for the prior 60 days or confinement began within 30 days following a 60
day confinement period. Such confinement must begin after the contract issue
date. Your contract will include this provision when you are under age 76 at
contract issue. You must provide us with a letter containing proof
satisfactory to us of the confinement as of the date you request the
surrender. We must receive your surrender request no later than 91 days after
your release from the hospital or nursing home. The amount surrendered must be
paid directly to you.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 45
Surrenders you make if you are disabled with a medical condition and are
diagnosed in the second or later contract years with reasonable medical
certainty, that the disability will result in death within 12 months or less
from the date of the diagnosis. You must provide us with a licensed
physician's statement containing the terminal illness diagnosis, the expected
date of death and the date the terminal illness was initially diagnosed. The
amount surrendered must be paid directly to you.
ORIGINAL CONTRACT:
CONTINGENT EVENTS
Surrenders you make if you or the annuitant are confined to a hospital or
nursing home and have been for the prior 60 days. Your contract will include
this provision when you and the annuitant are under age 76 at contract issue.
You must provide proof satisfactory to us of the confinement as of the date
you request the surrender.
Surrenders you make if you or the annuitant are diagnosed in the second or
later contract years as disabled with a medical condition that with reasonable
medical certainty will result in death within 12 months or less from the date
of the diagnosis. You must provide us with a licensed physician's statement
containing the terminal illness diagnosis and the date the terminal illness
was initially diagnosed.
BOTH CONTRACTS:
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD:
If you are receiving variable annuity payments under this annuity payout plan,
you can choose to take a surrender. The amount that you can surrender is the
present value of any remaining variable payouts. The discount rate we use in the
calculation will be 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. The surrender charge equals the
present value of the remaining payouts using the assumed investment return minus
the present value of the remaining payouts using the discount rate. (See
"Charges -- Surrender Charge" and "The Annuity Payout Period -- Annuity Payout
Plans.")
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses due to the size of the group, the average contribution
and the use of group enrollment procedures. In such cases, we may be able to
reduce or eliminate the contract administrative and surrender charges. However,
we expect this to occur infrequently.
FUND FEES AND EXPENSES
There are deductions from and expenses paid out of the assets of the funds that
are described in the prospectuses for those funds. (See "Annual Operating
Expenses of the Funds.")
PREMIUM TAXES
Certain state and local governments impose premium taxes on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was issued. Currently, we deduct any applicable premium tax on the
annuitization start date, but we reserve the right to deduct this tax at other
times such as when you make purchase payments or when you make a full surrender
from your contract.
OPTIONAL LIVING BENEFIT CHARGES
SECURESOURCE STAGES 2 RIDER CHARGE
We deduct an annual charge for this optional feature only if you select it as
follows:
SecureSource Stages 2 -- Single Life rider, 0.95%
SecureSource Stages 2 -- Joint Life rider, 1.15%
The charge is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource Stages 2 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated or until the contract value reduces to zero. If the
contract or rider is terminated for any reason, we will deduct the charge,
adjusted for the number of calendar days coverage was in place since we last
deducted the charge.
Currently the SecureSource Stages 2 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each investment option. The SecureSource Stages 2 -- Single Life rider fee
will not exceed a maximum of 1.75%. The SecureSource Stages 2 -- Joint Life
rider fee will not exceed a maximum of 2.25%.
--------------------------------------------------------------------------------
46 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iv) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(v) the ability to change your investment option to one that is more
aggressive than your current investment option. Any change to a less
aggressive investment option will further limit the investment
options available to the then current and less aggressive investment
options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive investment option than your current investment option and if the
new investment option has a higher current annual rider fee. The annual rider
fees associated with the available investment option may change at our
discretion, however these changes will not apply to this rider unless you
change your current investment option to a more aggressive one. The new fee
will be in effect on the valuation date we receive your written request to
change your investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same investment option or move to a less
aggressive one. Also, this type of fee increase does not allow you to
terminate the rider.
If your rider fee increases, on the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different fees that were in effect that year, adjusted for the number of
calendar days each fee was in effect.
The fee does not apply after the annuitization start date.
ACCUMULATION PROTECTOR BENEFIT RIDER FEE
We deduct an annual charge of 1.50%(1) of the greater of your contract value or
the minimum contract accumulation value on your contract anniversary for this
optional benefit only if you select it. We deduct the charge from the contract
value on the contract anniversary. For contract applications signed on or after
May 3, 2010, we prorate this charge among all accounts and the subaccounts in
the same proportion as your interest in each bears to your total contract value.
For contract applications signed prior to June 1, 2009, the charge will be
prorated among the GPAs, the one-year fixed account and the subaccounts. We will
modify this prorated approach to comply with state regulations where necessary.
Once you elect the Accumulation Protector Benefit rider, you may not cancel it
and the charge will continue to be deducted until the end of the waiting period.
If the contract is terminated for any reason or on the annuitization start date,
we will deduct the charge from the proceeds payable adjusted for the number of
calendar days coverage was in place since we last deducted the fee.
Currently, the Accumulation Protector Benefit rider fee does not vary with the
PN program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Accumulation Protector
Benefit rider charge will not exceed a maximum of 1.75%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Accumulation Protector Benefit rider fee in effect on
your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
(b) you change your PN program investment option after we have exercised our
rights to increase the rider fee or vary the rider fee for each PN program
investment option.
If you choose the elective step up, the elective spousal continuation step up or
change your PN program investment option after we have exercised our rights to
increase the rider fee as described above, you will pay the fee that is in
effect on the
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 47
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) For contract applications signed prior to Oct. 4 2010, the following charges
apply:
APPLICATION SIGNED DATE CURRENT CHARGE
Before Jan. 26, 2009 0.55%
Jan. 26, 2009 -- May 30, 2009 0.80%
May 3, 2010 -- July 18, 2010 0.95%
July 19, 2010 -- Oct. 3 2010 1.10%
SECURESOURCE RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource - Single Life rider, 1.10%(1);
SecureSource - Joint Life rider, 1.40%(1).
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among the GPAs, the fixed account and the subaccounts in the
same proportion as your interest in each bears to your total contract value. We
will modify this prorated approach to comply with state regulations where
necessary.
Once you elect a SecureSource rider, you may not cancel it and the charge will
continue to be deducted until the contract or rider is terminated, or the
contract value reduces to zero. If the contract or rider is terminated for any
reason, we will deduct the charge from the proceeds payable adjusted for the
number of calendar days coverage was in place since we last deducted the charge.
If the RBA reduces to zero but the contract value has not been depleted, you
will continue to be charged.
Currently the SecureSource rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource - Single Life rider
charge will not exceed a maximum charge of 2.00%(2). The SecureSource - Joint
Life rider fee will not exceed a maximum fee of 2.50%(2).
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the SecureSource rider fee in effect on your contract after
the rider effective date unless:
(a) you choose the annual elective step up or the elective spousal continuation
step up after we have exercised our rights to increase the rider fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average rider fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after annuitization start date.
(1) For contract applications signed on or after June 1, 2008, but prior to Jan.
26, 2009, the current fee is 0.75% for Single Life rider and 0.95% for Joint
Life rider. For contract applications signed prior to June 1, 2008, the
current fee is 0.65% for Single Life rider and 0.85% for Joint Life rider.
(2) For contract applications signed prior to Jan. 26, 2009, the maximum fee is
1.50% for Single Life rider and 1.75% for Joint Life rider.
SECURESOURCE STAGES RIDER FEE
We deduct a charge for this optional feature only if you select it as follows:
SecureSource Stages - Single Life rider, 1.10%
SecureSource Stages - Joint Life rider, 1.35%
The fee is based on the greater of the benefit base (BB) or the anniversary
contract value, but not more than the maximum BB of $10,000,000.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
--------------------------------------------------------------------------------
48 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
Once you elect the SecureSource Stages rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge adjusted for
the number of calendar days coverage was in place since we last deducted the
charge.
Currently the SecureSource Stages rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource Stages - Single Life
rider fee will not exceed a maximum of 2.00%. The SecureSource Stages - Joint
Life rider fee will not exceed a maximum of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups, any ability to make additional purchase
payments,
(ii) any future rider credits, and the credit base (CB) will be
permanently reset to zero,
(iii) any increase to the lifetime payment percentage due to changing age
bands on subsequent birthdays and rider anniversaries, and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current investment option. Any change to
a less aggressive PN program investment option will further limit the
PN program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee after any increase
is more than 0.25 percentage points higher than your fee before the
increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment option and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive model. Also, this type of fee increase does not allow
you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
SECURESOURCE 20 RIDER FEE
We deduct a charge based on the greater of the contract anniversary value or the
total Remaining Benefit Amount (RBA) for this optional feature only if you
select it as follows:
SecureSource 20 - Single Life rider, 1.25%;
SecureSource 20 - Joint Life rider, 1.55%.
We deduct the charge from your contract value on your contract anniversary. We
prorate this charge among all accounts and subaccounts in the same proportion as
your interest in each bears to your total contract value. We will modify this
prorated approach to comply with state regulations where necessary.
Once you elect the SecureSource 20 rider, you may not cancel it (except as
described below), and the charge will continue to be deducted until the contract
or rider is terminated, or the contract value reduces to zero. If the contract
or rider is terminated for any reason, we will deduct the charge from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee. If the RBA reduces to zero but the contract
value has not been depleted, you will continue to be charged.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 49
Currently the SecureSource 20 rider fee does not vary with the PN program
investment option selected; however, we reserve the right to vary the rider fee
for each PN program investment option. The SecureSource 20 - Single Life rider
fee will not exceed a maximum charge of 2.00%. The SecureSource 20 - Joint Life
rider fee will not exceed a maximum charge of 2.50%.
The following describes how your annual rider fee may increase:
1. We may increase the annual rider fee at our discretion and on a
nondiscriminatory basis. Your annual rider fee will increase if we declare an
increase to the fee with written notice 30 days in advance except as
described below. The new fee will be in effect on the date we declare in the
written notice.
(A) You can decline this increase and therefore all future fee increases if we
receive your written request prior to the date of the fee increase, in
which case you permanently relinquish:
(i) all future annual step-ups, and for the Joint Life rider, spousal
continuation step-ups,
(ii) any ability to make additional purchase payments,
(iii) any pending increase to the ALP due to the 20% credit on the later
of the third rider anniversary or the date the ALP is established,
and
(iv) the ability to change your PN program investment option to one that
is more aggressive than your current one. Any change to a less
aggressive PN program investment option will further limit the PN
program investment options available to the then current and less
aggressive PN program investment options.
(B) You can terminate this rider if your annual rider fee increase after any
increase is more than 0.25 percentage points higher than your fee before
the increase and if we receive your written request to terminate the rider
prior to the date of the fee increase.
2. Your annual rider fee may increase if you elect to change to a more
aggressive PN program investment option than your current PN program
investment options and if the new PN program investment option has a higher
current annual rider fee. The annual rider fees associated with the available
PN program investment options may change at our discretion, however these
changes will not apply to this rider unless you change your current PN
program investment option to a more aggressive one. The new fee will be in
effect on the valuation date we receive your written request to change your
PN program investment option. You cannot decline this type of fee increase.
To avoid it, you must stay in the same PN program investment option or move
to a less aggressive PN program investment option. Also, this type of fee
increase does not allow you to terminate the rider.
If your annual rider fee increases, on the next contract anniversary, we will
calculate an average rider fee, for the preceding contract year only, that
reflects the various different fees that were in effect that year, adjusted for
the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER FEE(1)
We deduct an annual charge of 0.65% of the greater of the contract anniversary
value or the total Remaining Benefit Amount (RBA) for this optional feature only
if you select it. We deduct the charge from your contract value on your contract
anniversary. We prorate this charge among the GPAs, the fixed account and the
subaccounts in the same proportion as your interest in each bears to your total
contract value. We will modify this prorated approach to comply with state
regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit for Life rider, you may not
cancel it and the charge will continue to be deducted until the contract is
terminated, or the contract value reduces to zero. If the contract is terminated
for any reason or on the annuitization start date, we will deduct the charge
from the proceeds payable, adjusted for the number of calendar days coverage was
in place since we last deducted the fee. If the RBA goes to zero but the
contract value has not been depleted, you will continue to be charged.
Currently the Guarantor Withdrawal Benefit for Life rider fee does not vary with
the PN program investment option selected; however, we reserve the right to vary
the rider fee for each investment option. The Guarantor Withdrawal Benefit for
Life rider fee will not exceed a maximum fee of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit for Life rider fee in effect
on your contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up after we have exercised our rights to increase the rider fee; or
--------------------------------------------------------------------------------
50 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each investment option.
(1) See disclosure in Appendix I.
If you choose the elective step up, the elective spousal continuation step up,
or change your PN program investment option after we have exercised our rights
to increase the rider fee as described above, you will pay the fee that is in
effect on the valuation date we receive your written request to step up or
change your PN program investment option. On the next contract anniversary, we
will calculate an average fee, for the preceding contract year only, that
reflects the various different charges that were in effect that year, adjusted
for the number of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
GUARANTOR WITHDRAWAL BENEFIT RIDER FEE(1)
THIS FEE INFORMATION APPLIES TO BOTH RIDER A AND RIDER B (SEE APPENDIX J) UNLESS
OTHERWISE NOTED.
We deduct an annual charge of 0.55% of contract value for this optional feature
only if you select it. We deduct the charge from your contract value on your
contract anniversary. We prorate this charge among the GPAs, the one-year fixed
account, and the subaccounts in the same proportion as your interest in each
bears to your total contract value. We will modify this prorated approach to
comply with state regulations where necessary.
Once you elect the Guarantor Withdrawal Benefit rider, you may not cancel it and
the charge will continue to be deducted until the contract is terminated, the
contract value reduces to zero or annuity payouts begin. If the contract is
terminated for any reason or on the annuitization start date, we will deduct the
charge from the proceeds payable adjusted for the number of calendar days
coverage was in place since we last deducted the fee. If the Remaining Benefit
Amount (RBA) goes to zero but the contract value has not been depleted, you will
continue to be charged.
Currently the Guarantor Withdrawal Benefit rider fee does not vary with the PN
program investment option selected; however, we reserve the right to vary the
rider fee for each PN program investment option. The Guarantor Withdrawal
Benefit rider fee will not exceed a maximum charge of 1.50%.
We may increase the rider fee at our discretion and on a nondiscriminatory
basis.
We will not change the Guarantor Withdrawal Benefit rider fee in effect on your
contract after the rider effective date unless:
(a) you choose the annual elective step up or elective spousal continuation step
up under Rider A after we have exercised our rights to increase the rider
fee; or
(b) you elect to change your PN program investment option after we have
exercised our rights to increase the rider fee or vary the rider fee for
each PN program investment option.
If you choose the annual or spousal continuation elective step up or change your
PN program investment option after we have exercised our rights to increase the
rider fee as described above, you will pay the fee that is in effect on the
valuation date we receive your written request to step up or change your PN
program investment option. On the next contract anniversary, we will calculate
an average rider fee, for the preceding contract year only, that reflects the
various different charges that were in effect that year, adjusted for the number
of calendar days each fee was in effect.
The charge does not apply after the annuitization start date.
(1) See disclosure in Appendix J.
INCOME ASSURER BENEFIT RIDER FEE
We deduct a charge for this optional feature only if you selected it. We
determine the charge by multiplying the guaranteed income benefit base by the
charge for the Income Assurer Benefit rider you select. There are three Income
Assurer Benefit rider options available under your contract (see "Optional
Benefits -- Income Assurer Benefit Riders") and each has a different guaranteed
income benefit base calculation. The charge for each Income Assurer Benefit
rider is as follows:
MAXIMUM CURRENT
Income Assurer Benefit - MAV 1.50% 0.30%(1)
Income Assurer Benefit - 5% Accumulation Benefit Base 1.75 0.60(1)
Income Assurer Benefit - Greater of MAV or 5% Accumulation
Benefit Base 2.00 0.65(1)
(1) For applications signed prior to Oct. 7, 2004, the following current annual
rider charges apply: Income Assurer Benefit - MAV -- 0.55%, Income Assurer
Benefit -- 5% Accumulation Benefit Base -- 0.70%; and Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base -- 0.75%.
We deduct the charge from the contract value on your contract anniversary. We
prorate this charge among the GPAs, the one-year fixed account and the
subaccounts in the same proportion your interest in each account bears to your
total contract value. We will modify this prorated approach to comply with state
regulations where necessary. If the contract is terminated for any
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 51
reason or on the annuitization start date, we will deduct the fee from the
proceeds payable adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
Currently the Income Assurer Benefit rider fee does not vary with the PN program
investment option selected; however, we reserve the right to increase this fee
and/or vary the rider fee for each PN program investment option but not to
exceed the maximum fees shown above. We cannot change the Income Assurer Benefit
fee after the rider effective date, unless you change your PN program investment
option after we have exercised our rights to increase the fee and/or charge a
separate fee for each PN program investment option. If you choose to change your
PN program investment option after we have exercised our rights to increase the
rider fee, you will pay the fee that is in effect on the valuation date we
receive your written request to change your PN program investment option. On the
next contract anniversary, we will calculate an average rider fee, for the
preceding contract year only, that reflects the various different charges that
were in effect that year, adjusted for the number of calendar days each fee was
in effect.
For an example of how each Income Assurer Benefit rider fee is calculated, see
Appendix K.
OPTIONAL DEATH BENEFIT CHARGES
BENEFIT PROTECTOR DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.25% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year. For the Original Contract, on the annuitization start
date and if the contract is terminated for any reason other than death, we will
deduct the fee from the contract value adjusted for the number of calendar days
coverage was in place since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER FEE
We deduct a charge for the optional feature only if you select it. If selected,
we deduct 0.40% of your contract value on your contract anniversary. We prorate
this fee among all accounts and subaccounts in the same proportion your interest
in each account bears to your total contract value. We will modify this prorated
approach to comply with state regulations where necessary.
For the Current Contract, on the annuitization start date and if the contract is
terminated for any reason except your election to terminate the rider during the
30 day window after certain anniversaries, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
during the contract year.
For the Original Contract, on the annuitization start date and if the contract
is terminated for any reason other than death, we will deduct the fee from the
contract value adjusted for the number of calendar days coverage was in place
since we last deducted the fee.
We cannot increase this annual charge after the rider effective date.
VALUING YOUR INVESTMENT
We value your accounts as follows:
GPAS
We value the amounts you allocate to the GPAs directly in dollars. The value of
the GPAs equals:
the sum of your purchase payments and transfer amounts allocated to the GPAs;
plus any purchase payment credits allocated to the GPAs;
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
--------------------------------------------------------------------------------
52 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
THE FIXED ACCOUNT
We value the amounts you allocate to the fixed account directly in dollars. The
value of the fixed account equals:
Current Contract: the sum of your purchase payments and any purchase payment
credits allocated to the regular fixed account and the Special DCA fixed
account, and transfer amounts to the regular fixed account (including any
positive or negative MVA on amounts transferred from the GPAs);
Original Contract: the sum of your purchase payments and any purchase payment
credits allocated to the one-year fixed account (if included) and the DCA
fixed account (if included), and transfer amounts to the one-year fixed
account (including any positive or negative MVA on amounts transferred from
the GPAs);
plus interest credited;
minus the sum of amounts surrendered (including any applicable surrender
charges) and amounts transferred out;
minus any prorated portion of the contract administrative charge; and
minus the prorated portion of the fee for any of the following optional
benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits, we credit a certain number
of accumulation units to your contract for that subaccount. Conversely, we
subtract a certain number of accumulation units from your contract each time you
take a partial surrender; transfer amounts out of a subaccount; or we assess a
contract administrative charge, a surrender charge, or fee for any optional
contract riders with annual charges (if applicable).
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses.
Here is how we calculate accumulation unit values:
NUMBER OF UNITS: To calculate the number of accumulation units for a particular
subaccount, we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: The current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
adding the fund's current net asset value per share, plus the per share amount
of any accrued income or capital gain dividends to obtain a current adjusted
net asset value per share; then
dividing that sum by the previous adjusted net asset value per share; and
subtracting the percentage factor representing the mortality and expense risk
fee and the variable account administrative charge from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 53
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: Accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
additional purchase payments you allocate to the subaccounts;
any purchase payment credits allocated to the subaccounts;
transfers into or out of the subaccounts (including any positive or negative
MVA on amounts transferred from the GPAs);
partial surrenders;
surrender charges;
and the deduction of a prorated portion of:
the contract administrative charge; and
the fee for any of the following optional benefits you have selected:
- SecureSource series of riders;
- Accumulation Protector Benefit rider;
- Guarantor Withdrawal Benefit for Life rider;
- Guarantor Withdrawal Benefit rider;
- Income Assurer Benefit rider;
- Benefit Protector rider; or
- Benefit Protector Plus rider.
Accumulation unit values will fluctuate due to:
changes in fund net asset value;
fund dividends distributed to the subaccounts;
fund capital gains or losses;
fund operating expenses; and
mortality and expense risk fee and the variable account administrative charge.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, for the
Original Contract, you might transfer a set amount monthly from a relatively
conservative subaccount to a more aggressive one, or to several others, or from
the one-year fixed account or one-year GPA to one or more subaccounts. Automated
transfers are not available for GPA terms of two or more years. You can also
obtain the benefits of dollar-cost averaging by setting up regular automatic SIP
payments or by establishing an interest sweep strategy. Interest sweeps are a
monthly transfer of the interest earned from the one-year fixed account or one-
year GPA into the subaccounts of your choice. If you participate in an interest
sweep strategy the interest you earn on the one-year fixed account or one-year
GPA will be less than the annual interest rate we apply because there will be no
compounding. For the Current Contract, you might transfer a set amount monthly
from a relatively conservative subaccount to a more aggressive one, or to
several others, or from the regular fixed account to one or more subaccounts.
You may not set up an automated transfer to or from the GPAs or set up an
automated transfer to the regular fixed account. You can also obtain the
benefits of dollar-cost averaging by setting up regular automatic SIP payments.
The Current Contract does not allow an interest sweep strategy.
There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
--------------------------------------------------------------------------------
54 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
HOW DOLLAR-COST AVERAGING WORKS
NUMBER
By investing an equal number AMOUNT ACCUMULATION OF UNITS
of dollars each month... MONTH INVESTED UNIT VALUE PURCHASED
Jan $100 $20 5.00
Feb 100 18 5.56
you automatically buy Mar 100 17 5.88
more units when the (ARROW) Apr 100 15 6.67
per unit market price is low... May 100 16 6.25
Jun 100 18 5.56
Jul 100 17 5.88
and fewer units Aug 100 19 5.26
when the per unit (ARROW) Sept 100 21 4.76
market price is high. Oct 100 20 5.00
You paid an average price of $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success will depend
upon your willingness to continue to invest regularly through periods of low
price levels. Dollar-cost averaging can be an effective way to help meet your
long-term goals. For specific features contact your investment professional.
Dollar-cost averaging as described in this section is not available when the PN
program is in effect. However, subject to certain restrictions, dollar-cost
averaging is available through the Special DCA fixed account (Current Contract)
and the DCA fixed account (Original Contract). See the "Special DCA Fixed
Account", "DCA Fixed Account" and "Portfolio Navigator Program" sections in this
prospectus for details.
ASSET REBALANCING
You can ask us in writing to automatically rebalance the subaccount portion of
your contract value either quarterly, semiannually, or annually. The period you
select will start to run on the date we record your request. On the first
valuation date of each of these periods, we automatically will rebalance your
contract value so that the value in each subaccount matches your current
subaccount percentage allocations. These percentage allocations must be in whole
numbers. There is no charge for asset rebalancing. The contract value must be at
least $2,000.
You can change your percentage allocations or your rebalancing period at any
time by contacting us in writing. We will restart the rebalancing period you
selected as of the date we record your change. You also can ask us in writing to
stop rebalancing your contract value. You must allow 30 days for us to change
any instructions that currently are in place. For more information on asset
rebalancing, contact your investment professional.
Different rules apply to asset rebalancing under the PN program (see "Portfolio
Navigator Program" below and "Appendix H -- Asset Allocation Program for
Contracts with Applications Signed Before May 1, 2006").
As long as you are not participating in a PN program, asset rebalancing is
available for use with the Special DCA fixed account (Current Contract) and the
DCA fixed account (Original Contract) (see "Special DCA Fixed Account" and "DCA
Fixed Account") only if your subaccount allocation for asset rebalancing is
exactly the same as your subaccount allocation for transfers from the Special
DCA fixed account and the DCA fixed account. If you change your subaccount
allocations under the asset rebalancing program or the Special DCA fixed account
and the DCA fixed account, we will automatically change the subaccount
allocations so they match. If you do not wish to have the subaccount allocation
be the same for the asset rebalancing program and the Special DCA fixed account
and the DCA fixed account, you must terminate the asset rebalancing program or
the Special DCA fixed account and the DCA fixed account, as you may choose.
PORTFOLIO NAVIGATOR PROGRAM (PN PROGRAM)
Under the PN program for the living benefit riders, your contract value is
allocated to a PN program investment option (except as described in the next
paragraph). The PN program investment options are currently five funds of funds,
each of which invests in underlying funds in proportions that vary among the
funds of funds in light of each fund of funds' investment objective ("Portfolio
Navigator funds"). The PN program is available for both nonqualified and
qualified annuities.
The PN program also allows those who participated in a previous version of the
PN program and who previously opted out of the transfer of their contract value
to Portfolio Navigator funds to remain invested in accordance with a "static" PN
program
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 55
model portfolio investment option that is not subject to updating or
reallocation. For more information on the static model portfolios, see "The
static model portfolios" below.
You are required to participate in the PN program if your contract includes
optional living benefit riders. If your contract does not include one of these
riders, you may not participate in the PN program; but you may choose to
allocate your contract value to one or more of the Portfolio Navigator funds
without being in the PN program. You should review any PN program information,
including the prospectus for the funds of funds, carefully. Your investment
professional can provide you with additional information and can answer
questions you may have on the PN program.
THE PORTFOLIO NAVIGATOR FUNDS. Each of the Portfolio Navigator funds is a fund
of funds with the investment objective of seeking a high level of total return
consistent with a certain level of risk by investing in various underlying
funds. The funds of funds have objectives ranging from Conservative to
Aggressive, and are managed within asset class allocation targets and with a
broad multi-manager approach. Columbia Management Investment Advisers is the
investment adviser of each of the funds of funds, and Columbia Management
Investment Advisers or an affiliate is the investment adviser of each of the
underlying funds in which the funds of funds invest. Morningstar Associates, LLC
serves as an independent consultant to Columbia Management Investment Advisers
to provide recommendations regarding portfolio construction and ongoing analysis
of the funds of funds. Neither Columbia Management Investment Advisers nor
Morningstar Associates, LLC serves as your investment adviser as to the
allocation of your contract value under the PN program (regardless of whether
you have selected a PN program investment option or have chosen to remain in a
static model portfolio). Some of the underlying funds are managed on a day-to-
day basis directly by Columbia Management Investment Advisers and some are
managed by one or more affiliated or unaffiliated sub-advisers, subject to the
oversight of Columbia Management Investment Advisers and the fund's board of
trustees.
Below are the target asset allocation weights (between equity and fixed
income/cash underlying funds) for each of the funds of funds:
1. Variable Portfolio - Aggressive Portfolio: 80% Equity / 20% Fixed Income
2. Variable Portfolio - Moderately Aggressive Portfolio: 65% Equity / 35% Fixed
Income
3. Variable Portfolio - Moderate Portfolio: 50% Equity / 50% Fixed Income
4. Variable Portfolio - Moderately Conservative Portfolio: 35% Equity / 65%
Fixed Income
5. Variable Portfolio - Conservative Portfolio: 20% Equity / 80% Fixed Income
FUND OF FUNDS CONFLICTS OF INTEREST. In providing investment advisory services
for the funds of funds and the underlying funds in which the funds of funds
invest, Columbia Management Investment Advisers is, together with its
affiliates, including us, subject to competing interests that may influence its
decisions. These competing interests typically arise because Columbia Management
Investment Advisers or one of its affiliates serves as the investment adviser to
the underlying funds and may provide other services in connection with such
underlying funds, and because the compensation we and our affiliates receive for
providing these investment advisory and other services varies depending on the
underlying fund. For additional information about the conflicts of interest to
which Columbia Management Investment Advisers and its affiliates are subject,
see the funds of funds prospectus.
THE STATIC MODEL PORTFOLIOS. If you have chosen to remain invested in a "static"
PN program model portfolio investment option, your assets will remain invested
in accordance with your current model portfolio, and you will not be provided
with any updates to the model portfolio or reallocation recommendations. (The
last such reallocation recommendation was provided in 2009.) Each model
portfolio consists of underlying funds and/or any GPAs (if included) according
to the allocation percentages stated for the model portfolio. If you are
participating in the PN program through a model portfolio, you instruct us to
automatically rebalance your contract value quarterly in order to maintain
alignment with these allocation percentages.
If you own a contract with a living benefit rider which requires you to
participate in the PN program and have chosen to remain in a PN program model
portfolio, you may in the future transfer the assets in your contract only to
one of the fund of funds investment options. If you begin taking income from
your contract and have a living benefit rider that requires a move to a certain
model portfolio once you begin taking income, you will be transferred to the
fund of funds that corresponds to that model portfolio.
Special rules apply to the GPAs if they are included in a model portfolio. Under
these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a fund of funds);
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio. (See "Guarantee Period
Accounts -- Market Value Adjustment.")
--------------------------------------------------------------------------------
56 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
If you choose to remain in a static model portfolio, the investments and
investment styles and policies of the underlying funds in which your contract
value is invested may change. Accordingly, your model portfolio may change so
that it is no longer appropriate for your needs, even though your allocations to
underlying funds do not change. Furthermore, the absence of periodic updating
means that existing underlying funds will not be replaced as may be appropriate
due to poor performance, changes in management personnel, or other factors.
Although the model portfolios are no longer maintained on an ongoing basis, the
asset allocations in the model portfolios may have been affected by conflicts of
interest similar to those to which the funds of funds are subject. Certain of
the underlying funds in the model portfolios are managed by Columbia Management
Investment Advisers or an affiliate while others are not, and we or our
affiliate had an incentive to specify greater allocation percentages for the
affiliated underlying funds.
PARTICIPATING IN THE PN PROGRAM. You are responsible for determining which
investment option is best for you. Your investment professional can help you
make this determination. In addition, your investment professional may provide
you with an investor questionnaire, a tool to help define your investing style
that is based on factors such as your investment goals, your tolerance for risk
and how long you intend to invest. Your responses to the investor questionnaire
can help you determine which investment option most closely matches your
investing style. While the scoring of the investor questionnaire is objective,
there is no guarantee that your responses to the investor questionnaire
accurately reflect your tolerance for risk. Similarly, there is no guarantee
that the investment option you select or have selected after completing the
investor questionnaire is appropriate to your ability to withstand investment
risk. RiverSource Life is not responsible for your selection of a specific
investment option or your decision to change to a different investment option.
Currently, there are five Portfolio Navigator funds (and under the previous PN
program, five static model portfolios investment options), ranging from
conservative to aggressive. You may not use more than one investment option at a
time.
If you initially allocate qualifying purchase payments to the DCA fixed account
(Original Contract) or Special DCA fixed account (Current Contract), when
available (see "The Special DCA Fixed Account" and "DCA Fixed Account"), and you
are participating in the PN program, we will make monthly transfers in
accordance with your instructions from the DCA fixed account (Original Contract)
or Special DCA fixed account (Current Contract), into the investment option or
model portfolio you have chosen.
You may request a change to your fund of funds (or a transfer from your model
portfolio to a fund of funds) up to twice per contract year by written request
on an authorized form or by another method agreed to by us. If you make such a
change, we may charge you a higher fee for your rider. If your contract includes
a SecureSource series rider, we reserve the right to limit the number of changes
if required to comply with the written instructions of a fund (see "Market
Timing"). If your contract includes the GWB for Life rider or SecureSource
series rider, we reserve the right to limit the number of investment options
from which you can select, subject to state restrictions.
We reserve the right to change the terms and conditions of the PN program upon
written notice to you. This includes but is not limited to the right to:
limit your choice of investment options based on the amount of your initial
purchase payment;
cancel required participation in the program after 30 days written notice;
substitute a fund of funds for your model portfolio, if applicable, if
permitted under applicable securities law; and
discontinue the PN program after 30 days written notice.
RISKS. Asset allocation through the PN program does not guarantee that your
contract will increase in value nor will it protect against a decline in value
if market prices fall. By investing in a fund of funds, you may be able to
reduce the volatility in your contract value, but there is no guarantee that
this will happen. For additional information about the risks of investing in a
Portfolio Navigator funds of funds, see funds of funds prospectus.
LIVING BENEFITS REQUIRING PARTICIPATION IN THE PN PROGRAM;
ACCUMULATION PROTECTOR BENEFIT RIDER: You cannot terminate the Accumulation
Protector Benefit rider. As long as the Accumulation Protector Benefit rider
is in effect, your contract value must be invested in one of the PN program
investment options. For contracts with applications signed on or after Jan.
26, 2009, you cannot select the Aggressive investment option, or transfer to
the Aggressive investment option while the rider is in effect. The
Accumulation Protector Benefit rider automatically ends at the end of the
waiting period and you then have the option to cancel your participation in
the PN program. At all other times, if you do not want to invest in any of the
PN program investment options, you must terminate your contract by requesting
a full surrender. Surrender charges and tax penalties may apply. THEREFORE,
YOU SHOULD NOT SELECT THE ACCUMULATION PROTECTOR BENEFIT RIDER IF YOU DO NOT
INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE
MAY MODIFY IT IN THE FUTURE) UNTIL THE END OF THE WAITING PERIOD.
SECURESOURCE SERIES OR GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDERS : The
SecureSource series or the Guarantor Withdrawal Benefit for Life riders
require that your contract value be invested in one of the PN program
investment options
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 57
for the life of the contract. Subject to state restrictions, we reserve the
right to limit the number of investment options from which you can select
based on the dollar amount of purchase payments you make. Because you cannot
terminate the SecureSource series rider or the Guarantor Withdrawal Benefit
for Life rider once you have selected it, you must terminate your contract by
requesting a full surrender if you do not want to invest in any of the PN
program investment options. Surrender charges and tax penalties may apply.
THEREFORE, YOU SHOULD NOT SELECT THE SECURESOURCE SERIES OR GUARANTOR
WITHDRAWAL BENEFIT FOR LIFE RIDER IF YOU DO NOT INTEND TO CONTINUE
PARTICIPATING IN THE PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN
THE FUTURE) FOR THE LIFE OF THE CONTRACT.
GUARANTOR WITHDRAWAL BENEFIT RIDER: The Guarantor Withdrawal Benefit rider
requires that your contract value be invested in one of the PN program
investment options for the life of the contract and because you cannot
terminate the Guarantor Withdrawal Benefit rider once you have selected it,
you must terminate your contract by requesting a full surrender if you do not
want to invest in any of the PN program investment options. Surrender charges
and tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE GUARANTOR
WITHDRAWAL BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE
PN PROGRAM (AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE
LIFE OF THE CONTRACT.
INCOME ASSURER BENEFIT RIDER: The Income Assurer Benefit rider requires that
your contract value be invested in one of the PN program investment options
for the life of the contract. You can terminate the Income Assurer Benefit
rider during the 30-day period after the first rider anniversary and at any
time after the expiration of the waiting period. At all other times you cannot
terminate the Income Assurer Benefit rider once you have selected it and you
must terminate your contract by requesting a full surrender if you do not want
to invest in any of the PN program investment options. Surrender charges and
tax penalties may apply. THEREFORE, YOU SHOULD NOT SELECT THE INCOME ASSURER
BENEFIT RIDER IF YOU DO NOT INTEND TO CONTINUE PARTICIPATING IN THE PN PROGRAM
(AS IT NOW EXISTS OR AS WE MAY MODIFY IT IN THE FUTURE) FOR THE LIFE OF THE
CONTRACT.
TRANSFERRING AMONG ACCOUNTS
The transfer rights discussed in this section do not apply while the PN program
is in effect.
For the Current Contract, you may transfer contract value from any one
subaccount, GPAs, the regular fixed account and the Special DCA fixed account to
another subaccount before the annuitization start date. For the Original
Contract, you may transfer contract value from any one subaccount, GPAs, the
one-year fixed account, or the DCA fixed account to another subaccount before
the annuitization start date. Certain restrictions apply to transfers involving
the GPAs, the regular fixed account and the one-year fixed account. You may not
transfer contract value to the Special DCA fixed account or the DCA fixed
account. You may not transfer contract value from the Special DCA fixed account
or the DCA fixed account except as part of automated monthly transfers.
The date your request to transfer will be processed depends on when we receive
it:
If we receive your transfer request at our corporate office in good order
before the close of business, we will process your transfer using the
accumulation unit value we calculate on the valuation date we received your
transfer request.
If we receive your transfer request at our corporate office in good order at
or after the close of business, we will process your transfer using the
accumulation unit value we calculate on the next valuation date after we
received your transfer request.
There is no charge for transfers. Before making a transfer, you should consider
the risks involved in changing investments. Transfers out of the GPAs will be
subject to an MVA if done more than 30 days before the end of the guarantee
period, unless an exception applies.
We may suspend or modify transfer privileges at any time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
CURRENT CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the regular fixed
account at any time. However, if you made a transfer from the regular fixed
account to the subaccounts or the GPAs, took a partial surrender from the
fixed account or terminated automated transfers from the Special DCA fixed
account, you may not make a transfer from any subaccount or GPA to the regular
fixed account for six months following that transfer, partial surrender or
termination.
You may transfer contract values from the regular fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the regular fixed account are not subject to an MVA. You may transfer the
entire contract value to the regular fixed account. Subject to state
restrictions, we reserve the right to limit transfers to the regular fixed
account at any time on a non-discriminatory basis with notification. Transfers
out of the regular
--------------------------------------------------------------------------------
58 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
fixed account, including automated transfers, are limited to 30% of regular
fixed account value at the beginning of the contract year(1) or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the regular fixed account. You
should carefully consider whether the regular fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to change the percentage allowed to be transferred from the
regular fixed account at any time on a non-discriminatory basis with
notification.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs or the
regular fixed account into the Special DCA fixed account. However, you may
transfer contract values as automated monthly transfers from the Special DCA
fixed account to the subaccounts or the PN program model portfolio or
investment option in effect. (See "Special DCA Fixed Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and Special DCA fixed account.
(1) All purchase payments and purchase payment credits received into the regular
fixed account prior to your transfer request are considered your beginning
of contract year value during the first contract year.
ORIGINAL CONTRACT:
Before the annuitization start date, you may transfer contract values between
the subaccounts, or from the subaccounts to the GPAs and the one-year fixed
account if part of your contract, at any time. However, if you made a transfer
from the one-year fixed account to the subaccounts or the GPAs, you may not
make a transfer from any subaccount or GPA back to the one-year fixed account
for six months following that transfer.
You may transfer contract values from the one-year fixed account to the
subaccounts or the GPAs once a year on or within 30 days before or after the
contract anniversary (except for automated transfers, which can be set up at
any time for certain transfer periods subject to certain minimums). Transfers
from the one-year fixed account are not subject to an MVA. The amount of
contract value transferred to the one-year fixed account cannot result in the
value of the one-year fixed account being greater than 30% of the contract
value. Transfers out of the one-year fixed account are limited to 30% of one-
year fixed account values at the beginning of the contract year or $10,000,
whichever is greater. Because of this limitation, it may take you several
years to transfer all your contract value from the one-year fixed account. You
should carefully consider whether the one-year fixed account meets your
investment criteria before you invest. Subject to state restrictions, we
reserve the right to further limit transfers to or from the one-year fixed
account if the interest rate we are then crediting on new purchase payments
allocated to the one-year fixed account is equal to the minimum interest rate
stated in the contract.
You may transfer contract values from a GPA any time after 60 days of transfer
or payment allocation to the account. Transfers made more than 30 days before
the end of the guarantee period will receive an MVA, which may result in a
gain or loss of contract value, unless an exception applies (see "The
Guarantee Period Accounts (GPAs) -- Market Value Adjustment (MVA)").
You may not transfer contract values from the subaccounts, the GPAs, or the
one-year fixed account into the DCA fixed account. However, you may transfer
contract values as automated monthly transfers from the DCA fixed account to
any of the investment options available under your contract, subject to
investment minimums and other restrictions we may impose on investments in the
one-year fixed account and the GPA, as described above. (See "DCA Fixed
Account.")
After the annuitization start date, you may not make transfers to or from the
GPAs or the fixed account, but you may make transfers once per contract year
among the subaccounts. During the annuity payout period, we reserve the right
to limit the number of subaccounts in which you may invest. On the
annuitization start date, you must transfer all contract value out of your
GPAs and DCA fixed account.
MARKET TIMING
Market timing can reduce the value of your investment in the contract. If market
timing causes the returns of an underlying fund to suffer, contract value you
have allocated to a subaccount that invests in that underlying fund will be
lower too. Market timing can cause you, any joint owner of the contract and your
beneficiary(ies) under the contract a financial loss.
Funds available as investment options under the contract that invest in
securities that trade in overseas securities markets may be at greater risk of
loss from market timing, as market timers may seek to take advantage of changes
in the values of securities between the close of overseas markets and the close
of U.S. markets. Also, the risks of market timing may be
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 59
greater for underlying funds that invest in securities such as small cap stocks,
high yield bonds, or municipal securities, that may be traded infrequently.
WE SEEK TO PREVENT MARKET TIMING. MARKET TIMING IS FREQUENT OR SHORT-TERM
TRADING ACTIVITY. WE DO NOT ACCOMMODATE SHORT-TERM TRADING ACTIVITIES. DO NOT
BUY A CONTRACT IF YOU WISH TO USE SHORT-TERM TRADING STRATEGIES TO MANAGE YOUR
INVESTMENT. THE MARKET TIMING POLICIES AND PROCEDURES DESCRIBED BELOW APPLY TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN THE CONTRACT. THE UNDERLYING FUNDS IN
WHICH THE SUBACCOUNTS INVEST HAVE THEIR OWN MARKET TIMING POLICIES AND
PROCEDURES. THE MARKET TIMING POLICIES OF THE UNDERLYING FUNDS MAY BE MORE
RESTRICTIVE THAN THE MARKET TIMING POLICIES AND PROCEDURES WE APPLY TO TRANSFERS
AMONG THE SUBACCOUNTS OF THE CONTRACT, AND MAY INCLUDE REDEMPTION FEES. WE
RESERVE THE RIGHT TO MODIFY OUR MARKET TIMING POLICIES AND PROCEDURES AT ANY
TIME WITHOUT PRIOR NOTICE TO YOU.
Market timing may hurt the performance of an underlying fund in which a
subaccount invests in several ways, including but not necessarily limited to:
diluting the value of an investment in an underlying fund in which a
subaccount invests;
increasing the transaction costs and expenses of an underlying fund in which a
subaccount invests; and,
preventing the investment adviser(s) of an underlying fund in which a
subaccount invests from fully investing the assets of the fund in accordance
with the fund's investment objectives.
IN ORDER TO HELP PROTECT YOU AND THE UNDERLYING FUNDS FROM THE POTENTIALLY
HARMFUL EFFECTS OF MARKET TIMING ACTIVITY, WE APPLY THE FOLLOWING MARKET TIMING
POLICY TO DISCOURAGE FREQUENT TRANSFERS OF CONTRACT VALUE AMONG THE SUBACCOUNTS
OF THE VARIABLE ACCOUNT:
We try to distinguish market timing from transfers that we believe are not
harmful, such as periodic rebalancing for purposes of an asset allocation,
dollar-cost averaging and asset rebalancing program that may be described in
this prospectus. There is no set number of transfers that constitutes market
timing. Even one transfer in related accounts may be market timing. We seek to
restrict the transfer privileges of a contract owner who makes more than three
subaccount transfers in any 90 day period. We also reserve the right to refuse
any transfer request, if, in our sole judgment, the dollar amount of the
transfer request would adversely affect unit values.
If we determine, in our sole judgment, that your transfer activity constitutes
market timing, we may modify, restrict or suspend your transfer privileges to
the extent permitted by applicable law, which may vary based on the state law
that applies to your contract and the terms of your contract. These restrictions
or modifications may include, but not be limited to:
requiring transfer requests to be submitted only by first-class U.S. mail;
not accepting hand-delivered transfer requests or requests made by overnight
mail;
not accepting telephone or electronic transfer requests;
requiring a minimum time period between each transfer;
not accepting transfer requests of an agent acting under power of attorney;
limiting the dollar amount that you may transfer at any one time;
suspending the transfer privilege; or
modifying instructions under an automated transfer program to exclude a
restricted fund if you do not provide new instructions.
Subject to applicable state law and the terms of each contract, we will apply
the policy described above to all contract owners uniformly in all cases. We
will notify you in writing after we impose any modification, restriction or
suspension of your transfer rights.
We cannot guarantee that we will be able to identify and restrict all market
timing activity. Because we exercise discretion in applying the restrictions
described above, we cannot guarantee that we will be able to restrict all market
timing activity. In addition, state law and the terms of some contracts may
prevent us from stopping certain market timing activity. Market timing activity
that we are unable to identify and/or restrict may impact the performance of the
underlying funds and may result in lower contract values.
IN ADDITION TO THE MARKET TIMING POLICY DESCRIBED ABOVE, WHICH APPLIES TO
TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR CONTRACT, YOU SHOULD CAREFULLY
REVIEW THE MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS. THE
MARKET TIMING POLICIES AND PROCEDURES OF THE UNDERLYING FUNDS MAY BE MATERIALLY
DIFFERENT THAN THOSE WE IMPOSE ON TRANSFERS AMONG THE SUBACCOUNTS WITHIN YOUR
CONTRACT AND MAY INCLUDE MANDATORY REDEMPTION FEES AS WELL AS OTHER MEASURES TO
DISCOURAGE FREQUENT TRANSFERS. AS AN INTERMEDIARY FOR THE UNDERLYING FUNDS, WE
ARE REQUIRED TO ASSIST THEM IN APPLYING THEIR MARKET TIMING POLICIES AND
PROCEDURES TO TRANSACTIONS INVOLVING THE PURCHASE AND EXCHANGE OF FUND SHARES.
THIS ASSISTANCE MAY INCLUDE, BUT NOT BE LIMITED TO, PROVIDING THE UNDERLYING
FUND UPON REQUEST WITH YOUR SOCIAL SECURITY NUMBER, TAXPAYER IDENTIFICATION
NUMBER OR OTHER UNITED STATES GOVERNMENT-ISSUED IDENTIFIER, AND THE DETAILS OF
YOUR
--------------------------------------------------------------------------------
60 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT TRANSACTIONS INVOLVING THE UNDERLYING FUND. AN UNDERLYING FUND, IN ITS
SOLE DISCRETION, MAY INSTRUCT US AT ANY TIME TO PROHIBIT YOU FROM MAKING FURTHER
TRANSFERS OF CONTRACT VALUE TO OR FROM THE UNDERLYING FUND, AND WE MUST FOLLOW
THIS INSTRUCTION. WE RESERVE THE RIGHT TO ADMINISTER AND COLLECT ON BEHALF OF AN
UNDERLYING FUND ANY REDEMPTION FEE IMPOSED BY AN UNDERLYING FUND. MARKET TIMING
POLICIES AND PROCEDURES ADOPTED BY UNDERLYING FUNDS MAY AFFECT YOUR INVESTMENT
IN THE CONTRACT IN SEVERAL WAYS, INCLUDING BUT NOT LIMITED TO:
Each fund may restrict or refuse trading activity that the fund determines, in
its sole discretion, represents market timing.
Even if we determine that your transfer activity does not constitute market
timing under the market timing policies described above which we apply to
transfers you make under the contract, it is possible that the underlying
fund's market timing policies and procedures, including instructions we
receive from a fund may require us to reject your transfer request. For
example, while we disregard transfers permitted under any asset allocation,
dollar-cost averaging and asset rebalancing programs that may be described in
this prospectus, we cannot guarantee that an underlying fund's market timing
policies and procedures will do so. Orders we place to purchase fund shares
for the variable account are subject to acceptance by the fund. We reserve the
right to reject without prior notice to you any transfer request if the fund
does not accept our order.
Each underlying fund is responsible for its own market timing policies, and we
cannot guarantee that we will be able to implement specific market timing
policies and procedures that a fund has adopted. As a result, a fund's returns
might be adversely affected, and a fund might terminate our right to offer its
shares through the variable account.
Funds that are available as investment options under the contract may also be
offered to other intermediaries who are eligible to purchase and hold shares
of the fund, including without limitation, separate accounts of other
insurance companies and certain retirement plans. Even if we are able to
implement a fund's market timing policies, we cannot guarantee that other
intermediaries purchasing that same fund's shares will do so, and the returns
of that fund could be adversely affected as a result.
FOR MORE INFORMATION ABOUT THE MARKET TIMING POLICIES AND PROCEDURES OF AN
UNDERLYING FUND, THE RISKS THAT MARKET TIMING POSE TO THAT FUND, AND TO
DETERMINE WHETHER AN UNDERLYING FUND HAS ADOPTED A REDEMPTION FEE, SEE THAT
FUND'S PROSPECTUS.
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER
Send your name, contract number, Social Security Number or Taxpayer
Identification Number* and signed request for a transfer or surrender to our
corporate office:
RIVERSOURCE LIFE INSURANCE COMPANY
829 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
CURRENT CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire subaccount balance**
ORIGINAL CONTRACT:
MINIMUM AMOUNT
Transfers or surrenders: $500 or entire account balance
ALL CONTRACTS
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
* Failure to provide a Social Security Number or Taxpayer Identification
Number may result in mandatory tax withholding on the taxable portion of
the distribution.
** The contract value after a partial surrender must be at least $500.
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS
Your investment professional can help you set up automated transfers among your
subaccounts, regular fixed account (Current Contract), the one-year fixed
account (Original Contract) or GPAs or automated partial surrenders from the
GPAs, regular fixed account, one-year fixed account, Special DCA fixed account
(Current Contract), DCA fixed account (Original Contract) or the subaccounts.
You can start or stop this service by written request or other method acceptable
to us.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 61
You must allow 30 days for us to change any instructions that are currently in
place.
Automated transfers from the one-year fixed account (Original Contact only) to
any one of the subaccounts may not exceed an amount that, if continued, would
deplete the one-year fixed account within 12 months.
Automated transfers from the regular fixed account (Current Contract only) are
limited to 30% of the regular fixed account values at the beginning of the
contract year or $10,000, whichever is greater.
Automated surrenders may be restricted by applicable law under some contracts.
You may not make additional purchase payments if automated partial surrenders
are in effect.
If the PN program is in effect, you are not allowed to set up automated
transfers except in connection with a Special DCA fixed account (Current
Contract) or DCA fixed account (Original Contract) (see "Special DCA Fixed
Account", "Fixed Account -- DCA Fixed Account" and "Making the Most of Your
Contract -- Portfolio Navigator Program").
Automated partial surrenders may result in IRS taxes and penalties on all or
part of the amount surrendered.
If you have one of the SecureSource series of riders, the Guarantor Withdrawal
Benefit for Life rider or the Guarantor Withdrawal Benefit rider, you may set
up automated partial surrenders up to the benefit amount available for
withdrawal under the rider.
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $50
ORIGINAL CONTRACT:
Transfers or surrenders: $100 monthly
$250 quarterly, semiannually or annually
3 BY PHONE
Call:
1-800-333-3437
MINIMUM AMOUNT
CURRENT CONTRACT:
Transfers or surrenders: $250 or entire contract balance
ORIGINAL CONTRACT:
Transfers or surrenders: $500 or entire account balance
MAXIMUM AMOUNT
CURRENT CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $100,000
ORIGINAL CONTRACT:
Transfers: Contract value or entire account balance
Surrenders: $25,000
We answer telephone requests promptly, but you may experience delays when the
call volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and recording calls. We will not allow a
telephone surrender within 30 days of a phoned-in address change. As long as we
follow the procedures, we (and our affiliates) will not be liable for any loss
resulting from fraudulent requests.
Telephone transfers and surrenders are automatically available. You may request
that telephone transfers and surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before the
annuitization start date by sending us a written request or calling us. If we
receive your surrender request in good order at our corporate office before the
close of business, we will process your surrender using the accumulation unit
value we calculate on the valuation date we received your surrender
--------------------------------------------------------------------------------
62 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
request. If we receive your surrender request at our corporate office at or
after the close of business, we will process your surrender using the
accumulation unit value we calculate on the next valuation date after we
received your surrender request. We may ask you to return the contract. You may
have to pay a contract administrative charge, surrender charges or any
applicable optional rider charges (see "Charges"), federal income taxes and
penalties. State and local income taxes may also apply (see "Taxes"). You cannot
make surrenders after the annuitization start date except under Variable Annuity
Payout Plan E. (See "The Annuity Payout Period -- Annuity Payout Plans.")
Any partial surrenders you take under the contract will reduce your contract
value. As a result, the value of your death benefit or any optional benefits you
have elected will also be reduced. If you have elected one of the SecureSource
series of riders, the Guarantor Withdrawal Benefit for Life rider or the
Guarantor Withdrawal Benefit rider and your partial surrenders in any contract
year exceed the permitted surrender amount under the terms of the rider, your
benefits under the rider may be reduced (see "Optional Benefits"). The first
partial surrender request during the first contract year, for the SecureSource
Stages 2 rider and any partial surrender request that reverses previous step-ups
during the 3-year waiting period or exceeds the amount allowed under the riders
and impacts the guarantees provided, will not be considered in good order until
we receive a signed Benefit Impact Acknowledgement. This form shows the
projected effect of the surrender on the rider benefits or a verbal
acknowledgement that you understand and accept the impacts that have been
explained to you.
In addition, surrenders you are required to take to satisfy RMDs under the Code
may reduce the value of certain death benefits and optional benefits (see
"Taxes -- Qualified Annuities -- Required Minimum Distributions").
SURRENDER POLICIES
CURRENT CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
Special DCA fixed account and/or the regular fixed account in the same
proportion as your value in each account correlates to your total contract
value, unless requested otherwise(1). The minimum contract value after partial
surrender is $500.
ORIGINAL CONTRACT:
If you have a balance in more than one account and you request a partial
surrender, we will automatically surrender from all your subaccounts, GPAs, the
DCA fixed account and/or the one-year fixed account in the same proportion as
your value in each account correlates to your total contract value, unless
requested otherwise.(1)
After executing a partial surrender, the value in the one-year fixed account and
each GPA and subaccount must be either zero or at least $50.
(1) If you elected one of the SecureSource series of riders, you do not have the
option to request from which account to surrender.
RECEIVING PAYMENT
By regular or express mail:
payable to you;
mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
Normally, we will send the payment within seven days after receiving your
request in good order. However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security holders.
TSA -- SPECIAL PROVISIONS
PARTICIPANTS IN TAX-SHELTERED ANNUITIES
If the contract is intended to be used in connection with an employer sponsored
403(b) plan, additional rules relating to this contract can be found in the
annuity endorsement for tax sheltered 403(b) annuities. Unless we have made
special arrangements with your employer, the contract is not intended for use in
connection with an employer sponsored 403(b) plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). In the
event that the employer either by affirmative election or inadvertent action
causes contributions under a plan that is subject to ERISA to be
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 63
made to this contract, we will not be responsible for any obligations and
requirements under ERISA and the regulations thereunder, unless we have prior
written agreement with the employer. You should consult with your employer to
determine whether your 403(b) plan is subject to ERISA.
In the event we have a written agreement with your employer to administer the
plan pursuant to ERISA, special rules apply as set forth in the TSA endorsement.
The employer must comply with certain nondiscrimination requirements for certain
types of contributions under a TSA contract to be excluded from taxable income.
You should consult your employer to determine whether the nondiscrimination
rules apply to you.
The Code imposes certain restrictions on your right to receive early
distributions from a TSA:
Distributions attributable to salary reduction contributions (plus earnings)
made after Dec. 31, 1988, or to transfers or rollovers from other contracts,
may be made from the TSA only if:
- you are at least age 59 1/2;
- you are disabled as defined in the Code;
- you severed employment with the employer who purchased the contract;
- the distribution is because of your death;
- the distribution is due to plan termination; or
- you are a military reservist.
If you encounter a financial hardship (as provided by the Code), you may be
eligible to receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the earnings
on them.
Even though a distribution may be permitted under the above rules, it may be
subject to IRS taxes and penalties (see "Taxes")
The above restrictions on distributions do not affect the availability of the
amount credited to the contract as of Dec. 31, 1988. The restrictions also do
not apply to transfers or exchanges of contract value within the contract, or
to another registered variable annuity contract or investment vehicle
available through the employer.
CHANGING THE ANNUITANT
For the Current Contract, if you have a nonqualified annuity and are a natural
person (excluding a revocable trust), you may change the annuitant or contingent
annuitant if the request is made prior to the annuitization start date and while
the existing annuitant or contingent annuitant is living. The change will become
binding on us when we receive it. If you and the annuitant are not the same
person and the annuitant dies before the annuitization start date, the owner
becomes the annuitant unless a contingent annuitant has been previously
selected. You may not change the annuitant if you have a qualified annuity or
there is non-natural or revocable trust ownership.
For the Original Contract, annuitant changes are not allowed.
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our corporate office. We
will honor any change of ownership request received in good order that we
believe is authentic and we will use reasonable procedures to confirm
authenticity. If we follow these procedures, we will not take any responsibility
for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in a similar capacity, ownership of the contract may be
transferred to the annuitant.
Please consider carefully whether or not you wish to change ownership of your
annuity contract. If you elected any optional contract features or riders and
any owner was not an owner before the change, all owners (including any prior
owner who is still an owner after the ownership change) (along with the
annuitant for the Original Contract) will be subject to all limitations and/or
restrictions of those features or riders just as if they were purchasing a new
contract.
--------------------------------------------------------------------------------
64 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
If you have an Income Assurer Benefit rider and/or the Benefit Protector Plus
rider, the riders will terminate upon transfer of ownership of the annuity
contract.
For the Original Contract, our current administrative practice is that if you
have the Benefit Protector rider, the owner can choose to terminate the Benefit
Protector rider during the 30-day window following the effective date of the
ownership change.
For the Current Contract, if you have the Benefit Protector rider, if any owner
is older than age 75 immediately following the ownership change, the rider will
terminate upon change of ownership. If all owners are younger than age 76, the
rider continues unless the owner chooses to terminate it during the 30-day
window following the effective date of the ownership change. The Benefit
Protector death benefit values may be reset (see "Optional Death
Benefits - Benefit Protector Death Benefit Rider").
For the Current Contract, the death benefit may change due to a change of
ownership. If any owner is older than age 85 immediately following the ownership
change, the MAV Death Benefit, 5% Accumulation Death Benefit and EDB will
terminate, the ROPP Death Benefit will be unavailable, and the Contract Value
Death Benefit will apply. If any owner is older than age 79 but all owners are
younger than age 86, the MAV Death Benefit, the 5% Accumulation Death Benefit,
and the EDB will terminate and the ROPP Death Benefit will apply. If all owners
are age 79 or younger, the ROPP Death Benefit, MAV Death Benefit, 5%
Accumulation Death Benefit or EDB will continue. The ROPP Death Benefit, MAV
Death Benefit, 5% Accumulation Death Benefit and EDB values may be reset (see
"Benefits in the Case of Death"). If the death benefit that applies to your
contract changes due to an ownership change, the mortality and expense risk fee
may change as well (see "Charges - Mortality and Expense Risk Fee").
The SecureSource series - Joint Life rider, if selected, only allows transfer of
the ownership of the annuity contract between covered spouses or their revocable
trust(s); no other ownership changes are allowed while this rider is in force,
subject to state restrictions. For the SecureSource Stages 2 - Joint Life rider,
if ownership is transferred from a covered spouse to their revocable trust(s),
the annuitant must be one of the covered spouses. The Accumulation Protector
Benefit, the SecureSource - Single Life, the Guarantor Withdrawal Benefit for
Life and the Guarantor Withdrawal Benefit riders will continue upon transfer of
ownership of the annuity contract and the values may be reset. For SecureSource
rider and Guarantor Withdrawal Benefit for Life rider, any ownership change that
impacts the guarantees provided will not be considered in good order until we
receive a signed Benefit Impact Acknowledgement form showing the projected
effect of the ownership change on the rider benefits or a verbal acknowledgement
that you understand and accept the impacts that have been explained to you. For
the Secure Source Stages 2 - Single Life riders, Secure Source 20 - Single Life
and SecureSource Stages - Single Life riders, an ownership change that results
in different covered person will terminate the rider, subject to state
restrictions. (See "Optional Benefits.")
BENEFITS IN CASE OF DEATH
CURRENT CONTRACT:
(applications signed on or after Nov. 30, 2009, subject to state availability)
We will pay the death benefit, less any purchase payment credits subject to
reversal, to your beneficiary upon your death if you die before the
annuitization start date while this contract is in force. If a contract has more
than one person as the owner, we will pay the benefits upon the first to die of
any owner. The basic death benefit available under your contract at contract
issue is the ROPP Death Benefit. In addition to the ROPP Death Benefit, we also
offer the following optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if you are age 79 or younger at contract
issue, you can elect any one of the above optional death benefits. If you are
age 80 or older at contract issue, the ROPP Death Benefit will apply.
Once you elect a death benefit, you cannot change it; however the death benefit
that applies to your contract may change due to an ownership change (see
"Changing Ownership") or continuation of the contract by the spouse under the
spousal continuation provision.
We show the death benefit that applies to your contract at issue on your
contract's data page. The death benefit determines the mortality and expense
risk fee that is assessed against the subaccounts. (See "Charges -- Mortality
and Expense Risk Fee.")
We will base the benefit paid on the death benefit coverage in effect on the
date of your death.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 65
HERE ARE SOME TERMS THAT ARE USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROPP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the
partial surrender.
DB = the applicable ROPP value or MAV on the date of (but prior to) the
partial surrender
CV = contract value on the date of (but prior to) the partial surrender.
COVERED LIFE CHANGE: is either continuation of the contract by a spouse under
the spousal continuation provision, or an ownership change where any owner after
the ownership change was not an owner prior to the change.
CONTRACT VALUE DEATH BENEFIT (CV DEATH BENEFIT): is the death benefit available
if any owner after an ownership change or spouse who continues the contract
under the spousal continuation provision is over age 85 and therefore cannot
qualify for the ROPP death benefit. Under this benefit, we will pay the
beneficiary the greater of:
- the Full Surrender Value, or
- the contract value after any rider charges have been deducted.
FULL SURRENDER VALUE: is the contract value immediately prior to the surrender
(immediately prior to payment of a death claim for death benefits) less:
any surrender charge,
pro rata rider charges,
the contract charge,
any purchase payment credits subject to reversal, and
plus:
any positive or negative market value adjustment.
RETURN OF PURCHASE PAYMENTS (ROPP) DEATH BENEFIT
The ROPP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments, and purchase payment
credits, adjusted for surrenders. If you die before the annuitization start date
and while this contract is in force, the death benefit will be the greatest of:
1. the contract value after any rider charges have been deducted,
2. the ROPP Value, or
3. the Full Surrender Value.
ROPP VALUE: is the total purchase payments and any purchase payment credits on
the contract issue date. Additional purchase payments and purchase payment
credits will be added to the ROPP value. Adjusted partial surrenders will be
subtracted from the ROPP value.
After a covered life change for a spouse who continues the contract and is age
85 or younger, we reset the ROPP value to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value). If the spouse who continues
the contract is age 86 or older, the ROPP Death Benefit will terminate and he or
she will be eligible for the CV death benefit.
After a covered life change other than for the spouse who continues the
contract, if the prior owner and current owners are eligible for the ROPP death
benefit we reset the ROPP value on the valuation date we receive your request
for the ownership change to the contract value after any rider charges have been
deducted, if the contract value is less.
If the prior owner was not eligible for the ROPP but all current owners are
eligible, we reset the ROPP value to the contract value after any rider charges
have been deducted on the valuation date we receive your request for the
ownership change.
IF AVAILABLE IN YOUR STATE AND YOU ARE AGE 79 OR YOUNGER AT CONTRACT ISSUE, YOU
MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT THE TIME YOU PURCHASE
YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY ADDITIONAL BENEFIT BEFORE
THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE APPROPRIATE FOR CERTAIN OLDER
ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE LIMITED AFTER AGE 80. BE SURE TO
DISCUSS WITH YOUR INVESTMENT PROFESSIONAL WHETHER OR NOT THESE DEATH BENEFITS
ARE APPROPRIATE FOR YOUR SITUATION.
--------------------------------------------------------------------------------
66 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you die while the contract is in force
and before the annuitization start date, the death benefit will be the greatest
of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV; or
4. the Full Surrender Value as described above.
The MAV equals the ROPP value prior to the first contract anniversary. Every
contract anniversary prior to the earlier of your 81st birthday or your death,
we compare the MAV to the current contract value and we reset the MAV to the
higher amount. The MAV is increased by any additional purchase payments and any
purchase payment credits and reduced by adjusted partial surrenders.
After a covered life change for a spouse who is age 79 or younger and continues
the contract, we reset the MAV to the contract value on the date of the
continuation after any rider charges have been deducted and after any increase
to the contract value due to the death benefit that would otherwise have been
paid (without regard to the Full Surrender Value).
After a covered life change other than for a spouse who continues the contract,
if all owners are under age 80, we reset the MAV on the valuation date we
receive your request for the ownership change to the lesser of these two values:
(a) the contract value after any rider charges have been deducted, or
(b) the MAV on that date, but prior to the reset.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the MAV. If your spouse is
over age 79 but younger than age 86 when the contract was continued, he or she
will be eligible for the ROPP death benefit. If your spouse is age 86 or older
when the contract was continued, he or she will be eligible for the CV death
benefit.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you die while the contract is
in force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the 5% accumulation death benefit floor;
4. the Full Surrender Value as described above.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% ACCUMULATION DEATH BENEFIT FLOOR: is equal to the sum of:
1. the contract value in the Excluded Accounts (currently, regular fixed account
and GPAs), if any, and
2. the variable account floor.
PROTECTED ACCOUNT BASE (PAB) AND EXCLUDED ACCOUNT BASE (EAB): Adjustments to
variable account floor require tracking amounts representing purchase payments,
not previously surrendered, that are allocated or transferred to the Protected
Accounts (currently, subaccounts and the Special DCA fixed account) and Excluded
Accounts.
- PAB equals amounts representing purchase payments and any purchase payment
credits, not previously surrendered or transferred, that are in the
Protected Accounts.
- EAB equals amounts representing purchase payments and any purchase payment
credits, not previously surrendered or transferred, that are in the Excluded
Accounts.
VARIABLE ACCOUNT FLOOR: Variable account floor is PAB increased on contract
anniversaries prior to the earlier of your 81st birthday or your death.
NET TRANSFER: If multiple transfers are made on the same valuation day, they are
combined to determine the net amount of contract value being transferred between
the Protected Accounts and Excluded Accounts. This net transfer amount is used
to adjust the EAB, PAB and variable account floor values.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 67
ESTABLISHMENT OF VARIABLE ACCOUNT FLOOR, PAB AND EAB
On the contract date, 1) variable account floor and PAB are established as your
initial purchase payment plus any purchase payment credit allocated to the
Protected Accounts; and 2) EAB is established as your initial purchase payment
plus any purchase payment credit allocated to the Excluded Accounts.
ADJUSTMENTS TO VARIABLE ACCOUNT FLOOR, PAB AND EAB
Variable account floor, PAB and EAB are adjusted by the following:
1. When an additional purchase payment is made;
(A) any payment and any purchase payment credit you allocate to the Protected
Accounts are added to PAB and to variable account floor, and
(B) any payment and any purchase payment credit you allocate to the excluded
accounts are added to EAB.
2. When transfers are made to the Protected Accounts from the Excluded Accounts,
we increase PAB and variable account floor, and we reduce EAB.
The amount we deduct from EAB and add to PAB and to variable account floor is
calculated for each net transfer using the following formula:
A = the amount the contract value in the Excluded Accounts is reduced by the
net transfer
B = EAB on the date of (but prior to) the transfer
C = the contract value in the Excluded Accounts on the date of (but prior to)
the transfer.
3. When partial surrenders are made from the Excluded Accounts, we reduce EAB by
the same amount as calculated above for transfers from the Excluded Accounts,
using surrender amounts in place of transfer amounts. Partial surrenders from
Excluded Accounts do not increase PAB.
4. When transfers are made to the Excluded Accounts from the Protected Accounts,
we reduce PAB and variable account floor, and increase EAB.
The amounts we deduct from PAB and variable account floor are calculated for
each net transfer using the following formula:
A = the amount the contract value in the Protected Accounts is reduced by the
net transfer
B = the applicable PAB or variable account floor on the date of (but prior
to) the transfer
C = the contract value in the Protected Accounts on the date of (but prior
to) the transfer.
The amount we subtract from PAB is added to EAB.
5. When partial surrenders are made from the Protected Accounts, we reduce PAB
and variable account floor by the same amount as calculated above for
transfers from the Protected Accounts, using surrender amounts in place of
transfer amounts. Partial surrenders from Protected Accounts do not increase
EAB.
6. After a covered life change for a spouse who continues the contract, variable
account floor and PAB are reset to the contract value in the Protected
Accounts on the date of continuation. EAB is reset to the contract value in
the Excluded Accounts on the date of continuation. The contract value is
after any rider charges have been deducted and after any increase to the
contract value due to the death benefit that would otherwise have been paid
(without regard to the Full Surrender Value).
7. After a covered life change other than for a spouse who continues the
contract, variable account floor, PAB and EAB are reset on the valuation date
we receive your written request for the covered life change if all owners are
eligible for the 5% Accumulation Death Benefit.
Variable account floor and PAB are reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Protected Accounts on that date, and
B = Variable account floor on that date (but prior to the reset).
EAB is reset to the lesser of A or B where:
A = the contract value (after any rider charges have been deducted) in
the Excluded Accounts on that date, and
--------------------------------------------------------------------------------
68 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
B = EAB on that date (but prior to the reset).
8. On a contract anniversary when variable account floor is greater than zero:
(A) On the first contract anniversary, we increase variable account floor by
an amount equal to 5%, multiplied by variable account floor as of 60 days
after the contract date.
(B) On each subsequent contract anniversary prior to the earlier of your 81st
birthday or your death, we increase variable account floor by 5%,
multiplied by the prior contract anniversary's variable account floor.
(C) Any variable account floor increase on contract anniversaries does not
increase PAB or EAB.
For contracts issued in New Jersey and Washington state, the cap on the variable
account floor is 200% of PAB.
If your spouse chooses to continue the contract under the spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the 5% Accumulation Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you die while the contract is in
force and before the annuitization start date, the death benefit will be the
greatest of these values:
1. contract value after any rider charges have been deducted;
2. the ROPP value as described above;
3. the MAV as described above;
4. the 5% accumulation death benefit floor as described above; or
5. the Full Surrender Value as described above.
If your spouse chooses to continue the contract under spousal continuation
provision, the death benefit available for the spouse's beneficiaries depends on
the spouse's age. If your spouse was age 79 or younger when the contract was
continued, he or she will continue to be eligible for the Enhanced Death
Benefit. If your spouse is over age 79 but younger than age 86 when the contract
was continued, he or she will be eligible for the ROPP death benefit. If your
spouse is age 86 or older when the contract was continued, he or she will be
eligible for the CV Death Benefit.
For an example of how each death benefit is calculated, see Appendix C.
ORIGINAL CONTRACT:
(applications signed prior to Nov. 30, 2009 or in states where the Current
Contract is not available)
We will pay the death benefit, less any purchase payment credits subject to
reversal, to your beneficiary upon the earlier of your death or the annuitant's
death. If a contract has more than one person as the owner or annuitant, we will
pay the benefits upon the first to die of any owner or the annuitant. The basic
death benefit available under your contract at contract issue is the ROP Death
Benefit. In addition to the ROP Death Benefit, we also offer the following
optional death benefits at contract issue:
MAV Death Benefit;
5% Accumulation Death Benefit; or
Enhanced Death Benefit.
If it is available in your state and if both you and the annuitant are age 79 or
younger at contract issue, you can elect any one of the above death benefits. If
either you or the annuitant are age 80 or older at contract issue, the ROP Death
Benefit will apply. Once you elect a death benefit, you cannot change it. We
show the death benefit that applies in your contract on your contract's data
page. The death benefit you select determines the mortality and expense risk fee
that is assessed against the subaccounts. (See "Charges -- Mortality and Expense
Risk Fee.")
We will base the benefit paid on the death benefit coverage you chose when you
purchased the contract.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 69
HERE ARE SOME TERMS USED TO DESCRIBE THE DEATH BENEFITS:
PS X DB
ADJUSTED PARTIAL SURRENDERS (CALCULATED FOR ROP AND MAV DEATH BENEFITS) = ---------
CV
PS = the amount by which the contract value is reduced as a result of the partial
surrender.
DB = the applicable ROP value or MAV on the date of (but prior to) the partial
surrender.
CV = contract value on the date of (but prior to) the partial surrender.
RETURN OF PURCHASE PAYMENTS (ROP) DEATH BENEFIT
The ROP Death Benefit is the basic death benefit on the contract that will pay
your beneficiaries no less than your purchase payments and any purchase payment
credits, adjusted for surrenders. If you or the annuitant die before the
annuitization start date and while this contract is in force, the death benefit
will be the greater of these two values, minus any applicable rider charges:
1. contract value; or
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
The ROP Death Benefit will apply unless you select one of the alternative death
benefits described immediately below.
IF AVAILABLE IN YOUR STATE AND BOTH YOU AND THE ANNUITANT ARE AGE 79 OR YOUNGER
AT CONTRACT ISSUE, YOU MAY SELECT ONE OF THE DEATH BENEFITS DESCRIBED BELOW AT
THE TIME YOU PURCHASE YOUR CONTRACT. THE DEATH BENEFITS DO NOT PROVIDE ANY
ADDITIONAL BENEFIT BEFORE THE FIRST CONTRACT ANNIVERSARY AND MAY NOT BE
APPROPRIATE FOR CERTAIN OLDER ISSUE AGES BECAUSE THE BENEFIT VALUES MAY BE
LIMITED AFTER AGE 80. BE SURE TO DISCUSS WITH YOUR INVESTMENT PROFESSIONAL
WHETHER OR NOT THESE DEATH BENEFITS ARE APPROPRIATE FOR YOUR SITUATION.
MAXIMUM ANNIVERSARY VALUE (MAV) DEATH BENEFIT
The MAV Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these three values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the MAV on the date of death.
MAXIMUM ANNIVERSARY VALUE (MAV): is zero prior to the first contract
anniversary. On the first contract anniversary, we set the MAV as the greater of
these two values:
(a) current contract value; or
(b) total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by adjusted partial surrenders.
Every contract anniversary after that prior to the earlier of your or the
annuitant's 81st birthday, we compare the MAV to the current contract value and
we reset the MAV to the higher amount.
5% ACCUMULATION DEATH BENEFIT
The 5% Accumulation Death Benefit provides that if you or the annuitant die
while the contract is in force and before the annuitization start date, the
death benefit will be the greatest of these three values, minus any applicable
rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders; or
3. the 5% variable account floor.
The key terms and provisions of the 5% Accumulation Death Benefit are:
5% VARIABLE ACCOUNT FLOOR: is the sum of the value of the GPAs, the one-year
fixed account and the variable account floor. There is no variable account floor
prior to the first contract anniversary. On the first contract anniversary, we
establish the variable account floor as:
the amounts allocated to the subaccounts and the DCA fixed account at issue
increased by 5%;
plus any subsequent amounts allocated to the subaccounts and the DCA fixed
account;
minus adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account.
--------------------------------------------------------------------------------
70 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
Thereafter, we continue to add subsequent purchase payments and any purchase
payment credits allocated to the subaccounts or the DCA fixed account and
subtract adjusted transfers and partial surrenders from the subaccounts or the
DCA fixed account. On each contract anniversary after the first, through age 80,
we add an amount to the variable account floor equal to 5% of the prior
anniversary's variable account floor. We stop adding this amount after you or
the annuitant reach age 81 or after the earlier of your or the annuitant's
death.
PST X VAF
---------
5% VARIABLE ACCOUNT FLOOR ADJUSTED TRANSFERS OR PARTIAL SURRENDERS = SAV
PST = the amount by which the contract value in the subaccounts and the DCA fixed
account is reduced as a result of the partial surrender or transfer from the
subaccounts or the DCA fixed account.
VAF = variable account floor on the date of (but prior to) the transfer or partial
surrender.
SAV = value of the subaccounts and the DCA fixed account on the date of (but prior
to) the transfer or partial surrender.
The amount of purchase payments and any purchase payment credits surrendered or
transferred from any subaccount or fixed account (if applicable) or GPA account
is calculated as (a) times (b) where:
(a) is the amount of purchase payments and any purchase payment credits in the
account or subaccount on the date of but prior to the current surrender or
transfer; and
(b) is the ratio of the amount of contract value transferred or surrendered from
the account or subaccount to the value in the account or subaccount on the
date of (but prior to) the current surrender or transfer.
For contracts issued in New Jersey, the cap on the variable account floor is
200% of the sum of the purchase payments and any purchase payment credits
allocated to the subaccounts and the DCA fixed account that have not been
surrendered or transferred out of the subaccounts or DCA fixed account.
NOTE: The 5% variable account floor is calculated differently and is not the
same value as the Income Assurer Benefit(R) 5% variable account floor.
ENHANCED DEATH BENEFIT
The Enhanced Death Benefit provides that if you or the annuitant die while the
contract is in force and before the annuitization start date, the death benefit
will be the greatest of these four values, minus any applicable rider charges:
1. contract value;
2. total purchase payments and any purchase payment credits applied to the
contract minus adjusted partial surrenders;
3. the MAV on the date of death as described above; or
4. the 5% variable account floor as described above.
For an example of how each death benefit is calculated, see Appendix C.
IF YOU DIE BEFORE THE ANNUITIZATION START DATE
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value using the accumulation unit value we calculate on that
valuation date. We pay interest, if any, at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled.
NONQUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value). To do this your spouse must, on the date our death claim
requirements are fulfilled, give us written instructions to continue the
contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse will be subject to all limitations
and/or restrictions of those features or riders just as if they were purchasing
a new contract and the values may be reset. (see "Optional Benefits" and
"Benefits in the Case of Death"). If the death benefit applicable to the
contract changes due to spousal continuation, the mortality and expense risk fee
may change as well (see "Charges -- Mortality and Expense Risk Fee").
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 71
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
FOR THE ORIGINAL CONTRACT:
If your spouse is sole beneficiary and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid. To do this your spouse
must, on the date our death claim requirements are fulfilled, give us written
instructions to continue the contract as owner.
There will be no surrender charges on the contract from that point forward
unless additional purchase payments are made. If you elected any optional
contract features or riders, your spouse and the new annuitant (if applicable)
will be subject to all limitations and/or restrictions of those features or
riders just as if they were purchasing a new contract and the values may be
reset. (See "Optional Benefits" and "Optional Death Benefits".)
If your beneficiary is not your spouse, or your spouse does not elect spousal
continuation, we will pay the beneficiary in a single sum unless you give us
other written instructions. Generally, we must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
payouts begin no later than one year after your death, or other date as
permitted by the IRS; and
the payout period does not extend beyond the beneficiary's life or life
expectancy.
QUALIFIED ANNUITIES
FOR THE CURRENT CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid (without
regard to the Full Surrender Value). To do this your spouse must, on the date
our death claim requirements are fulfilled, give us written instructions to
continue the contract as owner. There will be no surrender charges on the
contract from that point forward unless additional purchase payments are made.
If you elected any optional contract features or riders, your spouse will be
subject to all limitations and/or restrictions of those features or riders
just as if they were purchasing a new contract and the values may be reset
(see "Optional Benefits", "Optional Death Benefits" and "Benefits in the Case
of Death"). If the death benefit applicable to the contract changes due to
spousal continuation, the mortality and expense risk fee may change as well
(see "Charges -- Mortality and Expense Risk Fee"). If your spouse is the sole
beneficiary and elects to treat the contract his/her own as an inherited IRA,
the SecureSource Stages rider will terminate.
If you purchased this contract as an inherited IRA and your spouse is the sole
beneficiary, he or she can elect to continue this contract as an inherited
IRA.
If you purchased this contract as an inherited IRA and your spouse is not the
sole beneficiary, he or she can elect an alternative payment plan for their
share of the death benefit and all optional death benefits and living benefits
will terminate. Your spouse must follow the schedule of minimum surrenders
established based on your life expectancy.
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
--------------------------------------------------------------------------------
72 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
FOR THE ORIGINAL CONTRACT:
SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
your spouse is the sole beneficiary, your spouse may either elect to treat the
contract as his/her own, so long as he or she is eligible to do so, or elect
an annuity payout plan or another plan agreed to by us. If your spouse elects
a payout option, the payouts must begin no later than the year in which you
would have reached age 70 1/2. If you attained age 70 1/2 at the time of
death, payouts must begin no later than Dec. 31 of the year following the year
of your death.
Your spouse may elect to assume ownership of the contract with the contract
value equal to the death benefit that would otherwise have been paid. To do
this your spouse must, on the date our death claim requirements are fulfilled,
give us written instructions to continue the contract as owner. There will be
no surrender charges on the contract from that point forward unless additional
purchase payments are made. If you elected any optional contract features or
riders, your spouse and the new annuitant (if applicable) will be subject to
all limitations and/or restrictions of those features or riders just as if
they were purchasing a new contract and the values may be reset. (See
"Optional Benefits" and "Optional Death Benefits".)
NON-SPOUSE BENEFICIARY: If you have not elected an annuity payout plan, and if
death occurs prior to the year you would have attained age 70 1/2, the
beneficiary may elect to receive payouts from the contract over a five year
period. If your beneficiary does not elect a five year payout or if your death
occurs after attaining age 70 1/2, we will pay the beneficiary in a single sum
unless the beneficiary elects to receive payouts under any payout plan
available under this contract if:
- the beneficiary asks us in writing within 60 days after the day on which all
documents have been received that prove your death has occurred; and
- payouts begin no later than one year following the year of your death; and
- the payout period does not extend beyond the beneficiary's life or life
expectancy.
If a beneficiary elects an alternative payment plan which is an inherited IRA,
all optional death benefits and living benefits will terminate. The
beneficiary must submit the applicable investment options form or the
Portfolio Navigator program enrollment form. No additional purchase payments
will be accepted. The death benefit payable on the death of the non-spouse
beneficiary is the CV death benefit.
In the event of your beneficiary's death, their beneficiary can elect to take
a lump sum payment or to continue the alternative payment plan following the
schedule of minimum surrenders established based on the life expectancy of
your beneficiary.
ANNUITY PAYOUT PLAN: If you elect an annuity payout plan which guarantees
payouts to a beneficiary after death, the payouts to your beneficiary will
continue pursuant to the annuity payout plan you elect.
OPTIONAL BENEFITS
The assets held in our general account support the guarantees under your
contract, including optional death benefits and optional living benefits. To the
extent that we are required to pay you amounts in addition to your contract
value under these benefits, such amounts will come from our general account
assets. You should be aware that our general account is exposed to the risks
normally associated with a portfolio of fixed-income securities, including
interest rate, option, liquidity and credit risk. You should also be aware that
we issue other types of insurance and financial products as well, and we also
pay our obligations under these products from assets in our general account. Our
general account is not segregated or insulated from the claims of our creditors.
The financial statements contained in the SAI include a further discussion of
the risks inherent within the investments of the general account.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 73
OPTIONAL LIVING BENEFITS
SECURESOURCE STAGES 2 RIDERS
The SecureSource Stages 2 rider is an optional benefit that you can add to your
contract for an additional charge. This benefit is intended to provide to you,
after the lifetime benefit is established, a specified withdrawal amount
annually for life, even if your contract value is zero, subject to the terms and
provisions described in this section. Additionally, this benefit offers a credit
feature to help in low or poor performing markets and a step up feature to lock
in contract anniversary gains.
The SecureSource Stages 2 rider may be appropriate for you if you intend to make
periodic withdrawals from your annuity contract after the waiting period and
wish to ensure that market performance will not adversely affect your ability to
withdraw income over your lifetime. This rider may not be appropriate for you if
you do not intend to limit withdrawals to the amount allowed in order to receive
the full benefits of the rider.
Your benefits under the rider can be reduced if any of the following occurs:
- If you take any withdrawals during the 1-year waiting period, the lifetime
benefit amount will be determined using percentage B for the appropriate age
band as long as rider benefits are payable;
- If you withdraw more than the allowed withdrawal amount in a contract year,
or you take withdrawals before the lifetime benefit is available;
- If you take a withdrawal and later choose to allocate your contract value to
a fund of funds that is more aggressive than the target fund;
- If the contract value is 20% or more below purchase payments increased by
any contract anniversary gains or rider credits and adjusted for withdrawals
(see withdrawal adjustment base described below).
The SecureSource Stages 2 rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year after the lifetime benefit is established. Your age at the time of
the first withdrawal will determine the age band for as long as benefits are
payable except as described in the lifetime payment percentage provision.
As long as your total withdrawals during the current year do not exceed the
lifetime benefit amount, you will not be assessed a surrender charge. If you
withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and benefits will be reduced in accordance with excess
withdrawal processing. At any time, you may withdraw any amount up to your
entire surrender value, subject to excess withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages 2 riders available under your
contract:
- SecureSource Stages 2 -- Single Life
- SecureSource Stages 2 -- Joint Life
The information in this section applies to both SecureSource Stages 2 riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages 2 -- Single Life rider covers one person. The
SecureSource Stages 2 -- Joint Life Rider covers two spouses jointly who are
named at contract issue. You may elect only the SecureSource Stages 2 -- Single
Life rider or the SecureSource Stages 2 -- Joint Life rider, not both, and you
may not switch riders later. You must elect the rider when you purchase your
contract. The rider effective date will be the contract issue date.
The SecureSource Stages 2 rider is an optional benefit that you may select for
an additional annual charge if:
- SINGLE LIFE: you are 85 or younger on the date the contract is issued; or
- JOINT LIFE: you and your spouse are 85 or younger on the date the contract
is issued.
The SecureSource Stages 2 riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
74 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
The SecureSource Stages 2 rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
- SINGLE LIFE: death (see "At Death" heading below).
- JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages 2 rider are:
AGE BANDS: Each age band is associated with a two lifetime payment percentages.
The covered person (JOINT LIFE: the younger covered spouse) must be at least the
youngest age shown in the first age band for the annual lifetime payment to be
established. After the annual lifetime payment is established, in addition to
your age, other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: the younger covered spouse)
has reached the youngest age in the first age band. After the waiting period,
the annual withdrawal amount guaranteed by the rider can vary each contract
year.
ANNUAL STEP-UP: an increase in the benefit base and/or the principal back
guarantee and a possible increase in the lifetime payment percentage that is
available each rider anniversary if your contract value increases, subject to
certain conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken before the annual lifetime payment is
established, or (2) a withdrawal that is greater than the remaining annual
lifetime payment after the annual lifetime payment is established.
EXCESS WITHDRAWAL PROCESSING: a reduction in benefits if a withdrawal is taken
before the annual lifetime payment is established or if a withdrawal exceeds the
remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band. The
difference between percentage A and percentage B is referred to as the income
bonus. Percentage B is referred to as the minimum lifetime payment percentage.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you take withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. After the annual lifetime payment is
established, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten contract anniversaries based on a rider credit percentage of 8% for
the first anniversary and 6% thereafter, as long as no withdrawals have been
taken since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and excess withdrawals may reduce or eliminate
the benefit of any rider credits. Rider credits may result in higher rider
charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
limiting benefits under the rider. If you take any withdrawals during the
waiting period, the lifetime benefit amount will be determined using percentage
B, the minimum lifetime payment percentage, for the appropriate age band and
percentage A, and therefore the income bonus, will not be available as long as
rider benefits are payable. The waiting period starts on the rider effective
date and ends on the day prior to the first anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage after the waiting period. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 75
IMPORTANT SECURESOURCE STAGES 2 RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages 2 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 1-year waiting period, the
lifetime benefit amount will be determined using percentage B for the
appropriate age band and percentage A, and therefore the income bonus, will
not be available as long as rider benefits are payable. Any withdrawals in the
first 10 years will terminate any remaining rider credits. Also, if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider will be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must elect one of the
investment options under the PN program. This requirement limits your choice
of investment options. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option classification as shown in your contract if your
current investment option is more aggressive than the target investment option
classification. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option is currently the Moderate investment option. We reserve the
right to change the target investment option to an investment option
classification that is more aggressive than the Moderate investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset, you are in a
withdrawal phase. During withdrawal phases you may request to change your
investment option to the target investment option or any investment option
that is more conservative than the target investment option without a benefit
reset as described below. If you are in a withdrawal phase and you choose to
allocate your contract value to an investment option that is more aggressive
than the target investment option, you will be in the accumulation phase again
and your rider benefit will be reset as follows:
1. the BB, PBG and WAB will be reset to the contract value, if less than
their current amount; and
2. the ALP and RALP, if available, will be recalculated. You may request to
change your investment option by written request on an authorized form or
by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource Stages 2 rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
charge will continue to be deducted until the contract or rider is terminated
or the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages 2 -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages 2 -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of nonnatural
or revocable trust ownership). The rider will terminate at the death of the
contract owner because the original covered spouse will be unable to elect the
spousal continuation provision of the contract (see "Joint Life only: Covered
Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the
--------------------------------------------------------------------------------
76 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
owner's death provision, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of the
trust must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource Stages 2 -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period the lifetime benefit amount will be determined using
percentage B for as long as rider benefits are payable. While the rider
permits certain excess withdrawals to be taken for the purpose of satisfying
RMD requirements for your contract alone without reducing future benefits
guaranteed under the rider, there can be no guarantee that changes in the
federal income tax law after the effective date of the rider will not require
a larger RMD to be taken, in which case, future guaranteed withdrawals under
the rider could be reduced. See Appendix F for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person or a revocable trust, the covered spouses are the annuitant
and the legally married spouse of the annuitant. The covered spouses lives are
used to determine when the annual lifetime payment is established, and the
duration of the ALP payments (see "Annual Lifetime Payment (ALP)" heading
below). The covered spouses are established on the rider effective date and
cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the covered person (JOINT LIFE: younger covered spouses) has
reached age 50. When the ALP is established and at all times thereafter, the ALP
is equal to the BB multiplied by the lifetime payment percentage. Anytime the
lifetime payment percentage or BB changes as
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 77
described below, the ALP will be recalculated. After the waiting period and when
the ALP is established, the first withdrawal taken in each contract year will
set and fix the lifetime payment percentage for the remainder of the contract
year.
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the annual lifetime payment guaranteed
for withdrawal for the remainder of the contract year. The RALP is established
at the same time as the ALP. The RALP equals the ALP less all withdrawals in the
current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band used to calculate the initial ALP is
the percentage for the covered person's attained age (JOINT LIFE: younger
covered spouse's attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouse's subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouse's attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any rider
fee increase or if a withdrawal has been taken since the ALP was established,
then the lifetime payment percentage will not change on subsequent birthdays.)
Upon annual step-ups (see "Annual Step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was established and no rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether percentage A or percentage B is used for each
applicable age band:
During the waiting period, percentage B will be used. If you take a withdrawal
in the waiting period, percentage B will be used and the income bonus will not
be available for as long as rider benefits are payable.
If no withdrawal is taken during the waiting period, after the waiting period a
comparison of your contract value and the withdrawal adjustment base (WAB)
determines whether percentage A or percentage B is used to calculate the ALP
unless the percentage is fixed as described below. Market volatility, a
prolonged flat, low or down market, rider credits, and the deduction of charges
all impact whether you are eligible for percentage A or percentage B. On each
valuation date, if the
--------------------------------------------------------------------------------
78 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
benefit determining percentage is less than the 20% adjustment threshold, then
percentage A is used in calculating your ALP, otherwise percentage B is used.
The benefit determining percentage is calculated as follows, but it will not be
less than zero:
1 - (a/b) where:
a = Contract value at the end of the prior valuation period
b = WAB at the end of the prior valuation period
After the ALP is established and after the waiting period, the first withdrawal
taken in each contract year will set and fix the lifetime payment percentage for
the remainder of the contract year. Beginning on the next rider anniversary, the
lifetime payment percentage can change on each valuation day as described above
until a withdrawal is taken in that contract year.
However, at the earliest of (1), (2) or (3) below Percentage A and Percentage B
will be set and remain fixed as long as the benefit is payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values
(benefit base (BB), credit base (CB) and withdrawal adjustment base (WAB)) and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: If the WAB and CB are greater
than zero, the WAB and CB will be increased by the amount of each additional
purchase payment. The BB and PBG will be increased by the amount of each
additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits.
When a withdrawal is taken:
(a) If the first withdrawal is taken during the waiting period, the WAB will
be permanently reset to zero. If the first withdrawal is taken after the
waiting period, the WAB will be reduced by the "adjustment for
withdrawal," as defined below.
(b) If the ALP is established and the withdrawal is less than or equal to the
RALP, the BB does not change and the PBG is reduced by the amount of the
withdrawal, but it will not be less than zero.
(c) If the ALP is not established, excess withdrawal processing will occur as
follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not be less
than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the withdrawal and
further reduced by an amount calculated as follows, but it will not be
less than zero:
a = the amount of the withdrawal minus the RALP
b = the PBG minus the RALP on the date of (but prior to) the withdrawal
c = the contract value on the date of (but prior to) the withdrawal minus
the RALP
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 79
The BB will be reduced by an amount as calculated below:
d = the amount of the withdrawal minus the RALP
e = the BB on the date of (but prior to) the withdrawal
f = the contract value on the date of (but prior to) the withdrawal minus
the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is reduced by a
withdrawal in the same proportion as the contract value is reduced, the
proportional amount deducted is the "adjustment for withdrawal." The "adjustment
for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PBG (as applicable) on the date of (but prior to) the
withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
THE WAB ON RIDER ANNIVERSARIES: Unless the WAB is permanently reset to zero or
you decline any rider fee increase, the WAB (after any rider credit is added)
will be increased to the contract value, if the contract value is greater.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
rider fee increase, rider credits are available for the first ten contract
anniversaries. On the first anniversary, the rider credit equals the credit
base (CB) 180 days following the rider effective date multiplied by 8%. On any
subsequent anniversaries, the rider credit equals the CB as of the prior rider
anniversary multiplied by 6%. On the first anniversary the BB and WAB will be
set to the greater of the current BB, or the BB 180 days following the
contract date increased by the rider credit and any additional purchase
payments since 180 days following the rider effective date. On any subsequent
rider credit dates the BB and WAB will be set to the greater of the current
BB, or the BB on the prior anniversary increased by the rider credit and any
additional purchase payments since the prior anniversary. If the CB is greater
than zero, the CB will be permanently reset to zero on the 10th rider
anniversary after any adjustment to the WAB and BB, and there will be no
additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you decline any rider fee increase, future annual step-
ups will no longer be available.
The annual step-up will be executed on any rider anniversary where the
contract value is greater than the PBG or the BB after any rider credit is
added. If an annual step-up is executed, the PBG, BB and lifetime payment
percentage will be adjusted as follows: The PBG will be increased to the
contract value, if the contract value is greater. The BB (after any rider
credit is added) will be increased to the contract value, if the contract
value is greater. If the covered person's attained age (Joint Life: younger
covered spouses attained age) on the rider anniversary is in a higher age band
and (1) there is an increase to BB due to a step-up or (2) the BB is at the
maximum of $10,000,000 so there was no step-up of the BB, then the higher age
band will be used to determine the appropriate lifetime payment percentage,
regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of your RMD that exceeds the benefit amount will not be subject to
excess withdrawal processing provided that the following conditions are met:
- The annual lifetime payment is established;
- The RMD is for your contract alone;
- The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
- The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on
the contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. If any withdrawal is taken in the
waiting
--------------------------------------------------------------------------------
80 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
period, including RMDs, Percentage B for the applicable age band will be used as
long as rider benefits are payable. Any withdrawals taken before the annual
lifetime payment is established or withdrawing amounts greater than the
remaining annual lifetime payment that do not meet these conditions will result
in excess withdrawal processing. The amount in excess of the RALP that is not
subject to excess withdrawal processing will be recalculated if the ALP changes
due to lifetime payment percentage changes. See Appendix E for additional
information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages 2 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource Stages
2 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
Unless you decline a rider fee increase, at the time of spousal continuation, a
step-up may be available. All annual step-up rules (see "Rider Anniversary
Processing -- Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that the RALP will be reduced for any prior
withdrawals in that contract year. The WAB, if greater than zero, will be
increased to the contract value if the contract value is greater. The spousal
continuation step-up is processed on the valuation date spousal continuation is
effective.
RULES FOR SURRENDER: Minimum contract values following surrender no longer apply
to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that contract year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
- elect to take the death benefit under the terms of the contract, or
- elect to take the principal back guarantee available under this rider, or
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 81
- continue the contract and the SecureSource Stages 2 -- Joint Life rider
under the spousal continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
1. If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are
equal to the PBG on the date of death.
2. If the PBG is greater than zero and the ALP is not established, the BB on
the date of death multiplied by the lifetime payment percentage used for
the youngest age of the covered spouses in the first age band will be paid
annually until total payments to the beneficiary are equal to the PBG on
the date of death.
In either of the above cases:
- After the date of death, there will be no additional rider credits or annual
step-ups.
- The lifetime payment percentage used will be set as of the date of death.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
3. On the date of death (JOINT LIFE: remaining covered spouse's date of
death), if the CB is greater than zero, the CB will be permanently reset to
zero, and there will be no additional rider credits.
4. If the PBG equals zero, the benefit terminates. No further payments are
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: If your annuitization start date is the maximum
annuitization start date, you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the SecureSource Stages 2 rider. Under the rider's payout option, the minimum
amount payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages 2 rider cannot be terminated either by you or us except
as follows:
- SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
- SINGLE LIFE: after the death benefit is payable, the rider will terminate.
- SINGLE LIFE: spousal continuation will terminate the rider.
- JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a
beneficiary of a participant in an employer sponsored retirement plan, the
rider will terminate.
- On the annuitization start date, the rider will terminate.
- You may terminate the rider if your annual rider fee after any increase is
more than 0.25 percentage points higher than your fee before the increase.
(see "Charges -- SecureSource Stages 2 rider charge").
- When the contract value is zero and either the annual lifetime payment is
not established or a withdrawal in excess of the remaining annual lifetime
payment is taken, the rider will terminate.
- Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
ACCUMULATION PROTECTOR BENEFIT RIDER
The Accumulation Protector Benefit rider is an optional benefit, available for
contract applications signed on or after May 3, 2010, that you may select for
an additional charge. We have offered a different version of the Accumulation
Protector Benefit
--------------------------------------------------------------------------------
82 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
rider for the Original Contract with applications signed prior to June 1, 2009.
The description of the Accumulation Protector Benefit rider in this section
applies to both Original and Current contracts unless noted otherwise. The
Accumulation Protector Benefit rider specifies a waiting period that ends on the
benefit date. The Accumulation Protector Benefit rider provides a one-time
adjustment to your contract value on the benefit date if your contract value is
less than the Minimum Contract Accumulation Value (defined below) on that
benefit date. On the benefit date, if the contract value is equal to or greater
than the Minimum Contract Accumulation Value, as determined under the
Accumulation Protector Benefit rider, the Accumulation Protector Benefit rider
ends without value and no benefit is payable.
If the contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time during the waiting period
and before the benefit date, the contract and all riders, including the
Accumulation Protector Benefit rider will terminate without value and no
benefits will be paid. EXCEPTION: if you are still living on the benefit date,
we will pay you an amount equal to the Minimum Contract Accumulation Value as
determined under the Accumulation Protector Benefit rider on the valuation date
your contract value reached zero.
For the Current Contract, if you are (or if the owner is a non-natural person,
then the annuitant is) age 80 or younger at contract issue and this rider is
available in your state, you may elect the Accumulation Protector Benefit rider
at the time you purchase your contract and the rider effective date will be the
contract issue date. For the Original Contract, you may have elected the
Accumulation Protector Benefit rider at the time you purchased your contract and
the rider effective date was the contract issue date. The Accumulation Protector
Benefit rider may not be terminated once you have elected it except as described
in the "Terminating the Rider" section below. An additional charge for the
Accumulation Protector Benefit rider will be assessed annually during the
waiting period. The rider ends when the waiting period expires and no further
benefit will be payable and no further charges for the rider will be deducted.
After the waiting period, you have the following options:
Continue your contract;
Take partial surrenders or make a full surrender; or
Annuitize your contract.
The Accumulation Protector Benefit rider may not be purchased with the optional
SecureSource Stages 2 rider.
You should consider whether an Accumulation Protector Benefit rider is
appropriate for you because:
you must participate in the PN program and you must elect one of the PN
program investment options. This requirement limits your choice of
investments. This means you will not be able to allocate contract value to all
of the subaccounts, GPAs or the regular fixed account that are available under
the contract to other contract owners who do not elect this rider. You may
allocate qualifying purchase payments to the Special DCA fixed account, when
available (see "The Special DCA Fixed Account"), and we will make monthly
transfers into the PN program investment option you have chosen. (See "Making
the Most of Your Contract -- Portfolio Navigator Program");
you may not make additional purchase payments to your contract during the
waiting period after the first 180 days immediately following the effective
date of the Accumulation Protector Benefit rider. Some exceptions apply (see
"Additional Purchase Payments with Elective Step Up" below). In addition, we
reserve the right to change these additional purchase payment limitations,
including making further restrictions, upon written notice;
if you purchase this contract as a qualified annuity, for example, an IRA, you
may need to take partial surrenders from your contract to satisfy the RMDs
under the Code. Partial surrenders, including those used to satisfy RMDs, will
reduce any potential benefit that the Accumulation Protector Benefit rider
provides. You should consult your tax advisor if you have any questions about
the use of this rider in your tax situation;
if you think you may surrender all of your contract value before you have held
your contract with this benefit rider attached for 10 years, or you are
considering selecting an annuity payout option within 10 years of the
effective date of your contract, you should consider whether this optional
benefit is right for you. You must hold the contract a minimum of 10 years
from the effective date of the Accumulation Protector Benefit rider, which is
the length of the waiting period under the Accumulation Protector Benefit
rider, in order to receive the benefit, if any, provided by the Accumulation
Protector Benefit rider. In some cases, as described below, you may need to
hold the contract longer than 10 years in order to qualify for any benefit the
Accumulation Protector Benefit rider may provide;
the 10 year waiting period under the Accumulation Protector Benefit rider will
restart if you exercise the elective step-up option (described below) or your
surviving spouse exercises the spousal continuation elective step-up
(described below); and
the 10 year waiting period under the Accumulation Protector Benefit rider may
be restarted if you elect to change your investment option to one that causes
the Accumulation Protector Benefit rider charge to increase (see "Charges").
Be sure to discuss with your investment professional whether an Accumulation
Benefit rider is appropriate for your situation.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 83
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE OPERATION OF THE
ACCUMULATION PROTECTOR BENEFIT:
BENEFIT DATE: This is the first valuation date immediately following the
expiration of the waiting period.
MINIMUM CONTRACT ACCUMULATION VALUE (MCAV): An amount calculated under the
Accumulation Protector Benefit rider. The contract value will be increased to
equal the MCAV on the benefit date if the contract value on the benefit date is
less than the MCAV on the benefit date.
ADJUSTMENTS FOR PARTIAL SURRENDERS: The adjustment made for each partial
surrender from the contract is equal to the amount derived from multiplying (a)
and (b) where:
(a) is 1 minus the ratio of the contract value on the date of (but immediately
after) the partial surrender to the contract value on the date of (but
immediately prior to) the partial surrender; and
(b) is the MCAV on the date of (but immediately prior to) the partial surrender.
WAITING PERIOD: The waiting period for the rider is 10 years.
We reserve the right to restart the waiting period on the latest contract
anniversary if you change your investment option after we have exercised our
rights to increase the rider fee.
Your initial MCAV is equal to your initial purchase payment and any purchase
payment credits. It is increased by the amount of any subsequent purchase
payments and any purchase payment credits received within the first 180 days
that the rider is effective. It is reduced by any adjustments for partial
surrenders made during the waiting period.
AUTOMATIC STEP UP
On each contract anniversary after the effective date of the rider, the MCAV
will be set to the greater of:
1. 80% of the contract value on the contract anniversary; or
2. the MCAV immediately prior to the automatic step up.
The automatic step up does not create contract value, guarantee the performance
of any investment option, or provide a benefit that can be surrendered or paid
upon death. Rather, the automatic step up is an interim calculation used to
arrive at the final MCAV, which is used to determine whether a benefit will be
paid under the rider on the benefit date.
The automatic step up of the MCAV does not restart the waiting period or
increase the charge (although the total fee for the rider may increase).
ELECTIVE STEP UP OPTION
Within thirty days following each contract anniversary after the rider effective
date, but prior to the benefit date, you may notify us in writing that you wish
to exercise the annual elective step up option. You may exercise this elective
step up option only once per contract year during this 30 day period. If your
contract value on the valuation date we receive your written request to step up
is greater than the MCAV on that date, your MCAV will increase to 100% of that
contract value.
We may increase the fee for your rider (see "Charges -- Accumulation Protector
Benefit Rider Charge"). The revised fee would apply to your rider if you
exercise the annual elective step up, your MCAV is increased as a result, and
the revised fee is higher than your annual rider fee before the elective step
up. Elective step ups will also result in a restart of the waiting period as of
the most recent contract anniversary.
The elective step up does not create contract value, guarantee the performance
of any investment option or provide any benefit that can be surrendered or paid
upon death. Rather the elective step up is an interim calculation used to arrive
at the final MCAV, which is used to determine whether a benefit will be paid
under the rider on the benefit date.
The elective step up option is not available for inherited IRAs or if the
benefit date would be after the annuitization start date.
ADDITIONAL PURCHASE PAYMENTS WITH ANNUAL ELECTIVE STEP UPS -- CURRENT CONTRACT
ONLY
If your MCAV is increased as a result of elective step up, you have 180 days
from the latest contract anniversary to make additional purchase payments, if
allowed under the base contract. The MCAV will include the amount of any
additional purchase payments and purchase payment credits received during this
period. We reserve the right to change these additional purchase payment
limitations.
SPOUSAL CONTINUATION
If a spouse chooses to continue the contract under the spousal continuation
provision, the rider will continue as part of the contract. Once, within the
thirty days following the date of spousal continuation, the spouse may choose to
exercise an elective step up. The spousal continuation elective step up is in
addition to the annual elective step up. If the contract value on the valuation
date we receive the written request to exercise this option is greater than the
MCAV on that date, we will increase the MCAV to that contract value. If the MCAV
is increased as a result of the elective step up and we have increased the
--------------------------------------------------------------------------------
84 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
charge for the Accumulation Protector Benefit rider, the spouse will pay the
charge that is in effect on the valuation date we receive their written request
to step up for the entire contract year. In addition, the waiting period will
restart as of the most recent contract anniversary.
CHANGE OF OWNERSHIP OR ASSIGNMENT
Subject to state limitations, a change of ownership or assignment is subject to
our approval.
TERMINATING THE RIDER
The rider will terminate under the following conditions:
The rider will terminate before the benefit date without paying a benefit on
the date:
- you take a full surrender;
- annuitization begins;
- the contract terminates as a result of the death benefit being paid; or
- when a beneficiary elects an alternative payment plan which is an inherited
IRA.
The rider will terminate on the benefit date.
For an example, see Appendix L.
OPTIONAL LIVING BENEFITS
(FOR CONTRACTS WITH APPLICATION SIGNED BEFORE JULY 19, 2010)
If you bought a contract before July 19, 2010 with an optional living benefit,
please use the following table to review the disclosure that applies to the
optional living benefit rider you purchased. If you are uncertain as to which
optional living benefit rider you purchased, ask your investment professional,
or contact us at the telephone number or address shown on the first page of this
prospectus.
------------------------------------------------------------------------------------------------------------------------
IF YOU PURCHASED AND YOU SELECTED ONE OF THE DISCLOSURE FOR THIS BENEFIT MAY BE
A CONTRACT(1)... FOLLOWING OPTIONAL LIVING BENEFITS... FOUND IN THE FOLLOWING APPENDIX:
------------------------------------------------------------------------------------------------------------------------
Before April 29, 2005 Guarantor Withdrawal Benefit ("Rider B") Appendix J
------------------------------------------------------------------------------------------------------------------------
April 29, 2005 - April 30, Guarantor Withdrawal Benefit ("Rider A") Appendix J
2006
------------------------------------------------------------------------------------------------------------------------
May 1, 2006 - April 30, 2007 Guarantor Withdrawal Benefit for Life Appendix I
------------------------------------------------------------------------------------------------------------------------
Before May 1, 2007 Income Assurer Benefit Appendix K
------------------------------------------------------------------------------------------------------------------------
Before Aug. 10, 2009 SecureSource Rider Appendix M
------------------------------------------------------------------------------------------------------------------------
Before Nov. 30, 2009 SecureSource 20 Rider Appendix N
------------------------------------------------------------------------------------------------------------------------
Before July 19, 2010 SecureSource Stages Rider Appendix O
------------------------------------------------------------------------------------------------------------------------
(1) These dates are approximate and will vary by state; your actual contract and
any riders are the controlling documents.
OPTIONAL ADDITIONAL DEATH BENEFITS
BENEFIT PROTECTOR DEATH BENEFIT RIDER (BENEFIT PROTECTOR)
The Benefit Protector is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector provides reduced
benefits if you (Current Contract) or you or the annuitant (Original Contract)
are 70 or older at the rider effective date, The Benefit Protector does not
provide any additional benefit before the first rider anniversary.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector to your contract. You must elect the
Benefit Protector at the time you purchase your contract and your rider
effective date will be the contract issue date. You may not select this rider if
you select the Benefit Protector Plus, the 5% Accumulation Death Benefit or
Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector is appropriate for your situation.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 85
The Benefit Protector provides that if you (Current Contract) or you or the
annuitant (Original Contract) die after the first rider anniversary, but before
the annuitization start date, and while this contract is in force, we will pay
the beneficiary:
the applicable death benefit, plus:
- 40% of your earnings at death if you (Current Contract) or you and the
annuitant (Original Contract) were under age 70 on the rider effective date;
or
- 15% of your earnings at death if you (Current Contract) or you or the
annuitant (Original Contract) were 70 or older on the rider effective date.
For the Current Contract, if this rider is effective after the contract date or
if there has been a covered life change, remaining purchase payment is
established or set as the contract value on the rider effective date or, if
later, the date of the most recent covered life change. Thereafter, remaining
purchase payments is increased by the amount of each additional purchase payment
and adjusted for each partial surrender.
EARNINGS AT DEATH: For purposes of the Benefit Protector and Benefit Protector
Plus riders, this is an amount equal to the applicable death benefit minus
remaining purchase payments (also referred to as purchase payments not
previously surrendered under the Original Contract). Partial surrenders will
come from any earnings before reducing purchase payments in the contract. The
earnings at death may not be less than zero and may not be more than 250% of the
purchase payments not previously surrendered that are one or more years old.
Note: Purchase payments not previously surrendered is calculated differently and
is not the same value as purchase payments not previously surrendered used in
the surrender charge calculation.
TERMINATING THE BENEFIT PROTECTOR
CURRENT CONTRACT:
You may terminate the rider within 30 days after the first rider anniversary.
You may terminate the rider within 30 days after any rider anniversary
beginning with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
Your spouse may terminate the rider within 30 days following the effective
date of the spousal continuation if your spouse is age 75 or younger.
A new owner may terminate the rider within 30 days following the effective
date of an ownership change if the new owner is age 75 or younger.
The rider will terminate for a spousal continuation or ownership change if the
spouse or new owner is age 76 or older at the time of the change.
The rider will terminate after the death benefit is payable, unless the spouse
continues the contract under spousal continuation provision.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
ORIGINAL CONTRACT:
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
Our current administrative practice allows a new owner or your spouse to
terminate the rider within 30 days following the effective date of the
ownership change or spousal continuation.
The rider will terminate when you make a full surrender from the contract or
on the annuitization start date.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
IF YOUR SPOUSE IS THE SOLE BENEFICIARY and you die before the annuitization
start date, your spouse may keep the contract as owner. For Current Contract,
your spouse will be subject to all the limitations and restrictions of the rider
just as if they were purchasing a new contract and the age of the new spouse at
the time of the change will be used to determine the earnings at death
percentage going forward. If your spouse does not qualify for the rider on the
basis of age we will terminate the rider. If they do qualify for the rider on
the basis of age we will set the contract value equal to the death benefit that
would otherwise have been paid (without regard to the Full Surrender Value) and
we will substitute this new contract value on the date of death for "remaining
purchase payments" used in calculating earnings at death.
For Current Contract, after a covered life change other than a spouse that
continues the contract, the new owner will be subject to all the limitations and
restrictions of the rider just as if they were purchasing a new contract and the
age of the new owner at the time of the change will be used to determine the
earnings at death percentage going forward. If the new owner does not qualify
for the rider on the basis of age we will terminate the rider. If they do
qualify for the rider on the basis of age
--------------------------------------------------------------------------------
86 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
we will substitute the contract value on the date of the ownership changes for
remaining purchase payments used in calculating earnings at death.
For an example, see Appendix F.
BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER (BENEFIT PROTECTOR PLUS)
The Benefit Protector Plus is intended to provide an additional benefit to your
beneficiary to help offset expenses after your death such as funeral expenses or
federal and state taxes. This is an optional benefit that you may select for an
additional annual charge (see "Charges"). The Benefit Protector Plus provides
reduced benefits if you (Current Contract), or you or the annuitant (Original
Contract) are 70 or older at the rider effective date. It does not provide any
additional benefit before the first rider anniversary and it does not provide
any benefit beyond what is offered under the Benefit Protector rider during the
second rider year. Be sure to discuss with your investment professional whether
or not the Benefit Protector Plus is appropriate for your situation.
If this rider is available in your state and you (Current Contract) or both you
and the annuitant (Original Contract) are 75 or younger at contract issue, you
may choose to add the Benefit Protector Plus to your contract. You must elect
the Benefit Protector Plus at the time you purchase your contract and your rider
effective date will be the contract issue date. This rider is only available for
transfers, exchanges or rollovers. If this is a non-qualified annuity,
transfers, exchanges or rollovers must be from another annuity or life insurance
policy. You may not select this rider if you select the Benefit Protector Rider,
5% Accumulation Death Benefit or the Enhanced Death Benefit.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions from the annuity contract (see "Taxes -- Qualified
Annuities -- Required Minimum Distributions"). Since the benefit paid by the
rider is determined by the amount of earnings at death, the amount of the
benefit paid may be reduced as a result of taking any surrenders including RMDs.
Be sure to discuss with your investment professional and tax advisor whether or
not the Benefit Protector Plus is appropriate for your situation.
The Benefit Protector Plus provides that if you (Current Contract), or you or
the annuitant (Original Contract) die after the first rider anniversary, but
before the annuitization start date, and while this contract is in force, we
will pay the beneficiary:
the benefits payable under the Benefit Protector described above, plus:
a percentage of purchase payments made within 60 days of contract issue not
previously surrendered as follows:
PERCENTAGE IF YOU (CURRENT CONTRACT) PERCENTAGE IF YOU (CURRENT CONTRACT)
RIDER YEAR WHEN DEATH OR YOU AND THE ANNUITANT (ORIGINAL CONTRACT) ARE OR YOU OR THE ANNUITANT (ORIGINAL CONTRACT) ARE
OCCURS; UNDER AGE 70 ON THE RIDER EFFECTIVE DATE 70 OR OLDER ON THE RIDER EFFECTIVE DATE
One and Two 0% 0%
Three and Four 10% 3.75%
Five or more 20% 7.5%
Another way to describe the benefits payable under the Benefit Protector Plus
rider is as follows:
the applicable death benefit plus:
IF YOU (CURRENT CONTACT) OR YOU AND THE
ANNUITANT (ORIGINAL CONTRACT) ARE UNDER
RIDER YEAR WHEN DEATH OCCURS; AGE 70 ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 40% x earnings at death (see above)
Three and Four 40% x (earnings at death + 25% of initial purchase
payment*)
Five or more 40% x (earnings at death + 50% of initial purchase
payment*)
IF YOU (CURRENT CONTRACT) OR YOU OR THE
ANNUITANT (ORIGINAL CONTRACT) ARE AGE 70
RIDER YEAR WHEN DEATH OCCURS; OR OLDER ON THE RIDER EFFECTIVE DATE, ADD . . .
One Zero
Two 15% x earnings at death
Three and Four 15% x (earnings at death + 25% of initial purchase
payment*)
Five or more 15% x (earnings at death + 50% of initial purchase
payment*)
* Initial purchase payments are payments made within 60 days of rider issue
not previously surrendered.
TERMINATING THE BENEFIT PROTECTOR PLUS
You may terminate the rider within 30 days of the first rider anniversary.
You may terminate the rider within 30 days of any rider anniversary beginning
with the seventh rider anniversary.
The rider will terminate when you make a full surrender from the contract, on
the annuitization start date, or when the death benefit is payable.
The rider will terminate if there is an ownership change.
The rider will terminate when a beneficiary elects an alternative payment plan
which is an inherited IRA.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 87
IF YOUR SPOUSE IS SOLE BENEFICIARY and you die before the annuitization start
date, your spouse may keep the contract as owner with the contract value equal
to the death benefit that would otherwise have been paid (without regard to the
Full Surrender Value for the Current Contract). We will then terminate the
Benefit Protector Plus (see "Benefits in Case of Death").
For an example, see Appendix G.
THE ANNUITY PAYOUT PERIOD
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting on the annuitization start date. You may select
one of the annuity payout plans outlined below, or we may mutually agree on
other payout arrangements. We do not deduct any surrender charges under the
payout plans listed below, except under annuity payout Plan E. (See
"Charges -- Surrender charge under Annuity Payout Plan E").
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amount available to purchase
payouts under the plan you select is the contract value on your annuitization
start date after any rider charges have been deducted, plus any positive or
negative MVA less any purchase payment credits subject to reversal and less any
applicable premium tax. Additionally, we currently allow you to use part of the
amount available to purchase payouts, leaving any remaining contract value to
accumulate on a tax-deferred basis. If you select a variable annuity payout, we
reserve the right to limit the number of subaccounts in which you may invest.
The GPAs and the Special DCA fixed account (Current Contract) and the DCA fixed
account (Original Contract) are not available during this payout period.
AMOUNTS OF FIXED AND VARIABLE PAYOUTS DEPEND ON:
the annuity payout plan you select;
the annuitant's age and, in most cases, sex;
the annuity table in the contract; and
the amounts you allocated to the accounts at settlement.
In addition, for variable annuity payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the funds will fluctuate.
For information with respect to transfers between accounts after annuity payouts
begin, (see "Making the Most of Your Contract -- Transfer policies").
ANNUITY TABLES
The annuity tables in your contract (Table A and Table B) show the amount of the
monthly payout for each $1,000 of contract value according to the age and, when
applicable, the annuitant's sex. (Where required by law, we will use a unisex
table of settlement rates.)
Table A shows the amount of the first monthly variable annuity payout assuming
that the contract value is invested at the beginning of the annuity payout
period and earns a 5% rate of return, which is reinvested and helps to support
future payouts. If you ask us at least 30 days before the annuitization start
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% Table A in the contract. The assumed investment rate affects
both the amount of the first payout and the extent to which subsequent payouts
increase or decrease. For example, annuity payouts will increase if the
investment return is above the assumed investment rate and payouts will decrease
if the return is below the assumed investment rate. Using a 5% assumed interest
rate results in a higher initial payout, but later payouts will increase more
slowly when annuity unit values rise and decrease more rapidly when they
decline.
Table B shows the minimum amount of each fixed annuity payout. We declare
current payout rates that we use in determining the actual amount of your fixed
annuity payout. The current payout rates will equal or exceed the guaranteed
payout rates shown in Table B. We will furnish these rates to you upon request.
ANNUITY PAYOUT PLANS
You may choose an annuity payout plan by giving us written instructions at least
30 days before the annuitization start date. Generally, you may select one of
the Plans A through E below or another plan agreed to by us. Some of the annuity
payout plans may not be available if you have selected the Income Assurer
Benefit rider.
PLAN A - LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the annuitant
dies after we made only one monthly payout, we will not make any more payouts.
PLAN B - LIFE ANNUITY WITH FIVE, TEN, 15 OR 20 YEARS CERTAIN: (under the
Income Assurer Benefit rider: you may select life annuity with ten or 20 years
certain): We make monthly payouts for a guaranteed payout period of five, ten,
15 or 20 years that you elect. This election will determine the length of the
payout period to the beneficiary if the annuitant should die
--------------------------------------------------------------------------------
88 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
before the elected period expires. We calculate the guaranteed payout period
from the annuitization start date. If the annuitant outlives the elected
guaranteed payout period, we will continue to make payouts until the
annuitant's death.
PLAN C - LIFE ANNUITY -- INSTALLMENT REFUND: (not available under the Income
Assurer Benefit rider): We make monthly payouts until the annuitant's death,
with our guarantee that payouts will continue for some period of time. We will
make payouts for at least the number of months determined by dividing the
amount applied under this option by the first monthly payout, whether or not
the annuitant is living.
PLAN D
- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make monthly payouts
while both the annuitant and a joint annuitant are living. If either
annuitant dies, we will continue to make monthly payouts at the full amount
until the death of the surviving annuitant. Payouts end with the death of
the second annuitant.
- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH 20 YEARS CERTAIN: We make monthly
annuity payouts during the lifetime of the annuitant and joint annuitant.
When either the annuitant or joint annuitant dies, we will continue to make
monthly payouts during the lifetime of the survivor. If the survivor dies
before we have made payouts for 20 years, we continue to make payouts to the
named beneficiary for the remainder of the 20-year period which begins when
the first annuity payout is made.
PLAN E - PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect (under the Income
Assurer Benefit rider, you may elect a payout period of 20 years only). We
will make payouts only for the number of years specified whether the annuitant
is living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any remaining
variable payouts and pay it to you in a lump sum. (Exception: If you have an
Income Assurer Benefit rider and elect this annuity payout plan based on the
Guaranteed Income Benefit Base, a lump sum payout is unavailable.) We
determine the present value of the remaining annuity payouts which are assumed
to remain level at the amount of the payout that would have been made 7 days
prior to the date we determine the present value. The discount rate we use in
the calculation is 5.17% for the assumed investment return of 3.5% and 6.67%
for the assumed investment return of 5.0%. (See "Charges -- Surrender charge
under Annuity Payout Plan E.") You can also take a portion of the discounted
value once a year. If you do so, your monthly payouts will be reduced by the
proportion of your surrender to the full discounted value. A 10% IRS penalty
tax could apply if you take a surrender. (See "Taxes.").
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER
CONTRACTS WITH THE SECURESOURCE, GUARANTOR WITHDRAWAL BENEFIT FOR LIFE OR
GUARANTOR WITHDRAWAL BENEFIT RIDERS): This fixed annuity payout option is an
alternative to the above annuity payout plans. This option may not be
available if the contract is a qualified annuity. For such contracts, this
option will be available only if the guaranteed payment period is less than
the life expectancy of the owner at the time the option becomes effective.
Such life expectancy will be computed using a life expectancy table published
by the IRS. Under this option, the amount payable each year will be equal to
the remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource Riders", "Appendix I: Guarantor Withdrawal Benefit
for Life Rider" or "Appendix J: Guarantor Withdrawal Benefit Rider"). The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in the
frequency that you elect. The frequencies will be among those offered by us at
the time but will be no less frequent than annually. If, at the death of the
owner, total payouts have been made for less than the RBA, the remaining
payouts will be paid to the beneficiary.
REMAINING BENEFIT ANNUITY PAYOUT OPTION (AVAILABLE ONLY UNDER CONTRACTS WITH
THE SECURESOURCE 20 RIDER): This fixed annuity payout option is an alternative
to the above annuity payout plans. This option may not be available if the
contract is a qualified annuity. For such contracts, this option will be
available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the
IRS. Under this option, the amount payable each year will be equal to the
remaining schedule of GBPs, but the total amount paid will not exceed the
total RBA at the time you begin this fixed payout option (see "Optional
Benefits -- SecureSource 20 Riders"). The amount paid in the current contract
year will be reduced for any prior withdrawals in that year. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequent
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary.
ANNUITY PAYOUT PLAN REQUIREMENTS FOR QUALIFIED ANNUITIES: If your contract is a
qualified annuity, you have the responsibility for electing a payout plan under
your contract that complies with applicable law. Your contract describes your
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 89
payout plan options. The options will meet certain IRS regulations governing
RMDs if the payout plan meets the incidental distribution benefit requirements,
if any, and the payouts are made:
in equal or substantially equal payments over a period not longer than your
life expectancy, or over the joint life expectancy of you and your designated
beneficiary; or
over a period certain not longer than your life expectancy or over the joint
life expectancy of you and your designated beneficiary.
For qualified and nonqualified contracts with the SecureSource Stages rider, on
the annuitization start date you can choose one of the payout options available
under the contract or an alternative fixed annuity payout option available under
the rider. Under the rider's payout option, the minimum amount payable shown in
Table B will not apply, and you will receive the ALP provided by this rider
until the later of the death of covered person (JOINT LIFE: both covered
spouses) or depletion of the PBG. If you choose to receive the ALP, the amount
payable each year will be equal to the ALP on the annuitization start date. The
amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually. If You choose to
receive the ALP rather than a payout option available under the contract, all
other contract features, rider features and charges terminate after the
annuitization start date except for the principal back guarantee. You must
select a payout plan as of the annuitization start date set forth in your
contract.
IF WE DO NOT RECEIVE INSTRUCTIONS: You must give us written instructions for the
annuity payouts at least 30 days before the annuitization start date. If you do
not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
IF MONTHLY PAYOUTS WOULD BE LESS THAN $20: We will calculate the amount of
monthly payouts at the time amounts are applied to an annuity payout plan. If
the calculations show that monthly payouts would be less than $20, we have the
right to pay the amount that would otherwise have been applied to a plan to the
owner in a lump sum or to change the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN: If you (Current Contract), or you or the
annuitant (Original Contract) die after annuity payouts begin, we will pay any
amount payable to the beneficiary as provided in the annuity payout plan in
effect.
TAXES
Under current law, your contract has a tax-deferral feature. Generally, this
means you do not pay income tax until there is a taxable distribution (or deemed
distribution) from the contract. We will send a tax information reporting form
for any year in which we made a taxable or reportable distribution according to
our records.
NONQUALIFIED ANNUITIES
Generally, only the increase in the value of a non-qualified annuity contract
over the investment in the contract is taxable. Certain exceptions apply.
Federal tax law requires that all nonqualified deferred annuity contracts issued
by the same company (and possibly its affiliates) to the same owner during a
calendar year be taxed as a single, unified contract when distributions are
taken from any one of those contracts.
ANNUITY PAYOUTS: Generally, unlike surrenders described below, the taxation of
annuity payouts are subject to exclusion ratios, i.e. a portion of each payout
will be ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment in the contract and will not be
taxed. All amounts you receive after your investment in the contract is fully
recovered will be subject to tax. Under Annuity Payout Plan A: Life
annuity -- no refund, where the annuitant dies before your investment in the
contract is fully recovered, the remaining portion of the unrecovered investment
may be available as a federal income tax deduction to the owner for the last
taxable year. Under all other annuity payout plans, where the annuity payouts
end before your investment in the contract is fully recovered, the remaining
portion of the unrecovered investment may be available as a federal income tax
deduction to the taxpayer for the tax year in which the payouts end. (See "The
Annuity Payout Period -- Annuity Payout Plans.")
Beginning in 2011, federal tax law permits taxpayers to annuitize a portion of
their nonqualified annuity while leaving the remaining balance to continue to
grow tax-deferred. Under the new partial annuitization rules, the portion
annuitized must be received as an annuity for a period of 10 years or more, or
for the lives of one or more individuals. If this requirement is met, the
annuitized portion and the tax-deferred balance will generally be treated as two
separate contracts for income tax purposes only. If a contract is partially
annuitized, the investment in the contract is allocated between the deferred and
the annuitized portions on a pro rata basis.
SURRENDERS: Generally, if you surrender all or part of your nonqualified annuity
before the annuitization start date, including surrenders under any optional
withdrawal benefit rider, your surrender will be taxed to the extent that the
contract value
--------------------------------------------------------------------------------
90 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
immediately before the withdrawal exceeds the investment in the contract.
Different rules may apply if you exchange another contract into this contract.
You also may have to pay a 10% IRS penalty for surrenders of taxable income you
make before reaching age 59 1/2 unless certain exceptions apply.
WITHHOLDING: If you receive taxable income as a result of an annuity payout or
surrender, including surrenders under any optional withdrawal benefit rider, we
may deduct federal, and in some cases state withholding against the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual income tax return. As long as you have
provided us with a valid Social Security Number or Taxpayer Identification
Number, and you have a valid U.S. address, you may be able to elect not to have
any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a nonqualified contract
is not exempt from estate (federal or state) taxes. In addition, for income tax
purposes, any amount your beneficiary receives that exceeds the investment in
the contract is taxable as ordinary income to the beneficiary in the year he or
she receives the payments. (See also "Benefits in Case of Death -- If You Die
Before the Annuitization Start Date").
MEDICARE CONTRIBUTION TAX: Effective for taxable years beginning on or after
January 1, 2013, certain high-income individuals (as well as estates and trusts)
will be subject to a new 3.8% Medicare contribution tax (as an addition to
income taxes). For individuals, the 3.8% tax will apply to the lesser of (1) the
amount by which the taxpayer's modified adjusted gross income exceeds $200,000
($250,000 for married filing jointly and surviving spouses; $125,000 for married
filing separately) or (2) the taxpayer's "net investment income." Net investment
income includes taxable income from nonqualified annuities. Annuity holders are
advised to consult their tax advisor regarding the possible implications of this
additional tax.
ANNUITIES OWNED BY CORPORATIONS, PARTNERSHIPS OR IRREVOCABLE TRUSTS: For
nonqualified annuities, any annual increase in the value of annuities held by
such entities (nonnatural persons) generally will be treated as ordinary income
received during that year. However, if the trust was set up for the benefit of a
natural person(s) only, the income will generally remain tax-deferred until
withdrawn or paid out.
PENALTIES: If you receive amounts from your nonqualified annuity before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty will not apply to any amount
received:
because of your death or in the event of nonnatural ownership, the death of
annuitant;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if it is allocable to an investment before Aug. 14, 1982; or
if annuity payouts are made under immediate annuities as defined by the Code.
TRANSFER OF OWNERSHIP: Generally, if you transfer ownership of a nonqualified
annuity without receiving adequate consideration, the transfer may be treated as
a surrender for federal income tax purposes. If the transfer is a currently
taxable event for income tax purposes, the original owner will be taxed on the
amount of deferred earnings at the time of the transfer and also may be subject
to the 10% IRS penalty discussed earlier. In this case, the new owner's
investment in the contract will be the value of the contract at the time of the
transfer. In general, this rule does not apply to transfers between spouses or
former spouses. Similar rules apply if you transfer ownership for full
consideration. Please consult your tax advisor for further details.
1035 EXCHANGES: Section 1035 of the Code permits nontaxable exchanges of certain
insurance policies, endowment contracts, annuity contracts and qualified long-
term care insurance contracts while providing for continued tax deferral of
earnings. In addition, Section 1035 permits the carryover of the cost basis from
the old policy or contract to the new policy or contract. A 1035 exchange is a
transfer of one policy or contract for another policy or contract. The following
are nontaxable exchanges: (1) the exchange of a life insurance policy for
another life insurance policy or for an endowment, annuity or qualified long-
term care insurance contract, (2) the exchange of an endowment contract for an
annuity or qualified long-term care insurance
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 91
contract, or for an endowment contract under which payments will begin no later
than payments would have begun under the contract exchanged, (3) the exchange of
an annuity contract for another annuity or for a qualified long-term care
insurance contract, and (4) the exchange of a qualified long-term care insurance
contract for a qualified long-term care insurance contract. However, if the life
insurance policy has an outstanding loan, there may be tax consequences.
Depending on the issue date of your original policy or contract, there may be
tax or other benefits that are given up to gain the benefits of the new policy
or contract. Consider whether the features and benefits of the new policy or
contract outweigh any tax or other benefits of the old contract.
For a partial exchange of an annuity contract for another annuity contract, the
1035 exchange is generally tax-free. The investment in the original contract and
the earnings on the contract will be allocated proportionately between the
original and new contracts. However, per IRS Revenue Procedure 2011-38, if
withdrawals are taken from either contract within the 180-day period following
an exchange, the IRS will apply general tax principles to determine the
appropriate tax treatment of the exchange and subsequent withdrawal. As a
result, there may be unexpected tax consequences. You should consult your tax
advisor before taking any withdrawal from either contract during the 180-day
period following a partial exchange. Different IRS limitations on withdrawals
apply to partial exchanges completed prior to October 24, 2011.
ASSIGNMENT: If you assign or pledge your contract as collateral for a loan,
earnings on purchase payments you made after Aug. 13, 1982 will be taxed as a
deemed distribution and you may have to pay a 10% IRS penalty.
QUALIFIED ANNUITIES
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions. You should refer to your retirement plan's Summary Plan
Description, your IRA disclosure statement, or consult a tax advisor for
additional information about the distribution rules applicable to your
situation.
When you use your contract to fund a retirement plan or IRA that is already tax-
deferred under the Code, the contract will not provide any necessary or
additional tax deferral. If your contract is used to fund an employer sponsored
plan, your right to benefits may be subject to the terms and conditions of the
plan regardless of the terms of the contract.
ANNUITY PAYOUTS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or
Roth 403(b), the entire payout generally is includable as ordinary income and is
subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
ANNUITY PAYOUTS FROM ROTH IRAS: In general, the entire payout from a Roth IRA
can be free from income and penalty taxes if you have attained age 59 1/2 and
meet the five year holding period.
SURRENDERS: Under a qualified annuity, except a Roth IRA, Roth 401(k) or Roth
403(b), the entire surrender will generally be includable as ordinary income and
is subject to tax unless: (1) the contract is an IRA to which you made non-
deductible contributions; or (2) you rolled after-tax dollars from a retirement
plan into your IRA; or (3) the contract is used to fund a retirement plan and
you or your employer have contributed after-tax dollars.
SURRENDERS FROM ROTH IRAS: In general, the entire payout from a Roth IRA can be
free from income and penalty taxes if you have attained age 59 1/2 and meet the
five year holding period.
REQUIRED MINIMUM DISTRIBUTIONS: Retirement plans (except for Roth IRAs) are
subject to required surrenders called required minimum distributions ("RMDs")
beginning at age 70 1/2. RMDs are based on the fair market value of your
contract at year-end divided by the life expectancy factor. Certain death
benefits and optional riders may be considered in determining the fair market
value of your contract for RMD purposes. This may cause your RMD to be higher.
Inherited IRAs (including inherited Roth IRAs) are subject to special required
minimum distribution rules. You should consult your tax advisor prior to making
a purchase for an explanation of the potential tax implications to you.
WITHHOLDING FOR IRAS, ROTH IRAS, SEPS AND SIMPLE IRAS: If you receive taxable
income as a result of an annuity payout or a surrender, including surrenders
under any optional withdrawal benefit rider, we may deduct withholding against
the payment. Any withholding represents a prepayment of your tax due for the
year. You take credit for these amounts on your annual income tax return. As
long as you have provided us with a valid Social Security Number or Taxpayer
Identification Number, you can elect not to have any withholding occur.
If the payment is part of an annuity payout plan, we generally compute the
amount of federal income tax withholding using payroll tables. You may provide
us with a statement of how many exemptions to use in calculating the
withholding. If the distribution is any other type of payment (such as a partial
or full surrender) we compute federal income tax withholding using 10% of the
taxable portion.
--------------------------------------------------------------------------------
92 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
The federal income tax withholding requirements differ if we deliver payment
outside the United States or you are a non-resident alien.
Some states also may impose income tax withholding requirements similar to the
federal withholding described above. If this should be the case, we may deduct
state income tax withholding from the payment.
WITHHOLDING FOR ALL OTHER QUALIFIED ANNUITIES: If you receive directly all or
part of the contract value from a qualified annuity, mandatory 20% federal
income tax withholding (and possibly state income tax withholding) generally
will be imposed at the time the payout is made from the plan. Any withholding
represents a prepayment of your tax due for the year. You take credit for these
amounts on your annual income tax return. This mandatory withholding will not be
imposed if instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan. Payments
made to a surviving spouse instead of being directly rolled over to an IRA are
also subject to mandatory 20% income tax withholding.
In the below situations, the distribution is subject to an optional 10%
withholding instead of the mandatory 20% withholding. We will withhold 10% of
the distribution amount unless you elect otherwise.
the payout is one in a series of substantially equal periodic payouts, made at
least annually, over your life or life expectancy (or the joint lives or life
expectancies of you and your designated beneficiary) or over a specified
period of 10 years or more;
the payout is a RMD as defined under the Code;
the payout is made on account of an eligible hardship; or
the payout is a corrective distribution.
State withholding also may be imposed on taxable distributions.
PENALTIES: If you receive amounts from your qualified contract before reaching
age 59 1/2, you may have to pay a 10% IRS penalty on the amount includable in
your ordinary income. However, this penalty generally will not apply to any
amount received:
because of your death;
because you become disabled (as defined in the Code);
if the distribution is part of a series of substantially equal periodic
payments made at least annually, over your life or life expectancy (or joint
lives or life expectancies of you and your beneficiary);
if the distribution is made following severance from employment during the
calendar year in which you attain age 55 (TSAs and annuities funding 401(a)
plans only);
to pay certain medical or education expenses (IRAs only); or
if the distribution is made from an inherited IRA.
DEATH BENEFITS TO BENEFICIARIES: The entire death benefit generally is taxable
as ordinary income to the beneficiary in the year he/she receives the payments
from the qualified annuity. If you made non-deductible contributions to a
traditional IRA, the portion of any distribution from the contract that
represents after-tax contributions is not taxable as ordinary income to your
beneficiary. You are responsible for keeping all records tracking your non-
deductible contributions to an IRA. Death benefits under a Roth IRA generally
are not taxable as ordinary income to the beneficiary if certain distribution
requirements are met. (See also "Benefits in Case of Death -- If you Die Before
the Annuitization Start Date").
ASSIGNMENT: You may not assign or pledge your qualified contract as collateral
for a loan.
OTHER
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly when surrendered or paid out.
SPECIAL CONSIDERATIONS IF YOU SELECT ANY OPTIONAL RIDER: As of the date of this
prospectus, we believe that charges related to these riders are not subject to
current taxation. Therefore, we will not report these charges as partial
surrenders from your contract. However, the IRS may determine that these charges
should be treated as partial surrenders subject to taxation to the extent of any
gain as well as the 10% tax penalty for surrenders before the age of 59 1/2, if
applicable.
We reserve the right to report charges for these riders as partial surrenders if
we, as a withholding and reporting agent, believe that we are required to report
them. In addition, we will report any benefits attributable to these riders on
your death (Current Contract), or your or the annuitant's death (Original
Contract) as an annuity death benefit distribution, not as proceeds from life
insurance.
IMPORTANT: Our discussion of federal tax laws is based upon our understanding of
current interpretations of these laws. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 93
and highly individual and cannot always be anticipated, you should consult a tax
advisor if you have any questions about taxation of your contract.
RIVERSOURCE LIFE'S TAX STATUS: We are taxed as a life insurance company under
the Code. For federal income tax purposes, the subaccounts are considered a part
of our company, although their operations are treated separately in accounting
and financial statements. Investment income is reinvested in the fund in which
each subaccount invests and becomes part of that subaccount's value. This
investment income, including realized capital gains, is not subject to any
withholding for federal or state income taxes. We reserve the right to make such
a charge in the future if there is a change in the tax treatment of variable
annuities or in our tax status as we then understand it.
TAX QUALIFICATION: We intend that the contract qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, in spite of any other
provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any amendments.
SPOUSAL STATUS: Under the Code, spousal continuation and certain distribution
options are available only to a person who is defined as a "spouse" under the
Federal Defense of Marriage Act or other applicable Federal law. All contract
provisions will be interpreted and administered in accordance with the
requirements of the Code. Therefore, under current Federal law, if you are in
the civil union or you are contemplating a civil union or same-sex marriage, you
should note that the favorable tax treatment afforded under Federal law would
not be available to the same-sex partner or same-sex spouse. Same-sex partners
or spouses who own or are considering the purchase of annuity products that
provide benefits based upon status as a spouse should consult a tax adviser.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important fund policies until annuity payouts begin. Once they begin, the person
receiving them has voting rights. We will vote fund shares according to the
instructions of the person with voting rights.
Before annuity payouts begin, the number of votes you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
the reserve held in each subaccount for your contract; divided by
the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
laws or regulations change;
the existing funds become unavailable; or
in our judgment, the funds no longer are suitable (or are not the most
suitable) for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute a fund currently listed in this prospectus (existing fund) for
another fund (new fund). The new fund may have higher fees and/or operating
expenses than the existing fund. Also, the new fund may have investment
objectives and policies and/or investment advisers which differ from the
existing fund.
We may also:
add new subaccounts;
combine any two or more subaccounts;
transfer assets to and from the subaccounts or the variable account; and
eliminate or close any subaccounts.
--------------------------------------------------------------------------------
94 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
We will notify you of any substitution or change. If we notify you that a
subaccount will be eliminated or closed, you will have a certain period of time
to tell us where to reallocate purchase payments or contract value currently
allocated to that subaccount. If we do not receive your reallocation
instructions by the due date, we automatically will reallocate to the subaccount
investing in the Columbia Variable Portfolio -- Cash Management Fund (Class 3).
You may then transfer this reallocated amount in accordance with the transfer
provisions of your contract (see "Transferring Between Accounts" above).
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments.
ABOUT THE SERVICE PROVIDERS
PRINCIPAL UNDERWRITER
RiverSource Distributors, Inc. (RiverSource Distributors), our affiliate, serves
as the principal underwriter and general distributor of the contract. Its
offices are located at 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Distributors is a wholly-owned subsidiary of Ameriprise Financial,
Inc.
SALES OF THE CONTRACT
Only securities broker-dealers ("selling firms") registered with the SEC and
members of the FINRA may sell the contract.
The contracts are continuously offered to the public through authorized
selling firms. We and RiverSource Distributors have a sales agreement with the
selling firm. The sales agreement authorizes the selling firm to offer the
contracts to the public. RiverSource Distributors pays the selling firm (or an
affiliated insurance agency) for contracts its investment professional sell.
The selling firm may be required to return sales commissions under certain
circumstances including but not limited to when contracts are returned under
the free look period.
PAYMENTS WE MAKE TO SELLING FIRMS
We may use compensation plans which vary by selling firm. For example, some of
these plans pay selling firms a commission of up to 5.75% each time a purchase
payment is made. We may also pay ongoing trail commissions of up to 1.00% of
the contract value. We do not pay or withhold payment of trail commissions
based on which investment options you select.
We may pay selling firms an additional sales commission of up to 1% of
purchase payments for a period of time we select. For example, we may offer to
pay an additional sales commission to get selling firms to market a new or
enhanced contract or to increase sales during the period.
In addition to commissions, we may, in order to promote sales of the
contracts, and as permitted by applicable laws and regulation, pay or provide
selling firms with other promotional incentives in cash, credit or other
compensation. We may offer these promotional incentives to all selling firms.
The terms of such arrangements differ between selling firms. These promotional
incentives may include but are not limited to:
- sponsorship of marketing, educational, due diligence and compliance meetings
and conferences we or the selling firm may conduct for investment
professionals, including subsidy of travel, meal, lodging, entertainment and
other expenses related to these meetings;
- marketing support related to sales of the contract including for example,
the creation of marketing materials, advertising and newsletters;
- providing service to contract owners; and
- funding other events sponsored by a selling firm that may encourage the
selling firm's investment professionals to sell the contract.
These promotional incentives or reimbursements may be calculated as a percentage
of the selling firm's aggregate, net or anticipated sales and/or total assets
attributable to sales of the contract, and/or may be a fixed dollar amount. As
noted below this additional compensation may cause the selling firm and its
investment professionals to favor the contracts.
SOURCES OF PAYMENTS TO SELLING FIRMS
We pay the commissions and other compensation described above from our assets.
Our assets may include:
revenues we receive from fees and expenses that you will pay when buying,
owning and making a surrender from the contract (see "Expense Summary");
compensation we or an affiliate receive from the underlying funds in the form
of distribution and services fees (see "The Variable Account and the
Funds -- The Funds");
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 95
compensation we or an affiliate receive from a fund's investment adviser,
subadviser, distributor or an affiliate of any of these (see "The Variable
Account and the Funds -- The Funds"); and
revenues we receive from other contracts we sell that are not securities and
other businesses we conduct.
You do not directly pay the commissions and other compensation described above
as the result of a specific charge or deduction under the contract. However, you
may pay part or all of the commissions and other compensation described above
indirectly through:
fees and expenses we collect from contract owners, including surrender
charges; and
fees and expenses charged by the underlying subaccount funds in which you
invest, to the extent we or one of our affiliates receive revenue from the
funds or an affiliated person.
POTENTIAL CONFLICTS OF INTEREST
Compensation payment arrangements with selling firms can potentially:
give selling firms a heightened financial incentive to sell the contract
offered in this prospectus over another investment with lower compensation to
the selling firm.
cause selling firms to encourage their investment professionals to sell you
the contract offered in this prospectus instead of selling you other
alternative investments that may result in lower compensation to the selling
firm.
cause selling firms to grant us access to its investment professionals to
promote sales of the contract offered in this prospectus, while denying that
access to other firms offering similar contracts or other alternative
investments which may pay lower compensation to the selling firm.
PAYMENTS TO INVESTMENT PROFESSIONALS
The selling firm pays its investment professionals. The selling firm decides
the compensation and benefits it will pay its investment professionals.
To inform yourself of any potential conflicts of interest, ask the investment
professional before you buy, how the selling firm and its investment
professionals are being compensated and the amount of the compensation that
each will receive if you buy the contract.
ISSUER
RiverSource Life issues the contracts. We are located at 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 and are a wholly-owned subsidiary of
Ameriprise Financial, Inc.
We conduct a conventional life insurance business. We are licensed to do
business in 49 states, the District of Columbia and American Samoa. Our primary
products currently include fixed and variable annuity contracts and life
insurance policies.
LEGAL PROCEEDINGS
Life insurance companies have been the subject of increasing regulatory,
legislative and judicial scrutiny. Numerous state and federal regulatory
agencies have commenced examinations and other inquiries of insurance companies
regarding sales and marketing practices (including sales to older consumers and
disclosure practices), claims handling, and unclaimed property and escheatment
practices and procedures. With regard to an industry-wide investigation of
unclaimed property and escheatment practices and procedures, RiverSource Life is
responding to regulatory audits, market conduct examinations and other inquiries
(including inquiries from the State of Minnesota). RiverSource Life has
cooperated with and will continue to cooperate with the applicable regulators
regarding their inquiries.
RiverSource Life is involved in the normal course of business in a number of
other legal and arbitration proceedings concerning matters arising in connection
with the conduct of its business activities. RiverSource Life believes that it
is not a party to, nor are any of its properties the subject of, any pending
legal, arbitration or regulatory proceedings that would have a material adverse
effect on its consolidated financial condition, results of operations or
liquidity. However, it is possible that the outcome of any such proceedings
could have a material adverse impact on results of operations in any particular
reporting period as the proceedings are resolved.
ADDITIONAL INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
RiverSource Life is incorporating by reference in this prospectus information we
file with the SEC, which means that we are disclosing important information to
you by referring you to those documents. The information that we incorporate by
reference is an important part of this prospectus, and later information that we
file with the SEC automatically will update and supersede this information. The
Annual Report on Form 10-K of RiverSource Life Insurance Company for the year
ended December 31, 2011, File No. 33-28976, that we previously filed with the
SEC under the Securities Exchange Act of 1934
--------------------------------------------------------------------------------
96 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
(1934 Act) is incorporated by reference into this prospectus, as well as all of
our subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K filed with the SEC under the 1934 Act. To access
this document, see "SEC Filings" under "Investors Relations" on our website at
www.ameriprise.com.
RiverSource Life will furnish you without charge a copy of any or all of the
documents incorporated by reference into this prospectus, including any exhibits
to such documents which have been specifically incorporated by reference. We
will do so upon receipt of your written or oral request. You can contact
RiverSource Life at the telephone number and address listed on the first page of
this prospectus.
AVAILABLE INFORMATION
This prospectus is part of a registration statement we file with the SEC.
Additional information on RiverSource Life and on this offering is available in
the registration statement. You can obtain copies of these materials at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
can obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. In addition to this prospectus,
the SAI and information about the contract, information incorporated by
reference is available on the EDGAR Database on the SEC's Internet site at
(http://www.sec.gov).
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (Securities Act) may be permitted to directors and officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 97
APPENDICES
TABLE OF CONTENTS AND CROSS-REFERENCE TABLE
APPENDIX NAME PAGE # CROSS-REFERENCE PAGE #
Appendix A: Example -- Market Value Guarantee Period Accounts (GPAs)
Adjustment (MVA) p. 99 p. 32
Appendix B: Example -- Surrender Charges p. 101 Charges -- Surrender Charge p. 44
Appendix C: Example -- Death Benefits p. 110 Benefits in Case of Death p. 65
Appendix D: Example -- SecureSource Optional Benefits -- Optional Living
Series of Riders p. 116 Benefits p. 74
Appendix E: SecureSource Series of Optional Benefits -- Optional Living
Riders -- Additional RMD Disclosure p. 124 Benefits p. 74
Appendix F: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Death Benefit Rider p. 126 Death Benefit Rider p. 85
Appendix G: Example -- Benefit Protector Optional Benefits -- Benefit Protector
Plus Death Benefit Rider p. 128 Plus Death Benefit Rider p. 86
Appendix H: Asset Allocation Program for N/A
Contracts with Applications Signed
Before May 1, 2006 p. 130
Appendix I: Guarantor Withdrawal Benefit N/A
for Life Rider p. 131
Appendix J: Guarantor Withdrawal Benefit N/A
Rider p. 143
Appendix K: Income Assurer Benefit N/A
Riders p. 151
Appendix L: Example -- Accumulation Optional Benefits -- Optional Living
Protector Benefit Rider p. 160 Benefits p. 74
Appendix M :SecureSource Rider N/A
Disclosure p. 161
Appendix N: SecureSource 20 Rider N/A
Disclosure p. 174
Appendix O: SecureSource Stages Rider N/A
Disclosure p. 188
Appendix P: Condensed Financial Condensed Financial Information
Information (Unaudited) p. 198 (Unaudited) p. 19
The purpose of these appendices is first to illustrate the operation of various
contract features and riders; second, to provide additional disclosure regarding
various contract features and riders; and lastly, to provide condensed financial
history (unaudited) of the subaccounts.
In order to demonstrate the contract features and riders, an example may show
hypothetical contract values. These contract values do not represent past or
future performance. Actual contract values may be more or less than those shown
and will depend on a number of factors, including but not limited to the
investment experience of the subaccounts, GPAs, Special DCA Fixed account
(Current Contract), DCA fixed account (Original Contract), regular fixed account
(Current Contract) and one-year fixed account (Original Contract) and the fees
and charges that apply to your contract.
The examples of death benefits and optional riders in appendices include a
partial surrender to illustrate the effect of a partial surrender on the
particular benefit. These examples are intended to show how the optional riders
operate, and do not take into account whether the rider is part of a qualified
contract. Qualified contracts are subject to required minimum distributions at
certain ages which may require you to take partial surrenders from the contract
(see "Taxes -- Qualified Annuities -- Required Minimum Distributions"). If you
are considering the addition of certain death benefits and/or optional riders to
a qualified contract, you should consult your tax advisor prior to making a
purchase for an explanation of the potential tax implications to you.
--------------------------------------------------------------------------------
98 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX A: EXAMPLE -- MARKET VALUE ADJUSTMENT (MVA)
As the examples below demonstrate, the application of an MVA may result in
either a gain or a loss of principal. We refer to all of the transactions
described below as "early surrenders."
ASSUMPTIONS:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA; and
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a surrender from your GPA. In other
words, there are seven years left in your guarantee period.
Remember that the MVA depends partly on the interest rate of a new GPA for the
same number of years as the guarantee period remaining on your GPA. In this
case, that is seven years.
EXAMPLE 1: Remember that your GPA is earning 3.0%. Assume at the time of your
surrender new GPAs that we offer with a seven-year guarantee period are earning
3.5%. We add 0.10% to the 3.5% rate to get 3.6%. Your GPA's 3.0% rate is less
than the 3.6% rate and, so the MVA will be negative.
EXAMPLE 2: Remember again that your GPA is earning 3.0%, and assume that new
GPAs that we offer with a seven-year guarantee period are earning 2.5%. We add
0.10% to the 2.5% rate to get 2.6%. In this example, since your GPA's 3.0% rate
is greater than the 2.6% rate, the MVA will be positive. To determine that
adjustment precisely, you will have to use the formula described below.
SAMPLE MVA CALCULATIONS
The precise MVA formula we apply is as follows:
1 + I
EARLY SURRENDER AMOUNT X [( --------------- ) (N/12) - 1] = MVA
1 + J + .001
Where i = rate earned in the GPA from which amounts are being
transferred or surrendered.
j = current rate for a new guarantee period equal to the remaining
term in the current guarantee period.
n = number of months remaining in the current guarantee period
(rounded up).
EXAMPLES -- MVA
Using assumptions similar to those we used in the examples above:
You purchase a contract and allocate part of your purchase payment to the ten-
year GPA;
we guarantee an interest rate of 3.0% annually for your ten-year guarantee
period; and
after three years, you decide to make a $1,000 surrender from your GPA. In
other words, there are seven years left in your guarantee period.
EXAMPLE 1: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 3.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = -$39.84
1 + .035 + .001
In this example, the MVA is a negative $39.84.
EXAMPLE 2: You request an early surrender of $1,000 from your ten-year GPA
earning a guaranteed interest rate of 3.0%. Assume at the time of your surrender
new GPAs that we offer with a seven-year guarantee period are earning 2.5%.
Using the formula above, we determine the MVA as follows:
1.030
$1,000 X [( --------------- ) (84/12) - 1] = $27.61
1 + .025 + .001
In this example, the MVA is a positive $27.61.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 99
Please note that when you allocate your purchase payment to the ten-year GPA and
your purchase payment is in its fourth year from receipt at the beginning of the
guarantee period, the surrender charge will apply. (See "Charges -- Surrender
Charge.") We do not apply MVAs to the amounts we deduct for surrender charges,
so we would deduct the surrender charge from your early surrender after we
applied the MVA. Also note that when you request an early surrender, we
surrender an amount from your GPA that will give you the net amount you
requested after we apply the MVA and any applicable surrender charge, unless you
request otherwise.
The current interest rate we offer on the GPA will change periodically at our
discretion. It is the rate we are then paying on purchase payments, renewals and
transfers paid under this class of contracts for guarantee period durations
equaling the remaining guarantee period of the GPA to which the formula is being
applied.
--------------------------------------------------------------------------------
100 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX B: EXAMPLE -- SURRENDER CHARGES
EXAMPLE -- SURRENDER CHARGES
We determine your surrender charge by multiplying the amount of each purchase
payment surrendered which could be subject to a surrender charge by the
applicable surrender charge percentage, and then totaling the surrender charges.
We calculate the amount of purchase payments surrendered (PPS) as:
Current Contract:
PPS = PPSC + PPF
PPSC = purchase payments surrendered that could be subject to a surrender charge
= (PS - FA) / (CV - FA) x (PP - PPF)
PPF = purchase payments surrendered that are not subject to a surrender charge
= FA - contract earnings, but not less than zero
PP = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
PS = amount the contract value is reduced by the surrender
FA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
CV = contract value prior to the surrender
Original Contract:
PPS = XSF + (ACV - XSF) / (CV - TFA) x (PPNPS - XSF)
XSF = 10% of prior anniversary's contract value - contract earnings, but not less
than zero
ACV = amount the contract value is reduced by the surrender - contract earnings,
but not less than zero
TFA = total free amount = greater of contract earnings or 10% of prior
anniversary's contract value
PPNPS = purchase payments not previously surrendered (total purchase payments - PPS
from all previous surrenders)
CV = contract value prior to the surrender
When determining the surrender charge, contract earnings are defined as the
contract value, including any positive or negative MVA on amounts being
surrendered, less purchase payments not previously surrendered. We determine
current contract earnings by looking at the entire contract value, not the
earnings of any particular subaccount, GPA, the regular fixed account (Current
Contract), the one-year fixed account (Original Contract), the Special DCA fixed
account (Current Contract) or the DCA fixed account (Original Contract). If the
contract value is less than purchase payments received and not previously
surrendered, then contract earnings are zero.
The examples below show how the surrender charge for a full and partial
surrender is calculated for a contract with an eight-year surrender charge
schedule. Each example illustrates the amount of the surrender charge for both a
contract that experiences gains and a contract that experiences losses, given
the same set of assumptions.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 101
CURRENT CONTRACT: FULL SURRENDER CHARGE CALCULATION -- EIGHT-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with
an eight-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $1,000
purchase payment credit;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50.000.00 50.000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero) 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS: 60,000.00 40,000.00
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF+ (PS - FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 60,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
102 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 3,500.00 3,206.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (3,500.00) (3,206.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $56,460.00 $36,754.00
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 103
CURRENT CONTRACT: PARTIAL SURRENDER CHARGE CALCULATION -- EIGHT-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with
an eight-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $1,000
purchase payment credit;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 7.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously 50,000.00 50,000.00
surrendered (PP):
---------- ----------
Earnings in the contract (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the total free amount (FA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
FA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine PPF, the amount by which the
total free amount (FA) exceeds earnings.
Total free amount (FA): 10,000.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
PPF (but not less than zero): 0.00 4,200.00
STEP 4. Next we determine PS, the amount by which the
contract value is reduced by the surrender.
PS (determined by iterative process described 15,376.34 16,062.31
above):
STEP 5. Now we can determine how much of the PP is being
surrendered (PPS) as follows:
PPS = PPF + PPSC
= PPF + (PS - FA) / (CV - FA) * (PP - PPF)
PPF from Step 3 = 0.00 4,200.00
PS from Step 4 = 15,376.34 16,062.31
CV from Step 1 = 60,000.00 40,000.00
FA from Step 2 = 10,000.00 4,200.00
PP from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,376.34 19,375.80
--------------------------------------------------------------------------------
104 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,376.34 19,375.80
less PPF: 0.00 4,200.00
---------- ----------
PPSC = amount of PPS subject to a surrender charge: 5,376.34 15,175.80
multiplied by the surrender charge rate: x 7.0% x 7.0%
---------- ----------
surrender charge: 376.34 1,062.31
STEP 7. The dollar amount you will receive as a result of
your partial surrender is determined as:
Contract value surrendered: 15,376.34 16,062.31
SURRENDER CHARGE: (376.34) (1,062.31)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 105
ORIGINAL CONTRACT FULL SURRENDER CHARGE CALCULATION -- EIGHT-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with
an eight-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $1,000
purchase payment credit;
During the fourth contract year you surrender the contract for its total
value. The surrender charge percentage in the fourth year after a purchase
payment is 8.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
WE CALCULATE THE SURRENDER CHARGE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contact (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 60,000.00 40,000.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 50,000.00 40,000.00
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
STEP 5. Now we can determine how much of the PPNPS is being
surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) / (CV - TFA) X (PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 50,000.00 40,000.00
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 50,000.00 50,000.00
--------------------------------------------------------------------------------
106 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with a
loss, PPS may be greater than the amount you
request to surrender:
PPS: 50,000.00 50,000.00
less XSF: (0.00) (4,200.00)
---------- ----------
amount of PPS subject to a surrender charge: 50,000.00 45,800.00
multiplied by the surrender charge rate: x 8.0% x 8.0%
---------- ----------
surrender charge: 4,000.00 3,664.00
STEP 7. The dollar amount you will receive as a result of
your full surrender is determined as:
Contract value surrendered: 60,000.00 40,000.00
SURRENDER CHARGE: (4,000.00) (3,664.00)
Contract charge (assessed upon full surrender): (40.00) (40.00)
---------- ----------
NET FULL SURRENDER PROCEEDS: $55,960.00 $36,296.00
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 107
ORIGINAL CONTRACT PARTIAL SURRENDER CHARGE CALCULATION -- EIGHT-YEAR SURRENDER
CHARGE SCHEDULE:
This is an example of how we calculate the surrender charge on a contract with
an eight-year (from the date of EACH purchase payment) surrender charge schedule
and the following history:
ASSUMPTIONS:
We receive a single $50,000 purchase payment and we immediately add a $1,000
purchase payment credit;
During the fourth contract year you request a net partial surrender of
$15,000.00. The surrender charge percentage in the fourth year after a
purchase payment is 8.0%; and
You have made no prior surrenders.
WE WILL LOOK AT TWO SITUATIONS, ONE WHERE THE CONTRACT HAS A GAIN AND ANOTHER
WHERE THERE IS A LOSS:
--------------------------------------------------------------------------------
CONTRACT WITH GAIN CONTRACT WITH LOSS
Contract value just prior to surrender: $60,000.00 $40,000.00
Contract value on prior anniversary: 58,000.00 42,000.00
We determine the amount of contract value that must be surrendered in order for the net partial
surrender proceeds to match the amount requested. We start with an estimate of the amount of contract
value to surrender and calculate the resulting surrender charge and net partial surrender proceeds as
illustrated below. We then adjust our estimate and repeat until we determine the amount of contract
value to surrender that generates the desired net partial surrender proceeds.
WE CALCULATE THE SURRENDER CHARGE FOR EACH ESTIMATE AS FOLLOWS:
STEP 1. First, we determine the amount of earnings
available in the contract at the time of surrender
as:
Contract value just prior to surrender (CV): 60,000.00 40,000.00
Less purchase payments received and not previously
surrendered (PPNPS): 50,000.00 50,000.00
---------- ----------
Earnings in the contact (but not less than zero): 10,000.00 0.00
STEP 2. Next, we determine the Total Free Amount (TFA)
available in the contract as the greatest of the
following values:
Earnings in the contract: 10,000.00 0.00
10% of the prior anniversary's contract value: 5,800.00 4,200.00
---------- ----------
TFA (but not less than zero): 10,000.00 4,200.00
STEP 3. Next we determine ACV, the amount by which the
contract value surrendered exceeds earnings.
Contract value surrendered: 15,434.78 16,231.37
Less earnings in the contract: 10,000.00 0.00
---------- ----------
ACV (but not less than zero): 5,434.78 16,231.37
STEP 4. Next we determine XSF, the amount by which 10% of
the prior anniversary's contract value exceeds
earnings.
10% of the prior anniversary's contract value: 5,800.00 4,200.00
Less earnings in the contract: 10,000.00 0.00
---------- ----------
XSF (but not less than zero): 0.00 4,200.00
--------------------------------------------------------------------------------
108 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
CONTRACT WITH GAIN CONTRACT WITH LOSS
STEP 5. Now we can determine how much of the PPNPS is
being surrendered (PPS) as follows:
PPS = XSF + (ACV - XSF) /(CV - T-
FA) X (PPNPS - XSF)
XSF from Step 4 = 0.00 4,200.00
ACV from Step 3 = 5,434.78 16,231.37
CV from Step 1 = 60,000.00 40,000.00
TFA from Step 2 = 10,000.00 4,200.00
PPNPS from Step 1 = 50,000.00 50,000.00
---------- ----------
PPS = 5,434.78 19,592.09
STEP 6. We then calculate the surrender charge as a
percentage of PPS. Note that for a contract with
a loss, PPS may be greater than the amount you
request to surrender:
PPS: 5,434.78 19,592.09
less XSF: (0.00) 4,200.00
---------- ----------
amount of PPS subject to a surrender charge: 5,434.78 15,392.09
multiplied by the surrender charge rate: x 8.0% x 8.0%
---------- ----------
surrender charge: 434.78 1,231.37
STEP 7. The dollar amount you will receive as a result
of your partial surrender is determined as:
Contract value surrendered: 15,434.78 16,231.37
SURRENDER CHARGE: (434.78) (1,231.37)
---------- ----------
NET PARTIAL SURRENDER PROCEEDS: $15,000.00 $15,000.00
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 109
APPENDIX C: EXAMPLE -- DEATH BENEFITS
CURRENT CONTRACT:
EXAMPLE -- ROPP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $100,000. We add a purchase
payment credit of $3,000 to the contract; and
On the first contract anniversary you make an additional payment of $20,000.
We add a purchase payment credit of $600; and
During the second contract year the contract value is $110,000 and you take a
$10,000 partial surrender (including withdrawal charges); and
During the third contract year the contract value is $105,000.
WE CALCULATE THE ROPP DEATH BENEFIT AS FOLLOWS:
CONTRACT VALUE AT DEATH: $105,000.00
-----------
Purchase payments, plus credits minus adjusted partial surrenders:
Total purchase payments: $120,000.00
plus purchase payment credits: +3,600.00
minus adjusted partial surrenders calculated as:
$10,000 x $123,600
------------------ = -11,236.36
$110,000
-----------
for a death benefit of: $112,363.64
-----------
THE ROPP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$112,363.64
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $500 to your contract; and
On the first contract anniversary the contract value grows to $29,000; and
During the second contract year the contract value falls to $27,000, at which
point you take a $1,500 partial surrender (including surrender charges),
leaving a contract value of $25,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $25,500.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,416.67
$27,000
----------
for a death benefit of: $24,083.33
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $29,000.00
plus purchase payments and purchase payment credits made since the prior
anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $29,000
---------------- = -1,611.11
$27,000
----------
for a death benefit of: $27,388.89
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,388.89
--------------------------------------------------------------------------------
110 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a purchase
payment credit of $500 to your contract. You allocate $5,000 to the regular
fixed account and $20,500 to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF THREE VALUES, IS CALCULATED
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments and purchase payment credits: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a death benefit of: $23,925.93
----------
3. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: 1.05 x $20,000 =
plus amounts allocated to the subaccounts since that anniversary: $21,525.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as: +0.00
$1,500 x $21,525
---------------- = -1,699.34
$19,000
----------
variable account floor benefit: $19,825.66
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $25,125.66
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH
IS THE 5% ACCUMULATION DEATH BENEFIT FLOOR: $25,125.66
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 111
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a $500 purchase
payment credit with $5,000 allocated to the regular fixed account and $20,500
allocated to the subaccounts; and
on the first contract anniversary the regular fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the regular fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 (including surrender charge) partial surrender all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATEST OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS MINUS ADJUSTED PARTIAL SURRENDERS:
Total purchase payments: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a death benefit of: $23,925.93
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,500.00
plus purchase payments and credits made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a MAV Death Benefit of: $23,925.93
----------
4. THE 5% ACCUMULATION DEATH BENEFIT FLOOR:
The variable account floor on the first contract anniversary calculated
as: 1.05 x $20,000 = $21,525.00
plus amounts allocated to the subaccounts since that anniversary: +0.00
minus the 5% accumulation death benefit floor adjusted partial surrender
from the subaccounts, calculated as:
$1,500 x $21,525
---------------- = -1,699.34
$19,000
----------
variable account floor benefit: $19,825.66
plus the regular fixed account value: +5,300.00
----------
5% accumulation death benefit floor (value of the regular fixed account
and the variable account floor): $25,125.66
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5%
ACCUMULATION DEATH BENEFIT FLOOR: $25,125.66
--------------------------------------------------------------------------------
112 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
ORIGINAL CONTRACT:
EXAMPLE -- ROP DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $100,000. We add a purchase
payment credit of $3,000 to the contract; and
On the first contract anniversary you make an additional payment of $20,000.
We add a purchase payment credit of $600; and
During the second contract year the contract value is $110,000 and you take a
$10,000 partial surrender (including withdrawal charges); and
During the third contract year the contract value is $105,000.
WE CALCULATE THE ROP DEATH BENEFIT AS FOLLOWS:
CONTRACT VALUE AT DEATH: $105,000.00
-----------
Purchase payments, plus credits minus adjusted partial surrenders:
Total purchase payments: $120,000.00
plus purchase payment credits: +3,600.00
minus adjusted partial surrenders calculated as:
$10,000 x $123,600
------------------ = -11,236.36
$110,000
-----------
for a death benefit of: $112,363.64
-----------
THE ROP DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE TWO VALUES:
$112,363.64
EXAMPLE -- MAV DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000. We add a purchase payment
credit of $500 to your contract; and
On the first contract anniversary the contract value grows to $29,000; and
During the second contract year the contract value falls to $27,000, at which
point you take a $1,500 partial surrender (including surrender charges),
leaving a contract value of $25,500.
WE CALCULATE THE MAV DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES,
AS FOLLOWS:
1. CONTRACT VALUE AT DEATH: $25,500.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,416.67
$27,000
----------
for a death benefit of: $24,083.33
----------
3. THE MAV IMMEDIATELY PRECEDING THE DATE OF DEATH:
Greatest of your contract anniversary values: $29,000.00
plus purchase payments and purchase payment credits made since the prior
anniversary: +0.00
minus adjusted partial surrenders, calculated as:
$1,500 x $29,000
---------------- = -1,611.11
$27,000
----------
for a death benefit of: $27,388.89
----------
THE MAV DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE VALUES, WHICH
IS THE MAV: $27,388.89
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 113
EXAMPLE -- 5% ACCUMULATION DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a purchase
payment credit of $500 to your contract. You allocate $5,000 to the one-year
fixed account and $20,500 to the subaccounts; and
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial surrender, (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF THREE VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS, PLUS PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments and purchase payment credits: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a death benefit of: $23,925.93
----------
3. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,525.00
1.05 x $20,500 =
plus purchase payments and purchase payment credits allocated to the
subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,525
---------------- = -1,699.34
$19,000
----------
variable account floor benefit: $19,825.66
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable
account floor): $25,125.66
----------
THE 5% ACCUMULATION DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE THREE
VALUES, WHICH IS THE 5% VARIABLE ACCOUNT FLOOR: $25,125.66
--------------------------------------------------------------------------------
114 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- ENHANCED DEATH BENEFIT
ASSUMPTIONS:
You purchase the contract with a payment of $25,000 and we add a $500 purchase
payment credit with $5,000 allocated to the one-year fixed account and $20,500
allocated to the subaccounts; and
On the first contract anniversary the one-year fixed account value is $5,200
and the subaccount value is $17,000. Total contract value is $23,200; and
During the second contract year the one-year fixed account value is $5,300 and
the subaccount value is $19,000. Total contract value is $24,300. You take a
$1,500 partial surrender (including surrender charges) all from the
subaccounts, leaving the contract value at $22,800.
THE DEATH BENEFIT, WHICH IS BASED ON THE GREATER OF FOUR VALUES, IS CALCULATED AS
FOLLOWS:
1. CONTRACT VALUE AT DEATH: $22,800.00
----------
2. PURCHASE PAYMENTS AND PURCHASE PAYMENT CREDITS MINUS ADJUSTED PARTIAL
SURRENDERS:
Total purchase payments: $25,500.00
minus adjusted partial surrenders, calculated as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a return of purchase payments death benefit of: $23,925.93
----------
3. THE MAV ON THE ANNIVERSARY IMMEDIATELY PRECEDING THE DATE OF DEATH:
The MAV on the immediately preceding anniversary: $25,500.00
plus purchase payments and credits made since that anniversary: +0.00
minus adjusted partial surrenders made since that anniversary, calculated
as:
$1,500 x $25,500
---------------- = -1,574.07
$24,300
----------
for a MAV Death Benefit of: $23,925.93
----------
4. THE 5% VARIABLE ACCOUNT FLOOR:
The variable account floor on the first contract anniversary, calculated
as: $21,525.00
1.05 x $20,500 =
plus purchase payments and purchase payment credit amounts allocated to
the subaccounts since that anniversary: +0.00
minus the 5% variable account floor adjusted partial surrender from the
subaccounts, calculated as:
$1,500 x $21,525
---------------- = -1,699.34
$19,000
----------
variable account floor benefit: $19,825.66
plus the one-year fixed account value: +5,300.00
----------
5% variable account floor (value of the one-year fixed account and the
variable account floor): $25,125.66
----------
ENHANCED DEATH BENEFIT, CALCULATED AS THE GREATEST OF THESE FOUR VALUES, WHICH
IS THE 5% VARIABLE ACCOUNT FLOOR: $25,125.66
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 115
APPENDIX D: EXAMPLE -- SECURESOURCE SERIES RIDERS
SECURESOURCE STAGES 2 RIDERS -- EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT LIFETIME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $4,000 $4,000(1) 4%
1 0 0 98,000 108,000 108,000 9.3% 108,000 5,400 6,400(2) 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 6,700 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 125,134(5) 117,000 23.1% 118,877(5)6,257(5) 0 5%
8 0 0 80,000 125,134 117,000 31.6% 118,877 6,257 6,257 5%
9 0 0 95,000 125,134 117,000 18.8% 118,877 7,508(4) 7,508(4) 6%(4)
(1) The ALP and RALP are based on percentage B until the end of the 1-Year
waiting period.
(2) Since no withdrawal was taken at the end of the 1-year waiting period, the
ALP and RALP are recalculated based on percentage A.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the lifetime payment percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Lifetime Benefit Description - Determination of
Adjustment of Benefit Values".
--------------------------------------------------------------------------------
116 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE: SECURESOURCE STAGES
EXAMPLE:
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the PBG and/or the BB. Applied annual step-ups
are indicated in BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BENEFIT LIFETIME
DURATION PURCHASE PARTIAL CONTRACT DETERMINING PAYMENT
IN YEARS PAYMENTS WITHDRAWALS VALUE BB WAB PERCENTAGE PBG ALP RALP PERCENT
At Issue $100,000 NA $100,000 $100,000 $100,000 0.0% $100,000 $5,000 $ 0(1) 5%
1 0 0 98,000 108,000 108,000 9.3% 100,000 5,400 0 5%
2 0 0 105,000 114,000 114,000 7.9% 105,000 5,700 0 5%
3 0 0 118,000 120,000 120,000 1.7% 118,000 6,000 6,000(2) 5%
3.5 0 6,000 112,000 120,000 113,898 1.7% 112,000 6,000 0 5%
4 0 0 115,000 120,000 115,000 0.0% 115,000 6,000 6,000 5%
5 0 0 130,000 130,000 130,000 0.0% 130,000 7,800(3) 7,800(3) 6%(3)
6 0 0 110,000 130,000 130,000 15.4% 130,000 7,800 7,800 6%
7 0 0 100,000 130,000 130,000 23.1% 130,000 6,500(4) 6,500(4) 5%(4)
7.5 0 10,000 90,000 117,000(5) 117,000 23.1% 108,000(5)5,850(5) 0 5%
8 0 0 80,000 117,000 117,000 31.6% 108,000 5,850 5,850 5%
9 0 0 95,000 117,000 117,000 18.8% 108,000 7,020(4) 7,020(4) 6%(4)
(1) The RALP is zero until the end of the 3-Year waiting period.
(2) At the end of the 3-Year waiting period, the RALP is set equal to the ALP.
(3) Because the annual step-up increased the BB on the anniversary and the
covered person's (for the joint benefit, younger covered spouse's) attained
age is in a higher age band, the lifetime payment percentage increased.
(4) The lifetime payment percentage is based on percentage A when the BDP is
less than 20% and percentage B when the BDP is greater than or equal to 20%.
(5) The $10,000 withdrawal is greater than the $6,500 RALP allowed under the
rider and therefore excess withdrawal processing is applied. The BB and PBG
are reset as described in "Determination of Adjustment of Benefit Values" in
the "Lifetime Benefit Description".
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 117
EXAMPLE: SECURESOURCE 20
EXAMPLE #1: LIFETIME BENEFIT NOT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER
ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 61.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 NA NA
1 0 0 98,000 100,000 2.0% 100,000 100,000 6,000 0 NA NA
2 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 NA NA
3 0 0 125,000 125,000 0.0% 125,000 125,000 7,500 7,500 NA NA
3.5 0 6,000 111,000 118,590 6.4% 125,000 119,000 7,500 1,500 NA NA
4 0 0 104,000 118,590 12.3% 125,000 119,000 7,500 7,500 7,140(1) 7,140(1)
5 0 0 90,000 118,590 24.1% 125,000 119,000 6,250(2) 6,250(2) 5,950(2) 5,950(2)
6 0 0 95,000 118,590 19.9% 125,000 119,000 7,500 7,500 7,140 7,140
6.5 0 7,500 87,500 87,500(3) 0.0% 125,000 111,500 7,500 0 5,250(3) 0
7 0 0 90,000 90,000 0.0% 125,000 111,500 7,500 7,500 5,400 5,400
7.5 0 10,000 70,000 70,000(4) 0.0% 70,000(4) 70,000(4) 4,200(4) 0 4,200(4) 0
8 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
(1) The ALP and RALP are established on the contract anniversary following the
date the covered person (younger Covered Spouse for Joint) reaches age 65 as
the greater of the ELB or the RBA, times the ALP percentage.
(2) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(3) The $7,500 withdrawal is greater than the $7,140 RALP allowed under the
lifetime benefit and therefore excess withdrawal processing is applied to
the ALP, resetting the ALP to the lesser of the prior ALP or the ALP
percentage times the contract value following the withdrawal. The WAB is
reset to the ALP after the reset divided by the current ALP percentage. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(4) The $10,000 withdrawal is greater than both the $7,500 RBP allowed under the
basic benefit and the $5,400 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP percentage. The BDP at the time of withdrawal is
less than 20%, so the ALP percentage and GBP percentage are set at 6% for
the remainder of the contract year.
--------------------------------------------------------------------------------
118 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: LIFETIME BENEFIT ESTABLISHED AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and make no additional
payments to the contract.
You are the sole owner and also the annuitant. You (and your spouse for the
joint benefit) are age 65.
Annual step-ups are applied each anniversary when available, where the
contract value is greater than the RBA and/or the contract value times the ALP
percentage is greater than the ALP. Applied annual step-ups are indicated in
BOLD.
You elect the Moderate PN program investment option at issue. On the 7th
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL
CONTRACT ASSUMED BASIC BENEFIT LIFETIME BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------- -----------------
IN YEARS PAYMENTS WITHDRAWALS VALUE WAB BDP GBA RBA GBP RBP ALP RALP
At Issue $100,000 NA $100,000 $100,000 0.0% $100,000 $100,000 $6,000 $ 0 $6,000 $ 0
1 0 0 105,000 105,000 0.0% 105,000 105,000 6,300 0 6,300 0
2 0 0 110,000 110,000 0.0% 110,000 110,000 6,600 0 6,600 0
3 0 0 110,000 120,000 8.3% 110,000 110,000 6,600 6,600(1) 7,200 7,200(1)
3.5 0 6,000 104,000 113,455 8.3% 110,000 104,000 6,600 600 7,200 1,200
4 0 0 100,000 113,455 11.9% 110,000 104,000 6,600 6,600 7,200 7,200
4.5 0 7,000 90,000 105,267 14.5% 90,000 90,000 5,400(2) 5,400(2) 7,200 200
5 0 0 80,000 105,267 24.0% 90,000 90,000 4,500(3) 4,500(3) 6,000(3) 6,000(3)
5.5 0 10,000 70,000 70,000(4) 0.0% 70,000 70,000 3,500(4) 3,500(4) 3,500(4) 3,500(4)
6 0 0 75,000 75,000 0.0% 75,000 75,000 4,500 4,500 4,500 4,500
7 0 0 70,000 70,000(5) 0.0% 70,000(5) 70,000(5) 4,200(5) 4,200(5) 4,200(5) 4,200(5)
(1) At the end of the 3-Year waiting period, the RBP and RALP are set equal to
the GBP and ALP, respectively. The 20% rider credit is applied to the
lifetime benefit.
(2) The $7,000 withdrawal is greater than the $6,600 RBP allowed under the basic
benefit and therefore excess withdrawal processing is applied to the basic
benefit. The GBA is reset to the lesser of the prior GBA or the contract
value following the withdrawal. The RBA is reset to the lesser of the prior
RBA less the withdrawal or the contract value following the withdrawal. The
BDP at the time of withdrawal is less than 20%, so the ALP percentage and
GBP percentage are set at 6% for the remainder of the contract year.
(3) The ALP percentage and GBP percentage are 6% when the BDP is less than 20%
and 5% when the BDP is greater than or equal to 20%.
(4) The $10,000 withdrawal is greater than both the $4,500 RBP allowed under the
basic benefit and the $6,000 RALP allowed under the lifetime benefit and
therefore excess withdrawal processing is applied to both benefits. The GBA
is reset to the lesser of the prior GBA or the contract value following the
withdrawal. The RBA is reset to the lesser of the prior RBA less the
withdrawal or the contract value following the withdrawal. The ALP is reset
to the lesser of the prior ALP or the ALP percentage times the contract
value following the withdrawal. The WAB is reset to the ALP after the reset
divided by the current ALP Percentage. The BDP at the time of withdrawal is
greater than or equal to 20%, so the ALP percentage and GBP percentage are
set at 5% for the remainder of the contract year.
(5) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or the ALP percentage times the contract value. The WAB is reset to the
ALP after the reset divided by the current ALP percentage. Any future
withdrawals will reallocate your contract value to the Moderate PN program
investment option if you are invested more aggressively than the Moderate PN
program investment option.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 119
EXAMPLE: SECURESOURCE
EXAMPLE #1: SINGLE LIFE BENEFIT: COVERED PERSON HAS NOT REACHED AGE 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $98,039 and you receive a purchase
payment credit of $1,961, and make no additional payments to the contract.
You are the sole owner and also the annuitant. You are age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target PN program investment option under the
contract is the Moderate PN program investment option.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
5 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
5.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
6 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
6.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
7 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
7.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation, contract ownership change, or PN
program investment option changes), you can continue to withdraw up to either
the GBP of $3,850 each year until the RBA is reduced to zero, or the ALP of
$3,300 each year until the later of your death or the RBA is reduced to zero.
(1) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP (if established) is reset to the
lesser of the prior ALP or 6% of the contract value. Any future withdrawals
will reallocate your contract value to the Moderate PN program investment
option if you are invested more aggressively than the Moderate PN program
investment option.
(2) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65 as 6% of the RBA.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
120 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #2: SINGLE LIFE BENEFIT: COVERED PERSON HAS REACHED 65 AT THE TIME THE
CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $98,039 and you receive a purchase
payment credit of $1,961 and make no additional payments to the contract.
You are the sole owner and also the annuitant. You are age 65.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider. Your spouse is over age 65 and is the new covered person.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 6,600(5) 6,600(5)
7 0 0 105,000 125,000 125,000 8,750 8,750 6,600 6,600
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, contract ownership change, or PN program investment option
changes), your spouse can continue to withdraw up to either the GBP of $8,750
each year until the RBA is reduced to zero, or the ALP of $6,600 each year until
the later of your spouse's death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
(5) At spousal continuation, the ALP is reset to the lesser of the prior ALP or
6% of the contract value and the RALP is reset to the ALP.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 121
EXAMPLE #3: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS NOT REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $98,039 and you receive a purchase
payment credit of $1,961 and make no additional payments to the contract.
You are age 59 and your spouse is age 60.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
You elect the Moderate PN program investment option at issue. On the 1st
contract anniversary, you elect to change to the Moderately Aggressive PN
program investment option. The target investment option under the contract is
the Moderate PN program investment option.
Your death occurs after 9 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 5,000 92,000 100,000 95,000 7,000 2,000 N/A N/A
1 0 0 90,000 90,000(1) 90,000(1) 6,300 6,300 N/A N/A
2 0 0 81,000 90,000 90,000 6,300 6,300 N/A N/A
6 0 0 75,000 90,000 90,000 6,300 6,300 5,400(2) 5,400(2)
6.5 0 5,400 70,000 90,000 84,600 6,300 900 5,400 0
7 0 0 69,000 90,000 84,600 6,300 6,300 5,400 5,400
7.5 0 6,300 62,000 90,000 78,300 6,300 0 3,720(3) 0
8 0 0 64,000 90,000 78,300 6,300 6,300 3,840 3,840
8.5 0 10,000 51,000 51,000(4) 51,000(4) 3,570 0 3,060(4) 0
9 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
9.5 0 0 54,000 55,000 55,000 3,850 3,850 3,300 3,300
10 0 0 52,000 55,000 55,000 3,850 3,850 3,300 3,300
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or model portfolio changes), your spouse can continue to
withdraw up to either the GBP of $3,850 each year until the RBA is reduced to
zero, or the ALP of $3,300 each year until the later of your spouse's death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the younger covered spouse reaches age 65 as 6% of the RBA.
(2) Allocation to the Moderately Aggressive PN program investment option during
a withdrawal phase will reset the benefit. The GBA is reset to the lesser of
the prior GBA or the contract value. The RBA is reset to the lesser of the
prior RBA or the contract value. The ALP is reset to the lesser of the prior
ALP or 6% of the contract value. Any future withdrawals will reallocate your
contract value to the Moderate PN program investment option if you are
invested more aggressively than the Moderate PN program investment option.
(3) The $6,300 withdrawal is greater than the $5,400 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $6,300 RBP allowed under the
basic withdrawal benefit and the $3,840 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
122 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE #4: JOINT LIFE BENEFIT: YOUNGER COVERED SPOUSE HAS REACHED 65 AT THE
TIME THE CONTRACT AND RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a payment of $98,039 and you receive a purchase
payment credit of $1,961 and make no additional payments to the contract
You are age 71 and your spouse is age 70.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
Your death occurs after 6 1/2 contract years and your spouse continues the
contract and rider; the lifetime benefit is not reset.
HYPOTHETICAL LIFETIME WITHDRAWAL
ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
CONTRACT PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
DURATION PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
6.5 0 0 110,000 125,000 125,000 8,750 8,750 7,500 7,500
7 0 0 105,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, or PN program investment option changes), your spouse can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your spouse's
death or the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 123
APPENDIX E: SECURESOURCE SERIES OF RIDERS -- ADDITIONAL RMD DISCLOSURE
This appendix describes our current administrative practice for determining the
amount of withdrawals in any contract year which an owner may take under the
SecureSource series of riders to satisfy the RMD rules under 401(a)(9) of the
Code without application of the excess withdrawal processing described in the
rider. We reserve the right to modify this administrative practice at any time
upon 30 days' written notice to you.
For SecureSource Stages and SecureSource 20 riders, owners subject to annual RMD
rules under Section 401(a)(9) of the Code, withdrawing from this contract during
the waiting period to satisfy these rules will set your benefits to zero and you
will not receive any future rider credit.
Amounts you withdraw from this contract (for SecureSource Stages and
SecureSource 20 riders, amounts you withdraw from this contract after the
waiting period) to satisfy these rules are not subject to excess withdrawal
processing under the terms of the rider subject to the following rules and our
current administrative practice:
For SecureSource and SecureSource 20 riders:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the beginning
of the current contract year*,
- Basic Additional Benefit Amount (BABA) will be set equal to that portion
of your ALERMDA that exceeds the RBP from the beginning of the current
contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA. These
withdrawals will not be considered excess withdrawals with regard to the
GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the GBA and RBA and will
subject them all to the excess withdrawal processing described in the
SecureSource series of riders.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP from
the beginning of the current contract year,*
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year*.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
series of riders.
(3) If the ALP is established on a policy anniversary where your current ALERMDA
is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
For SecureSource Stages and SecureSource Stages 2 riders:
(1) Each calendar year, if your ALERMDA is greater than the ALP,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the ALP.
- The LABA will be reduced by the total of the amount that each withdrawal
in the current calendar year exceeds the RALP at the time of each
withdrawal, but shall not be reduced to less than zero.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA. These
withdrawals will not be considered excess withdrawals with regard to the
ALP as long as they do not exceed the remaining LABA. Withdrawals will not
be considered excess withdrawals unless amounts withdrawn exceed combined
RALP and LABA values.
--------------------------------------------------------------------------------
124 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
- Once the LABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals with regard to the ALP and will subject the
ALP to the excess withdrawal processing described by the SecureSource
Stages and SecureSource Stages 2.
* For SecureSource 20 riders, adjusted for any subsequent changes between 5%
and 6% as described under "GBP Percentage and ALP Percentage".
The ALERMDA is:
(1) determined by us each calendar year (for SecureSource Stages and
SecureSource 20 riders, starting with the calendar year in which the waiting
period ends);
(2) based on your initial purchase payment and not the entire interest value in
the calendar year of contract issue and therefore may not be sufficient to
allow you to withdraw your RMD without causing an excess withdrawal;
(3) based solely on the value of the contract to which the SecureSource Series
rider is attached as of the date we make the determination;
(4) based on your recalculated life expectancy taken from the Uniform Lifetime
Table under the Code; and
(5) based on the company's understanding and interpretation of the requirements
for life expectancy distributions intended to satisfy the required minimum
distribution rules under Code Section 401(a)(9) and the Treasury Regulations
promulgated thereunder, as applicable on the effective date of this
prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
In the future, the requirements under the Code for such distributions may change
and the life expectancy amount calculation provided under your rider within the
SecureSource series of riders may not be sufficient to satisfy the requirements
under the Code for these types of distributions. In such a situation, amounts
withdrawn to satisfy such distribution requirements will exceed your available
RBP or RALP amount and may result in the reduction of your GBA, RBA, and/or ALP
as described under the excess withdrawal provision of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years.
Please contact your tax advisor about the impact of those rules prior to
purchasing one of the SecureSource series of riders.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 125
APPENDIX F: EXAMPLE -- BENEFIT PROTECTOR DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
We add a $3,000 purchase payment credit to your contract; and
You select the MAV Death Benefit and the 8-year surrender charge schedule.
During the first contract year the contract value grows to $106,000.
The MAV Death Benefit equals the contract value less any purchase
payment credits added in the last 12 months, or $103,000. You have
not reached the first contract anniversary so the Benefit Protector
does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. The death benefit equals:
The MAV Death Benefit (contract value): $110,000
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV Death Benefit minus remaining purchase payments for
the Current Contract or MAV Death Benefit minus payments not
previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
The MAV Death Benefit: $110,000
plus the Benefit Protector (40% of earnings at death):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 8% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to an 8%
surrender charge because your payment is in the third year of the
surrender charge schedule, so we will surrender $39,500
($36,340 + $3,160 in surrender charges) from your contract value.
Altogether, we will surrender $50,000 and pay you $46,840. We
calculate purchase payments not previously surrendered as
$100,000 - $45,000 = $55,000 (remember that $5,000 of the partial
surrender is contract earnings). The death benefit equals:
The MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector benefit (40% of earnings at death):
0.40 x ($57,619 - $55,000) = +1,048
--------
Total death benefit of: $58,667
On the third contract anniversary the contract value falls to
$40,000. The death benefit equals the previous death benefit. The
reduction in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old.
The death benefit equals:
The MAV Death Benefit (contract value): $200,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $255,000
--------------------------------------------------------------------------------
126 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000 and we add a purchase payment credit of $1,500.
Your new contract value is now $251,500. The new purchase payment is
less than one year old and so it has no effect on the Benefit
Protector value. The death benefit equals:
The MAV Death Benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector benefit (40% of earnings at death, up
to a maximum of 100% of purchase payments not previously
surrendered that are one or more years old) +55,000
--------
Total death benefit of: $305,000
During the eleventh contract year the contract value remains
$251,500 and the "new" purchase payment is one year old and the
value of the Benefit Protector changes. The death benefit equals:
The MAV Death Benefit (contract value): $251,500
plus the Benefit Protector benefit which equals 40% of earnings
at death (MAV Death Benefit minus payments not previously
surrendered):
0.40 x ($251,500 - $105,000) = +58,600
--------
Total death benefit of: $310,100
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 127
APPENDIX G: EXAMPLE -- BENEFIT PROTECTOR PLUS DEATH BENEFIT RIDER
EXAMPLE OF THE BENEFIT PROTECTOR PLUS
ASSUMPTIONS:
You purchase the contract with a payment of $100,000 and you (Current
Contract) or you and the annuitant (Original Contract) are under age 70; and
We add a $3,000 purchase payment credit to your contract; and
You select the MAV Death Benefit and the 8-year surrender charge schedule.
During the first year the contract value grows to $106,000. The MAV
Death Benefit equals the contract value, less any purchase payment
credits added to the contract in the last 12 months, or $103,000.
You have not reached the first contract anniversary so the Benefit
Protector Plus does not provide any additional benefit at this time.
On the first contract anniversary the contract value grows to
$110,000. You have not reached the second contract anniversary so
the Benefit Protector Plus does not provide any additional benefit
beyond what is provided by the Benefit Protector at this time. The
death benefit equals:
The MAV Death Benefit (contract value): $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus remaining purchase
payments for the Current Contract or MAV Death Benefit minus
payments not previously surrendered for the Original Contract):
0.40 x ($110,000 - $100,000) = +4,000
--------
Total death benefit of: $114,000
On the second contract anniversary the contract value falls to
$105,000. The death benefit equals:
The MAV Death Benefit: $110,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($110,000 - $100,000) = +4,000
plus 10% of purchase payments made within 60 days of contract
issue
and not previously surrendered: 0.10 x $100,000 = +10,000
--------
Total death benefit of: $124,000
During the third contract year the contract value remains at
$105,000 and you request a partial surrender of $50,000, including
the applicable 8% surrender charge. We will surrender $10,500 from
your contract value free of charge (10% of your prior anniversary's
contract value). The remainder of the surrender is subject to an 8%
surrender charge because your payment is in its third year of the
surrender charge schedule, so we will surrender $39,500 ($36,340 +
$3,160 in surrender charges) from your contract value. Altogether,
we will surrender $50,000 and pay you $46,840. We calculate purchase
payments not previously surrendered as $100,000 - $45,000 = $55,000
(remember that $5,000 of the partial surrender is contract
earnings). The death benefit equals:
The MAV Death Benefit (MAV adjusted for partial surrenders): $57,619
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death:
0.40 x ($57,619 - $55,000) = +1,048
plus 10% of purchase payments made within 60 days of contract
issue
and not previously surrendered: 0.10 x $55,000 = +5,500
--------
Total death benefit of: $64,167
On the third contract anniversary the contract value falls $40,000.
The death benefit equals the previous death benefit. The reduction
in contract value has no effect.
On the ninth contract anniversary the contract value grows to a new
high of $200,000. Earnings at death reaches its maximum of 250% of
purchase payments not previously surrendered that are one or more
years old. Because we are beyond the fourth contract anniversary the
Benefit Protector Plus also reaches its maximum of 20%. The death
benefit equals:
The MAV Death Benefit (contract value): $200,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $266,000
--------------------------------------------------------------------------------
128 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
During the tenth contract year you make an additional purchase
payment of $50,000 and we add a purchase payment credit of $1,500.
Your new contract value is now $251,500. The new purchase payment is
less than one year old and so it has no effect on the Benefit
Protector Plus value. The death benefit equals:
The MAV Death Benefit (contract value less any purchase payment
credits added in the last 12 months): $250,000
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death, up to a maximum of 100% of purchase payments
not previously surrendered that are one or more years old +55,000
plus 20% of purchase payments made within 60 days of contract
issue and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $316,000
During the eleventh contract year the contract value remains
$251,500 and the "new" purchase payment is one year old. The value
of the Benefit Protector Plus remains constant. The death benefit
equals:
The MAV Death Benefit (contract value): $251,500
plus the Benefit Protector Plus benefit which equals 40% of
earnings at death (MAV Death Benefit minus payments not
previously surrendered):
0.40 x ($251,500 - $105,000) = +58,600
plus 20% of purchase payments made within 60 days of contract
issue
and not previously surrendered: 0.20 x $55,000 = +11,000
--------
Total death benefit of: $321,100
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 129
APPENDIX H: ASSET ALLOCATION PROGRAM FOR CONTRACTS WITH APPLICATIONS SIGNED
BEFORE MAY 1, 2006
ASSET ALLOCATION PROGRAM
For contracts with applications signed before May 1, 2006, we offered an asset
allocation program. You could elect to participate in the asset allocation
program, and there is no additional charge. If you purchased an optional
Accumulation Protector Benefit rider, Guarantor Withdrawal Benefit rider or
Income Assurer Benefit rider, you are required to participate in the asset
allocation program under the terms of the rider.
This asset allocation program allows you to allocate your contract value to a
model portfolio that consists of subaccounts and may include certain GPAs (if
available under the asset allocation program), which represent various asset
classes. By spreading your contract value among these various asset classes, you
may be able to reduce the volatility in your contract value, but there is no
guarantee that this will occur.
Asset allocation does not guarantee that your contract will increase in value
nor will it protect against a decline in value if market prices fall. If you
choose or are required to participate in the asset allocation program, you are
responsible for determining which model portfolio is best for you. Your
investment professional can help you make this determination. In addition, your
investment professional may provide you with an investor questionnaire, a tool
that can help you determine which model portfolio is suited to your needs based
on factors such as your investment goals, your tolerance for risk, and how long
you intend to invest.
Under the asset allocation program, we have offered five model portfolios
ranging from conservative to aggressive. You may not use more than one model
portfolio at a time. You are allowed to request a change to another model
portfolio twice per contract year. Each model portfolio specifies allocation
percentages to each of the subaccounts and any GPAs that make up that model
portfolio. By participating in the asset allocation program, you authorize us to
invest your contract value in the subaccounts and any GPAs according to the
allocation percentages stated for the specific model portfolio you have
selected. You also authorize us to automatically rebalance your contract value
quarterly beginning three months after the effective date of your contract in
order to maintain alignment with the allocation percentages specified in the
model portfolio.
Special rules will apply to the GPAs if they are included in a model portfolio.
Under these rules:
no MVA will apply when rebalancing occurs within a specific model portfolio
(but an MVA may apply if you elect to transfer to a new model portfolio); and
no MVA will apply when you elect an annuity payout plan while your contract
value is invested in a model portfolio (see "Guarantee Period
Accounts -- Market Value Adjustment").
Under the asset allocation program, the subaccounts and/or any GPAs that make up
the model portfolio you selected and the allocation percentages to those
subaccounts and/or any GPAs will not change unless we adjust the composition of
the model portfolio to reflect the liquidation, substitution or merger of an
underlying fund, a change of investment objective by an underlying fund or when
an underlying fund stops selling its shares to the variable account. We reserve
the right to change the terms and conditions of the asset allocation program
upon written notice to you.
If permitted under applicable securities law, we reserve the right to:
reallocate your current model portfolio to an updated version of your current
model portfolio; or
substitute a fund of funds for your current model portfolio.
We also reserve the right to discontinue the asset allocation program. We will
give you 30 days' written notice of any such change.
If you elected to participate in the asset allocation program, you may
discontinue your participation in the program at any time by giving us written
notice. Upon cancellation, automated rebalancing associated with the asset
allocation program will end. You can elect to participate in the asset
allocation program again at any time.
--------------------------------------------------------------------------------
130 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX I: GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER
The Guarantor Withdrawal Benefit for Life rider is an optional benefit that you
may select for an additional annual charge if(1):
you purchase your contract on or after May 1, 2006;
the rider is available in your state; and
you and the annuitant are 80 or younger on the date the contract is issued.
(1) The Guarantor Withdrawal Benefit for Life rider is not available under an
inherited qualified annuity.
You must elect the Guarantor Withdrawal Benefit for Life rider when you purchase
your contract. The rider effective date will be the contract issue date.
The Guarantor Withdrawal Benefit for Life rider guarantees that you will be able
to withdraw up to a certain amount each year from the contract, regardless of
the investment performance of your contract before the annuity payments begin,
until you have recovered at minimum all of your purchase payments. And, under
certain limited circumstances defined in the rider, you have the right to take a
specified amount of partial withdrawals in each contract year until death (see
"At Death" heading below) -- even if the contract value is zero.
Your contract provides for annuity payouts to begin on the annuitization start
date (see "Buying Your Contract -- The Retirement Date"). Before the
annuitization start date, you have the right to withdraw some or all of your
contract value, less applicable administrative, withdrawal and rider charges
imposed under the contract at the time of the surrender (see "Making the Most of
Your Contract -- Surrenders"). Because your contract value will fluctuate
depending on the performance of the underlying funds in which the subaccounts
invest, the contract itself does not guarantee that you will be able to take a
certain withdrawal amount each year before the annuitization start date, nor
does it guarantee the length of time over which such withdrawals can be made
before the annuitization start date.
The Guarantor Withdrawal Benefit for Life rider may be appropriate for you if
you intend to make periodic withdrawals from your annuity contract and wish to
ensure that market performance will not adversely affect your ability to
withdraw your principal over time.
Under the terms of the Guarantor Withdrawal Benefit for Life rider, the
calculation of the amount which can be withdrawn in each contract year varies
depending on several factors, including but not limited to the waiting period
(see "Waiting period" heading below) and whether or not the lifetime withdrawal
benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited partial
withdrawals in each contract year and guarantees that over time the
withdrawals will total an amount equal to, at minimum, your purchase
payments. Key terms associated with the basic withdrawal benefit are
"Guaranteed Benefit Payment (GBP)," "Remaining Benefit Payment (RBP),"
"Guaranteed Benefit Amount (GBA)," and "Remaining Benefit Amount (RBA)." See
these headings below for more information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited partial withdrawals
until the later of death (see "At Death" heading below) or until the RBA
(under the basic withdrawal benefit) is reduced to zero. Key terms
associated with the lifetime withdrawal benefit are "Annual Lifetime Payment
(ALP)," "Remaining Annual Lifetime Payment (RALP)," "Covered Person," and
"Annual Lifetime Payment Attained Age (ALPAA)." See these headings below for
more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the covered
person reaches age 65, or the rider effective date if the covered person is age
65 or older on the rider effective date (see "Annual Lifetime Payment Attained
Age (ALPAA)" heading below).
Provided annuity payouts have not begun, the Guarantor Withdrawal Benefit for
Life rider guarantees that you may take the following partial withdrawal amounts
each contract year:
After the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
GBP;
During the waiting period and before the establishment of the ALP, the rider
guarantees that each year you can cumulatively withdraw an amount equal to the
value of the RBP at the beginning of the contract year;
After the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal the ALP or the GBP, but the rider does not guarantee withdrawals
of the sum of both the ALP and the GBP in a contract year;
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 131
During the waiting period and after the establishment of the ALP, the rider
guarantees that each year you have the option to cumulatively withdraw an
amount equal to the value of the RALP or the RBP at the beginning of the
contract year, but the rider does not guarantee withdrawals of the sum of both
the RALP and the RBP in a contract year.
If you withdraw less than the allowed partial withdrawal amount in a contract
year, the unused portion cannot be carried over to the next contract year. As
long as your partial withdrawals in each contract year do not exceed the annual
partial withdrawal amount allowed under the rider, and there has not been a
contract ownership change or spousal continuation of the contract, the
guaranteed amounts available for partial withdrawals are protected (i.e., will
not decrease).
If you withdraw more than the allowed partial withdrawal amount in a contract
year, we call this an "excess withdrawal" under the rider. Excess withdrawals
trigger an adjustment of a benefit's guaranteed amount, which may cause it to be
reduced (see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal
Processing," and "ALP Excess Withdrawal Processing" headings below).
Please note that each of the two benefits has its own definition of the allowed
annual withdrawal amount. Therefore a partial withdrawal may be considered an
excess withdrawal for purposes of the lifetime withdrawal benefit only, the
basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable withdrawal charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any partial withdrawals
you take under the contract will reduce the value of the death benefits (see
"Benefits in Case of Death"). Upon full withdrawal of the contract, you will
receive the remaining contract value less any applicable charges (see "Making
the Most of Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the third rider
anniversary. You may take withdrawals after the waiting period without reversal
of prior step ups.
You should consider whether the Guarantor Withdrawal Benefit for Life rider is
appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) Once the contract value equals zero, payments are made for as long as the
oldest owner or annuitant is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the first death of any owner
or annuitant (see "At Death" heading below). Therefore, if there are
multiple contract owners or the annuitant is not an owner, the rider may
terminate or the lifetime withdrawal benefit may be reduced. This
possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contract); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This is could happen, for example, when
the owner is younger than the annuitant. This risk increases as the
age difference between owner and annuitant increases.
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on the basic withdrawal benefit's RBA at that time (see "Annual
Lifetime Payment (ALP)" heading below), unless there has been a spousal
continuation or ownership change. Any withdrawal you take before the ALP
is established reduces the RBA and therefore may result in a lower amount
of lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
Guarantor Withdrawal Benefit for Life rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate
--------------------------------------------------------------------------------
132 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
contract value to all of the subaccounts, GPAs or the one-year fixed account
that are available under the contract to contract owners who do not elect this
rider. (See "Making the Most of Your Contract -- Portfolio Navigator
Program.") You may allocate purchase payments and any purchase payment credits
to the DCA fixed account, when available, and we will make monthly transfers
into the investment option you have chosen. Subject to state restrictions, we
reserve the right to limit the number of investment options from which you can
select based on the dollar amount of purchase payments you make.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you select the
Guarantor Withdrawal Benefit for Life rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit for Life rider
may not be cancelled and the fee will continue to be deducted until the
contract is terminated, the contract value reduces to zero (described below)
or after the annuitization start date.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (TFA) CONTRACT PROVISION: The TFA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
TFA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's TFA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of this rider in your tax situation:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including partial
withdrawals taken from the contract under the terms of this rider, are treated
less favorably than amounts received as annuity payments under the contract
(see "Taxes -- Nonqualified Annuities"). Withdrawals before age 59 1/2 may
incur a 10% IRS early withdrawal penalty and may be considered taxable income.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the specified amount of withdrawal available under the rider.
Partial withdrawals in any contract year that exceed the guaranteed amount
available for withdrawal may reduce future benefits guaranteed under the
rider. While the rider permits certain excess withdrawals to be made for the
purpose of satisfying RMD requirements for this contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. Additionally, RMD
rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
For owners subject to annual RMD rules under Section 401(a)(9) of the Code,
the amounts you withdraw each year from this contract to satisfy these rules
are not subject to excess withdrawal processing under the terms of the rider
subject to the following rules and our current administrative practice:
(1) If on the date we calculated your Annual Life Expectancy Required Minimum
Distribution Amount (ALERMDA), it is greater than the RBP from the
beginning of the current contract year,
- Basic Additional Benefit Amount (BABA) will be set equal to that
portion of your ALERMDA that exceeds the RBP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
- Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the BABA.
These withdrawals will not be considered excess withdrawals with regard
to the GBA and RBA as long as they do not exceed the remaining BABA.
- Once the BABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the GBA and RBA and
will subject them all to the excess withdrawal processing described in
the Guarantor Withdrawal Benefit for Life rider.
(2) If on the date we calculated your ALERMDA, it is greater than the RALP
from the beginning of the current Contract Year,
- A Lifetime Additional Benefit Amount (LABA) will be set equal to that
portion of your ALERMDA that exceeds the RALP from the beginning of the
current contract year.
- Any withdrawals taken in a contract year will count first against and
reduce the RALP for that contract year.
- Once the RALP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce the LABA.
These withdrawals will not be considered excess withdrawals with regard
to the ALP as long as they do not exceed the remaining LABA.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 133
- Once the LABA has been depleted, any additional withdrawal amounts will
be considered excess withdrawals with regard to the ALP and will
subject the ALP to the excess withdrawal processing described by the
Guarantor Withdrawal Benefit for Life rider.
(3) If the ALP is established on a policy anniversary where your current
ALERMDA is greater than the new RALP,
- An initial LABA will be set equal to that portion of your ALERMDA that
exceeds the new RALP.
- This new LABA will be immediately reduced by the amount that total
withdrawals in the current calendar year exceed the new RALP, but shall
not be reduced to less than zero.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit for Life rider is attached as of the date we make the
determination; and
(3) is otherwise based on the company's understanding and interpretation of
the requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Code Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable on the
effective date of this prospectus, to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit for Life rider may not be sufficient to satisfy
the requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your available RBP or RALP amount and may result in the reduction of
your GBA, RBA, and/or ALP as described under the excess withdrawal provision
of the rider.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.,
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
For an example, see "Examples of Guarantor Withdrawal Benefit for Life" below.
KEY TERMS AND PROVISIONS OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE RIDER ARE
DESCRIBED BELOW:
PARTIAL WITHDRAWALS: A withdrawal of an amount that does not result in a full
withdrawal of the contract. The partial withdrawal amount is a gross amount and
will include any surrender charge and any market value adjustment.
WAITING PERIOD: The period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. The current
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative amount available for
partial withdrawals over the life of the rider under the basic withdrawal
benefit. The maximum GBA is $5,000,000. The GBA cannot be withdrawn and is not
payable as a
--------------------------------------------------------------------------------
134 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
death benefit. Rather, the GBA is an interim value used to calculate the amount
available for withdrawals each year under the basic withdrawal benefit (see
"Guaranteed Benefit Payment" below). At any time, the total GBA is the sum of
the individual GBAs associated with each purchase payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment plus any
purchase payment credits.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment plus any purchase
payment credits.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credits. The step up reversal
will only happen once during the waiting period, when the first partial
withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by this rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credits.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment plus any purchase payment credits).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credits. The step up reversal
will only happen once during the waiting period, when the first partial
withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing is applied AFTER any previously
applied annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 135
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for partial
withdrawals in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount plus any purchase
payment credits.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment plus any purchase payment credits. Each
payment's GBP will be reset to 7% of that purchase payment plus any purchase
payment credit. The step up reversal will only happen once during the waiting
period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the lesser
of that payment's RBA or 7% of that payment's GBA value, based on the RBA
and GBA after the withdrawal. If the partial withdrawal is made during the
waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for partial withdrawals
for the remainder of the contract year under the basic withdrawal benefit. At
any point in time, the total RBP is the sum of the RBPs for each purchase
payment. During the waiting period, when the guaranteed amount maybe less than
the GBP, the value of the RBP at the beginning of the contract year will be that
amount that is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment plus any purchase payment credits multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any partial withdrawal -- the total RBP is reset to equal the
total RBP immediately prior to the partial withdrawal less the amount of the
partial withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future partial withdrawals for the remainder of the contract's life may be
reduced by more than the amount of withdrawal. When determining if a
withdrawal will result in the excess withdrawal processing, the applicable RBP
will not yet reflect the amount of the current withdrawal.
--------------------------------------------------------------------------------
136 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
COVERED PERSON: The person whose life is used to determine when the ALP is
established, and the duration of the ALP payments. The covered person is the
oldest contract owner or annuitant. The covered person may change during the
contract's life if there is a spousal continuation or a change of contract
ownership. If the covered person changes, we recompute the benefits guaranteed
by the rider, based on the life of the new covered person, which may reduce the
amount of the lifetime withdrawal benefit.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): The covered person's age after
which time the lifetime benefit can be established. Currently, the lifetime
benefit can be established on the later of the contract effective date or the
contract anniversary date on/following the date the covered person reaches age
65.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP at any time is the
amount available for withdrawals in each contract year after the waiting period
until the later of death (see "At Death" heading below), or the RBA is reduced
to zero, under the lifetime withdrawal benefit. The maximum ALP is $300,000.
Prior to establishment of the ALP, the lifetime withdrawal benefit is not in
effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65 -- the ALP is
established as 6% of the total RBA.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At contract ownership change -- (see "Spousal Option to Continue the Contract"
and "Contract Ownership Change" headings below).
When you make a partial withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments plus any purchase
payment credits multiplied by 6%. The step up reversal will only happen once
during the waiting period, when the first partial withdrawal is made.
When you make a partial withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the partial withdrawal is made during the waiting
period, the excess withdrawal processing are applied AFTER any previously
applied annual step ups have been reversed.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for partial
withdrawals for the remainder of the contract year under the lifetime withdrawal
benefit. During the waiting period, when the guaranteed annual withdrawal amount
may be less than the ALP, the value of the RALP at the beginning of the contract
year will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The later of the contract effective date or the contract anniversary date
following the date the covered person reaches age 65, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments plus any purchase payment
credits.
(b) At any other time -- the RALP is established equal to the ALP.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments plus
any purchase payment credits, multiplied by 6%.
At the beginning of any other contract year -- the RALP is set equal to ALP.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 137
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any partial withdrawal -- the RALP equals the RALP immediately
prior to the partial withdrawal less the amount of the partial withdrawal, but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and the amount available for future
partial withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in excess withdrawal processing, the applicable RALP will not yet
reflect the amount of the current withdrawal.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP, and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP, and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA or, if established, the ALP,
would increase on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
If the application of the step up does not increase the rider charge, the
annual step up will be automatically applied to your contract, and the step up
date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP and RALP to step up even if the RBA or
GBA do not step up, and it is also possible for the RBA and GBA to step up
even if the ALP or RALP do not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset as the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT: If a surviving spouse elects to
continue the contract, the Guarantor Withdrawal Benefit for Life(R) rider also
continues. When the spouse elects to continue the contract, any remaining
waiting period is cancelled; the covered person will be re-determined and is the
covered person referred to below; and the GBA, RBA, GBP, RBP, ALP and RALP
values are affected as follows:
The GBA, RBA, and GBP values remain unchanged.
--------------------------------------------------------------------------------
138 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior partial withdrawals made in the current
contract year, but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to equal the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
SPOUSAL CONTINUATION STEP UP: If a surviving spouse elects to continue the
contract, another elective step up option becomes available. To exercise the
step up, the spouse or the spouse's investment professional must submit a
request within 30 days of the date of continuation. The step up date is the date
we receive the spouse's request to step up. If the request is received after the
close of business, the step up date will be the next valuation day. The GBA,
RBA, GBP, RBP, ALP and RALP will be reset in the same fashion as the annual step
up.
The spousal continuation step up is subject to the following rules:
If the spousal continuation step up option is exercised and we have increased
the charge for the rider, the spouse will pay the charge that is in effect on
the step up date.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero for any reason other than full withdrawal of the contract. In this
scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) wait until the rider anniversary on/following the date the covered person
reaches age 65, and then receive the ALP annually until the latter of (i)
the death of the covered person, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) the ALP annually until the latter of (i) the death of the covered person,
or (ii) the RBA is reduced to zero. We will notify you of this option. If
no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a partial withdrawal that is greater than the RBP but less than or equal
to the RALP. In this scenario, the ALP will be paid annually until the death
of the covered person.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 139
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
The death benefit becomes the remaining payments, if any, until the RBA is
reduced to zero.
The Guarantor Withdrawal Benefit for Life rider and the contract will terminate
under either of the following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may elect to take the death benefit as a lump
sum under the terms of the contract (see "Benefits in Case of Death") or the
annuity payout option (see "Guaranteed Withdrawal Benefit Annuity Payout Option"
heading below).
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
CONTRACT OWNERSHIP CHANGE: If the contract changes ownership (see "Changing
Ownership"), the covered person will be redetermined and is the covered person
referred to below. The GBA, RBA, GBP, RBP values will remain unchanged. The ALP
and RALP will be reset as follows. Our current administrative practice is to
only reset the ALP and RALP if the covered person changes due to the ownership
change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set to
the lesser of the ALP or total purchase payments plus any purchase payment
credits multiplied by 6%. If the anniversary date occurs at any other time,
the RALP will be set to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set equal to the lesser of the ALP or total purchase payments
plus any purchase payment credits multiplied by 6%. If the ownership change
date occurs at any other time, the RALP will be set equal to the ALP less all
prior withdrawals made in the current contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to the lesser of the ALP or total purchase payments plus
any purchase payment credits multiplied by 6%. If the time period ends at any
other time, the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments plus any purchase payment credits
multiplied by 6%. If the
--------------------------------------------------------------------------------
140 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
ownership change date occurs at any other time, the RALP will be reset to the
ALP less all prior withdrawals made in the current contract year but not less
than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION: Several annuity payout
plans are available under the contract. As an alternative to these annuity
payout plans, a fixed annuity payout option is available under the Guarantor
Withdrawal Benefit for Life rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
Section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed under the mortality table we then use to determine
current life annuity purchase rates under the contract to which this rider is
attached.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option.
Whenever multiple beneficiaries are designated under the contract, each such
beneficiary's share of the proceeds if they elect this option will be in
proportion to their applicable designated beneficiary percentage. Beneficiaries
of nonqualified contracts may elect this settlement option subject to the
distribution requirements of the contract. We reserve the right to adjust the
future schedule of GBPs if necessary to comply with the Code.
RIDER TERMINATION
The Guarantor Withdrawal Benefit for Life rider cannot be terminated either by
you or us except as follows:
1. Annuity payouts under an annuity payout plan will terminate the rider.
2. Termination of the contract for any reason will terminate the rider.
EXAMPLES OF THE GUARANTOR WITHDRAWAL BENEFIT FOR LIFE
EXAMPLE #1: COVERED PERSON HAS NOT REACHED AGE 65 AT THE TIME THE CONTRACT AND
RIDER ARE PURCHASED.
ASSUMPTIONS:
You purchase the contract with a $98,039 purchase payment with $1,961 purchase
payment credit.
You are the sole owner and also the annuitant. You are age 60.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $ N/A $ N/A
0.5 0 7,000 92,000 100,000 93,000 7,000 0 N/A N/A
1 0 0 91,000 100,000 93,000 7,000 7,000 N/A N/A
1.5 0 7,000 83,000 100,000 86,000 7,000 0 N/A N/A
2 0 0 81,000 100,000 86,000 7,000 7,000 N/A N/A
5 0 0 75,000 100,000 86,000 7,000 7,000 5,160(1) 5,160(1)
5.5 0 5,160 70,000 100,000 80,840 7,000 1,840 5,160 0
6 0 0 69,000 100,000 80,840 7,000 7,000 5,160 5,160
6.5 0 7,000 62,000 100,000 73,840 7,000 0 3,720(2) 0
7 0 0 70,000 100,000 73,840 7,000 7,000 4,200 4,200
7.5 0 10,000 51,000 51,000(3) 51,000(3) 3,570 0 3,060(3) 0
8 0 0 55,000 55,000 55,000 3,850 3,850 3,300 3,300
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 141
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $3,850 each year until the RBA is
reduced to zero, or the ALP of $3,300 each year until the later of your death or
the RBA is reduced to zero.
(1) The ALP and RALP are established on the contract anniversary date following
the date the covered person reaches age 65.
(2) The $7,000 withdrawal is greater than the $5,160 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(3) The $10,000 withdrawal is greater than both the $7,000 RBP allowed under the
basic withdrawal benefit and the $4,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
EXAMPLE #2: COVERED PERSON HAS REACHED 65 AT THE TIME THE CONTRACT AND RIDER ARE
PURCHASED.
ASSUMPTIONS:
You purchase the contract with a $98,039 purchase payment with $1,961 purchase
payment credit.
You are the sole owner and also the annuitant. You are age 65.
You make no additional payments to the contract.
Automatic annual step-ups are applied each anniversary when available, where
the contract value is greater than the RBA and/or 6% of the contract value is
greater than the ALP. Applied annual step-ups are indicated in BOLD.
HYPOTHETICAL LIFETIME WITHDRAWAL
CONTRACT ASSUMED BASIC WITHDRAWAL BENEFIT BENEFIT
DURATION PURCHASE PARTIAL CONTRACT ------------------------------------------- -------------------
IN YEARS PAYMENTS WITHDRAWALS VALUE GBA RBA GBP RBP ALP RALP
At Issue $100,000 $ N/A $100,000 $100,000 $100,000 $7,000 $7,000 $6,000 $6,000
1 0 0 105,000 105,000 105,000 7,350 7,000(1) 6,300 6,000(1)
2 0 0 110,000 110,000 110,000 7,700 7,000(1) 6,600 6,000(1)
3 0 0 110,000 110,000 110,000 7,700 7,700(2) 6,600 6,600(2)
3.5 0 6,600 110,000 110,000 103,400 7,700 1,100 6,600 0
4 0 0 115,000 115,000 115,000 8,050 8,050 6,900 6,900
4.5 0 8,050 116,000 115,000 106,950 8,050 0 6,900(3) 0
5 0 0 120,000 120,000 120,000 8,400 8,400 7,200 7,200
5.5 0 10,000 122,000 120,000(4) 110,000(4) 8,400 0 7,200(4) 0
6 0 0 125,000 125,000 125,000 8,750 8,750 7,500 7,500
At this point, assuming no additional activity (step ups, excess withdrawals,
purchase payments, spousal continuation or contract ownership change), you can
continue to withdraw up to either the GBP of $8,750 each year until the RBA is
reduced to zero, or the ALP of $7,500 each year until the later of your death or
the RBA is reduced to zero.
(1) The annual step-up has not been applied to the RBP or RALP because any
withdrawal after step up during the waiting period would reverse any prior
step ups prior to determining if the withdrawal is excess. Therefore, during
the waiting period, the RBP is the amount you can withdraw without incurring
the GBA and RBA excess withdrawal processing, and the RALP is the amount you
can withdraw without incurring the ALP excess withdrawal processing.
(2) On the third anniversary (after the end of the waiting period), the RBP and
RALP are set equal to the GBP and ALP, respectively.
(3) The $8,050 withdrawal is greater than the $6,900 RALP allowed under the
lifetime withdrawal benefit and therefore the excess withdrawal processing
is applied to the ALP, resetting the ALP to the lesser of the prior ALP or
6% of the contract value following the withdrawal.
(4) The $10,000 withdrawal is greater than both the $8,400 RBP allowed under the
basic withdrawal benefit and the $7,200 RALP allowed under the lifetime
withdrawal benefit and therefore the excess withdrawal processing is applied
to the GBA, RBA, and ALP. The GBA is reset to the lesser of the prior GBA or
the contract value following the withdrawal. The RBA is reset to the lesser
of the prior RBA less the withdrawal or the contract value following the
withdrawal. The ALP is reset to the lesser of the prior ALP or 6% of the
contract value following the withdrawal.
--------------------------------------------------------------------------------
142 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX J: GUARANTOR WITHDRAWAL BENEFIT RIDER
GUARANTOR WITHDRAWAL BENEFIT RIDER
We have offered two versions of the Guarantor Withdrawal Benefit that have been
referred to in previous disclosure as Rider A and Rider B. The description of
the Guarantor Withdrawal Benefit in this section applies to both Rider A and
Rider B, unless noted otherwise. Rider B is no longer available for purchase.
The Guarantor Withdrawal Benefit is an optional benefit that was offered for an
additional annual charge if(1):
RIDER A
you purchase(d) your contract on or after April 30, 2005 in those states where
the SecureSource rider and/or the Guarantor Withdrawal Benefit for Life(R)
rider are/were not available;
you and the annuitant were 79 or younger on the date the contract was issued.
RIDER B (NO LONGER AVAILABLE FOR PURCHASE)
you purchased your contract prior to April 29, 2005;
the rider was available in your state; and
you and the annuitant were 79 or younger on the date the contract was issued.
(1) The Guarantor Withdrawal Benefit is not available under an inherited
qualified annuity.
You must elect the Guarantor Withdrawal Benefit rider when you purchase your
contract (original rider). The original rider you receive at contract issue
offers an elective annual step-up and any withdrawal after a step up during the
first three years is considered an excess withdrawal, as described below. The
rider effective date of the original rider is the contract issue date.
We will offer you the option of replacing the original rider with a new
Guarantor Withdrawal Benefit (enhanced rider), if available in your state. The
enhanced rider offers an automatic annual step-up and a withdrawal after a step
up during the first three years is not necessarily an excess withdrawal, as
described below. The effective date of the enhanced rider will be the contract
issue date except for the automatic step-up which will apply to contract
anniversaries that occur after you accept the enhanced rider. The descriptions
below apply to both the original and enhanced riders unless otherwise noted.
The Guarantor Withdrawal Benefit initially provides a guaranteed minimum
withdrawal benefit that gives you the right to take limited partial withdrawals
in each contract year that over time will total an amount equal to your purchase
payments plus any purchase payment credits. Certain withdrawals and step ups, as
described below, can cause the initial guaranteed withdrawal benefit to change.
The guarantee remains in effect if your partial withdrawals in a contract year
do not exceed the allowed amount. As long as your withdrawals in each contract
year do not exceed the allowed amount, you will not be assessed a surrender
charge. Under the original rider, the allowed amount is the Guaranteed Benefit
Payment (GBP -- the amount you may withdraw under the terms of the rider in each
contract year, subject to certain restrictions prior to the third contract
anniversary, as described below). Under the enhanced rider, the allowed amount
is equal to 7% of purchase payments and purchase payment credits for the first
three years, and the GBP in all other years.
If you withdraw an amount greater than the allowed amount in a contract year, we
call this an "excess withdrawal" under the rider. If you make an excess
withdrawal under the rider:
surrender charges, if applicable, will apply only to the amount of the
withdrawal that exceeds the allowed amount;
the guaranteed benefit amount will be adjusted as described below; and
the remaining benefit amount will be adjusted as described below.
For a partial withdrawal that is subject to a surrender charge, the amount we
actually deduct from your contract value will be the amount you request plus any
applicable surrender charge (see "Charges -- Surrender Charge"). Market value
adjustments, if applicable, will also be made (see "Guarantee Period Accounts
(GPAs) -- Market Value Adjustment"). We pay you the amount you request. Any
partial withdrawals you take under the contract will reduce the value of the
death benefits (see "Benefits in Case of Death"). Upon full withdrawal of the
contract, you will receive the remaining contract value less any applicable
charges (see "Surrenders").
Once elected, the Guarantor Withdrawal Benefit rider may not be cancelled and
the fee will continue to be deducted until the contract is terminated, the
contract value reduces to zero (described below) or annuitization start date. If
you select the Guarantor(R) Withdrawal Benefit rider, you may not select an
Income Assurer Benefit rider or the Accumulation Protector Benefit(R) rider. If
you exercise the annual step up election (see "Elective Step Up" and "Annual
Step Up" below), the special spousal continuation step up election (see "Spousal
Continuation and Special Spousal Continuation Step Up" below) or change your
Portfolio Navigator model portfolio, the rider charge may change (see
"Charges").
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 143
You should consider whether the Guarantor Withdrawal Benefit is appropriate for
you because:
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must participate in the
Portfolio Navigator program if you purchase a contract on or after May 1, 2006
with this rider (see "Making the Most of Your Contract -- Portfolio Navigator
Program"). If you selected this Guarantor Withdrawal Benefit rider before May
1, 2006, you must participate in the asset allocation program (see "Appendix
J: Asset Allocation Program for Contracts Purchased Before May 1, 2006"),
however, you may have elected to participate in the Portfolio Navigator
program after May 1, 2006. The Portfolio Navigator program and the asset
allocation program limit your choice of subaccounts, one-year fixed account
and GPAs (if available) to the PN program investment options you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect this rider. You may allocate
qualifying purchase payments and any purchase payment credits to the DCA fixed
account, when available, and we will make monthly transfers into the
investment option you have chosen.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH THE TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw in each contract year without incurring a
surrender charge (see "Charges -- Surrender Charge"). The FA may be greater
than GBP under this rider. Any amount you withdraw under the contract's TFA
provision that exceeds the GBP is subject to the excess withdrawal processing
for the GBA and RBA described below.
RIDER A -- LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER THIS CONTRACT: If you
select the Guarantor Withdrawal Benefit rider, you may not elect the
Accumulation Protector Benefit rider.
NON-CANCELABLE: Once elected, the Guarantor Withdrawal Benefit rider may not
be cancelled and the fee will continue to be deducted until the contract is
terminated, the contract value reduces to zero (described below) or after the
annuitization start date.
You should consult your tax advisor if you have any questions about the use of
this rider in your tax situation:
TAX CONSIDERATIONS FOR NON-QUALIFIED ANNUITIES: Withdrawals before age 59 1/2
may incur a 10% IRS early withdrawal penalty and may be considered taxable
income;
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD.
If you make a withdrawal in any contract year to satisfy an RMD, this may
constitute an excess withdrawal, as defined below, and the excess withdrawal
processing described below will apply. Under the terms of the enhanced rider,
we allow you to satisfy the RMD based on the life expectancy RMD for your
contract and the requirements of the Code and regulations in effect when you
purchase your contract, without the withdrawal being treated as an excess
withdrawal. It is our current administrative practice to make the same
accommodation under the original rider, however, we reserve the right to
modify our administrative practice and will give you 30 days' written notice
of any such change.
For owners subject to RMD rules under Section 401(a)(9), our current
administrative practice under both the original and the enhanced riders is to
allow amounts you withdraw to satisfy these rules without applying excess
withdrawal processing under terms of the rider, subject to the following
rules:
(1) If your Annual Life Expectancy Required Minimum Distribution Amount
(ALERMDA) is greater than the RBP from the beginning of the current
contract year, an Additional Benefit Amount (ABA) will be set equal to
that portion of your ALERMDA that exceeds the RBP.
(2) Any withdrawals taken in a contract year will count first against and
reduce the RBP for that contract year.
(3) Once the RBP for the current contract year has been depleted, any
additional amounts withdrawn will count against and reduce any ABA. These
withdrawals will not be considered excess withdrawals as long as they do
not exceed the remaining ABA.
(4) Once the ABA has been depleted, any additional withdrawal amounts will be
considered excess withdrawals and will initiate the excess withdrawal
processing described in the Guarantor Withdrawal Benefit rider.
The Annual Life Expectancy Required Minimum Distribution Amount (ALERMDA) is:
(1) determined by us each calendar year;
(2) based solely on the value of the contract to which the Guarantor
Withdrawal Benefit rider is attached as of the date we make the
determination; and
--------------------------------------------------------------------------------
144 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
(3) based on the company's understanding and interpretation of the
requirements for life expectancy distributions intended to satisfy the
required minimum distribution rules under Section 401(a)(9) and the
Treasury Regulations promulgated thereunder, as applicable, on the
effective date of this prospectus to:
1. an individual retirement annuity (Section 408(b));
2. a Roth individual retirement account (Section 408A);
3. a Simplified Employee Pension plan (Section 408(k));
4. a tax-sheltered annuity rollover (Section 403(b)).
We reserve the right to modify our administrative practice described above and
will give you 30 days' written notice of any such change.
In the future, the requirements under the Code for such distributions may
change and the life expectancy amount calculation provided under your
Guarantor Withdrawal Benefit rider may not be sufficient to satisfy the
requirements under the Code for these types of distributions. In such a
situation, amounts withdrawn to satisfy such distribution requirements will
exceed your RBP amount and may result in the reduction of your GBA and RBA as
described under the excess withdrawal provision of the rider.
Please note that RMD rules follow the calendar year which most likely does not
coincide with your contract year and therefore may limit when you can take
your RMD and not be subject to excess withdrawal processing.
In cases where the Code does not allow the life expectancy of a natural person
to be used to calculate the required minimum distribution amount (e.g.
ownership by a trust or a charity), we will calculate the life expectancy RMD
amount calculated by us as zero in all years. The life expectancy required
minimum distribution amount calculated by us will also equal zero in all
years.
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions"). You should consult your
tax advisor before you select this optional rider if you have any questions
about the use of this rider in your tax situation;
THE TERMS "GUARANTEED BENEFIT AMOUNT" AND "REMAINING BENEFIT AMOUNT" ARE
DESCRIBED BELOW. EACH IS USED IN THE OPERATION OF THE GBP, THE RBP, THE ELECTIVE
STEP UP, THE ANNUAL STEP UP, THE SPECIAL SPOUSAL CONTINUATION STEP UP AND THE
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION.
GUARANTEED BENEFIT AMOUNT
The Guaranteed Benefit Amount (GBA) is equal to the initial purchase payment,
plus any purchase payment credits, adjusted for subsequent purchase payments,
any purchase payment credits, partial withdrawals in excess of the GBP, and step
ups. The maximum GBA is $5,000,000.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the GBA is equal to the initial purchase payment, plus
any purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own GBA equal to the amount of the
purchase payment plus any purchase payment credit. The total GBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual GBAs immediately prior to the receipt of the additional
purchase payment, plus the GBA associated with the additional purchase
payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the GBA remains
unchanged. If the partial withdrawal is taken during the first three
years, the GBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE GBA. If the partial
withdrawal is taken during the first three years, the GBA and the GBP are
calculated after the reversal of any prior step ups:
(c) under the original rider in a contract year after a step up but before the
third contract anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING
WILL BE APPLIED TO THE GBA. If the partial withdrawal is taken during the
first three years, the GBA and the GBP are calculated after the reversal
of any prior step ups:
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 145
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT
The remaining benefit amount (RBA) at any point is the total guaranteed amount
available for future partial withdrawals. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit;
When you make additional purchase payments -- each additional purchase payment
plus any purchase payment credit has its own RBA equal to the amount of the
purchase payment plus any purchase payment credit. The total RBA when an
additional purchase payment and purchase payment credit are added is the sum
of the individual RBAs immediately prior to the receipt of the additional
purchase payment, plus the RBA associated with the additional payment;
At step up -- (see "Elective Step Up" and "Annual Step Up" headings below).
When you make a partial withdrawal:
(a) and all of your withdrawals in the current contract year, including the
current withdrawal, are less than or equal to the GBP -- the RBA becomes
the RBA immediately prior to the partial withdrawal, less the partial
withdrawal. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
(b) and all of your withdrawals in the current contract year, including the
current withdrawal, are greater than the GBP -- THE FOLLOWING EXCESS
WITHDRAWAL PROCESSING WILL BE APPLIED TO THE RBA. If the partial
withdrawal is taken during the first three years, the RBA and the GBP are
calculated after the reversal of any prior step ups;
(c) under the original rider after a step up but before the third contract
anniversary -- THE FOLLOWING EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE RBA. If the partial withdrawal is taken during the first three
years, the RBA and the GBP are calculated after the reversal of any prior
step ups;
RBA EXCESS WITHDRAWAL PROCESSING
The RBA will automatically be reset to the lesser of (a) the contract value
immediately following the withdrawal, or (b) the RBA immediately prior to the
withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, any reduction of the RBA will be
taken out of each payment's RBA in the following manner:
The withdrawal amount up to the remaining benefit payment (defined below) is
taken out of each RBA bucket in proportion to its remaining benefit payment at
the time of the withdrawal; and the withdrawal amount above the remaining
benefit payment and any amount determined by the excess withdrawal processing
are taken out of each RBA bucket in proportion to its RBA at the time of the
withdrawal.
GUARANTEED BENEFIT PAYMENT
Under the original rider, the GBP is the amount you may withdraw under the terms
of the rider in each contract year, subject to certain restrictions prior to the
third anniversary.
Under the enhanced rider, the GBP is the withdrawal amount that you are entitled
to take each contract year after the third anniversary until the RBA is
depleted.
RIDER A: Under the original rider, the GBP is equal to 7% of the GBA. Under the
enhanced rider, the GBP is the lesser of (a) 7% of the GBA, or (b) the RBA.
Under both the original and enhanced riders, if you withdraw less than the GBP
in a contract year, there is no carry over to the next contract year.
RIDER B: Under both the original and enhanced riders, the GBP is the lesser of
(a) 7% of the GBA; or (b) the RBA. If you withdraw less than the GBP in a
contract year, there is no carry over to the next contract year.
--------------------------------------------------------------------------------
146 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING BENEFIT PAYMENT
Under the original rider, at the beginning of each contract year, the remaining
benefit payment (RBP) is set as the lesser of (a) the GBP, or (b) the RBA.
Under the enhanced rider, at the beginning of each contract year, during the
first three years and prior to any withdrawal, the RBP for each purchase payment
is set equal to that purchase payment plus any purchase payment credit,
multiplied by 7%. At the beginning of any other contract year, each individual
RBP is set equal to each individual GBP.
Each additional purchase payment has its own RBP established equal to that
payment's GBP. The total RBP is equal to the sum of the individual RBPs.
Whenever a partial withdrawal is made, the RBP equals the RBP immediately prior
to the partial withdrawal less the amount of the partial withdrawal, but not
less than zero.
ELECTIVE STEP UP (UNDER THE ORIGINAL RIDER ONLY)
You have the option to increase the RBA, the GBA, the GBP and the RBP beginning
with the first contract anniversary. An annual elective step up option is
available for 30 days after the contract anniversary. The elective step up
option allows you to step up the remaining benefit amount and guaranteed benefit
amount to the contract value on the valuation date we receive your written
request to step up.
The elective step up is subject to the following rules:
if you do not take any withdrawals during the first three years, you may step
up annually beginning with the first contract anniversary;
if you take any withdrawals during the first three years, the annual elective
step up will not be available until the third contract anniversary;
if you step up but then take a withdrawal prior to the third contract
anniversary, you will lose any prior step ups and the withdrawal will be
considered an excess withdrawal subject to the GBA and RBA excess withdrawal
processing discussed under the "Guaranteed Benefit Amount" and "Remaining
Benefit Amount" headings above; and
you may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
You may elect a step up only once each contract year within 30 days after the
contract anniversary. Once a step up has been elected, another step up may not
be elected until the next contract anniversary.
RIDER A: You may only step up if your contract value on the valuation date we
receive your written request to step up is greater than the RBA. The elective
step up will be determined as follows:
The effective date of the elective step up is the valuation date we receive
your written request to step up.
The RBA will be increased to an amount equal to the contract value on the
valuation date we receive your written request to step up.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract value on the
valuation date we receive your written request to step up.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up less any withdrawals made during
that contract year.
RIDER B: You may only step up if your contract anniversary value is greater than
the RBA. The elective step up will be determined as follows:
The effective date of the elective step up is the contract anniversary.
The RBA will be increased to an amount equal to the contract anniversary
value.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the elective step up; or (b) the contract anniversary
value.
The GBP will be increased to an amount equal to the greater of (a) the GBP
immediately prior to the elective step up; or (b) 7% of the GBA after the
elective step up.
The RBP will be increased to the lesser of (a) the RBA after the elective step
up; or (b) the GBP after the elective step up.
ANNUAL STEP UP (UNDER THE ENHANCED RIDER ONLY)
Beginning with the first contract anniversary after you accept the enhanced
rider, an increase of the RBA, the GBA, the GBP and the RBP may be available. A
step up does not create contract value, guarantee performance of any investment
options, or
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 147
provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP and RBP, and may extend the
payment period or increase allowable payment.
The annual step up is subject to the following rules:
The annual step up is available when the RBA would increase on the step up
date. The applicable step up date depends on whether the annual step up is
applied on an automatic or elective basis.
If the application of the step does not increase the rider charge, the annual
step up will be automatically applied to your contract and the step up date is
the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary. If you exercise the elective
annual step up option, you will pay the rider charge in effect on the step up
date. If you wish to exercise the elective annual step up option, we must
receive a request from you or your investment professional. The step up date
is the date we receive your request to step up. If your request is received
after the close of business, the step up date will be the next valuation day.
Only one step up is allowed each contract year.
If you take any withdrawals during the first three years, any previously
applied step ups will be reversed and the annual step up will not be available
until the third contract anniversary;
You may take withdrawals on or after the third contract anniversary without
reversal of previous step ups.
The annual step up will be determined as follows:
The RBA will be increased to an amount equal to the contract value on the step
up date.
The GBA will be increased to an amount equal to the greater of (a) the GBA
immediately prior to the annual step up; or (b) the contract value on the step
up date.
The GBP will be calculated as described earlier, but based on the increased
GBA and RBA.
The RBP will be reset as follows:
(a) Prior to any withdrawals during the first three years, the RBP will not be
affected by the step up.
(b) At any other time, the RBP will be reset as the increased GBP less all
prior withdrawals made during the current contract year, but never less
than zero.
SPOUSAL CONTINUATION AND SPECIAL SPOUSAL CONTINUATION STEP UP
If a surviving spouse elects to continue the contract, this rider also
continues. The spousal continuation step up is in addition to the elective step
up or the annual step up. When a spouse elects to continue the contract, any
rider feature processing particular to the first three years of the contract as
described in this prospectus no longer applies. The GBA, RBA and GBP values
remain unchanged. The RBP is automatically reset to the GBP less all prior
withdrawals made in the current contract year, but not less than zero.
RIDER A: A surviving spouse may elect a spousal continuation step up by written
request within 30 days following the spouse's election to continue the contract.
This step up may be made even if withdrawals have been taken under the contract
during the first three years. Under this step up, the RBA will be reset to the
greater of the RBA or the contract value on the valuation date we receive the
spouse's written request to step up; the GBA will be reset to the greater of the
GBA or the contract value on the same valuation date. If a spousal continuation
step up is elected and we have increased the charge for the rider for new
contract owners, the spouse will pay the charge that is in effect on the
valuation date we receive the written request to step up.
It is our current administrative practice to process the spousal continuation
step up as described in the next paragraph; however, we reserve the right to
discontinue our administrative practice and will give you 30 days' written
notice of any such change.
At the time of spousal continuation, a step-up may be available. All annual
step-up rules (see "Annual Step-Up" heading above), other than those that apply
to the waiting period, also apply to the spousal continuation step-up. If the
spousal continuation step-up is processed automatically, the step-up date is the
valuation date spousal continuation is effective. If not, the spouse must elect
the step up and must do so within 30 days of the spousal continuation date. If
the spouse elects the spousal continuation step up, the step-up date is the
valuation date we receive the spouse's written request to step-up if we receive
the request by the close of business on that day, otherwise the next valuation
date.
RIDER B: A spousal continuation step up occurs automatically when the spouse
elects to continue the contract. The rider charge will not change upon this
automatic step up. Under this step up, the RBA will be reset to the greater of
the RBA on the valuation date we receive the spouse's written request to
continue the contract and the death benefit that would otherwise have
--------------------------------------------------------------------------------
148 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
been paid; the GBA will be reset to the greater of the GBA on the valuation date
we receive the spouse' written request to continue the contract and the death
benefit that would otherwise have been paid.
GUARANTEED WITHDRAWAL BENEFIT ANNUITY PAYOUT OPTION
Several annuity payout plans are available under the contract. As an alternative
to these annuity payout plans, a fixed annuity payout option is available under
the Guarantor Withdrawal Benefit.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payments have
been made for less than the RBA, the remaining payments will be paid to the
beneficiary (see "'The Annuity Payout Period" and "Taxes").
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
IF CONTRACT VALUE REDUCES TO ZERO
If the contract value reduces to zero and the RBA remains greater than zero, the
following will occur:
you will be paid according to the annuity payout option described above;
we will no longer accept additional purchase payments;
you will no longer be charged for the rider;
any attached death benefit riders will terminate; and
the death benefit becomes the remaining payments under the annuity payout
option described above.
If the contract value falls to zero and the RBA is depleted, the Guarantor
Withdrawal Benefit rider and the contract will terminate.
EXAMPLE OF THE GUARANTOR WITHDRAWAL BENEFIT (APPLIES TO RIDER A AND RIDER B)
ASSUMPTION:
You purchase the contract with a payment of $100,000.
The Guaranteed Benefit Amount (GBA) equals your purchase payment: $100,000
The Guaranteed Benefit Payment (GBP) equals 7% of your GBA:
0.07 x $100,000 = $ 7,000
The Remaining Benefit Amount (RBA) equals your purchase payment: $100,000
On the first contract anniversary the contract value grows to
$110,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $110,000
The GBA equals 100% of your contract value: $110,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $110,000 = $ 7,700
During the fourth contract year you decide to take a partial
withdrawal of $7,700.
You took a partial withdrawal equal to your GBP, so your RBA equals
the prior RBA less the amount of the partial withdrawal:
$110,000 - $7,700 = $102,300
The GBA equals the GBA immediately prior to the partial withdrawal: $110,000
The GBP equals 7% of your GBA:
0.07 x $110,000 = $ 7,700
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 149
On the fourth contract anniversary you make an additional purchase
payment of $50,000.
The new RBA for the contract is equal to your prior RBA plus 100% of
the additional purchase payment:
$102,300 + $50,000 = $152,300
The new GBA for the contract is equal to your prior GBA plus 100% of
the additional purchase payment:
$110,000 + $50,000 = $160,000
The new GBP for the contract is equal to your prior GBP plus 7% of
the additional purchase payment:
7,700 + $3,500 = $ 11,200
On the fifth contract anniversary your contract value grows to
$200,000. You decide to step up your benefit.
The RBA equals 100% of your contract value: $200,000
The GBA equals 100% of your contract value: $200,000
The GBP equals 7% of your stepped-up GBA:
0.07 x $200,000 = $ 14,000
During the seventh contract year your contract value grows to
$230,000. You decide to take a partial withdrawal of $20,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$200,000 - $20,000 = $180,000
Reset RBA = lesser of (1) or (2) = $180,000
The GBA gets reset to the lesser of:
(1) your prior GBA $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$230,000 - $20,000 = $210,000
Reset GBA = lesser of (1) or (2) = $200,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $200,000 = $ 14,000
During the eighth contract year your contract value falls to
$175,000. You decide to take a partial withdrawal of $25,000. You
took more than your GBP of $14,000 so your RBA gets reset to the
lesser of:
(1) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
OR
(2) your prior RBA less the amount of the partial withdrawal.
$180,000 - $25,000 = $155,000
Reset RBA = lesser of (1) or (2) = $150,000
The GBA gets reset to the lesser of:
(1) your prior GBA; $200,000
OR
(2) your contract value immediately following the partial
withdrawal;
$175,000 - $25,000 = $150,000
Reset GBA = lesser of (1) or (2) = $150,000
The Reset GBP is equal to 7% of your Reset GBA:
0.07 x $150,000 = $ 10,500
--------------------------------------------------------------------------------
150 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX K: EXAMPLE -- INCOME ASSURER BENEFIT RIDERS
INCOME ASSURER BENEFIT RIDERS
The following three optional Income Assurer Benefit riders were available under
your contract if you purchased your contract prior to May 1, 2007. These riders
are no longer available for purchase.
Income Assurer Benefit - MAV;
Income Assurer Benefit - 5% Accumulation Benefit Base; or
Income Assurer Benefit - Greater of MAV or 5% Accumulation Benefit Base.
The Income Assurer Benefit riders are intended to provide you with a guaranteed
minimum income regardless of the volatility inherent in the investments in the
subaccounts. The riders benchmark the contract growth at each anniversary
against several comparison values and set the guaranteed income benefit base
(described below) equal to the largest value. The guaranteed income benefit
base, less any applicable premium tax, is the value we apply to the guaranteed
annuity purchase rates stated in Table B of the contract to calculate the
minimum annuity payouts you will receive if you exercise the rider. If the
guaranteed income benefit base is greater than the contract value, the
guaranteed income benefit base may provide a higher annuity payout level than is
otherwise available. However, the riders use guaranteed annuity purchase rates
which may result in annuity payouts that are less than those using the annuity
purchase rates that we may apply at annuitization under the standard contract
provisions. Therefore, the level of income provided by the riders may be less
than the contract otherwise provides. If the annuity payouts through the
standard contract provisions are more favorable than the payouts available
through the riders, you will receive the higher standard payout option. The
guaranteed income benefit base does not create contract value or guarantee the
performance of any investment option.
The general information in this section applies to each Income Assurer Benefit
rider.
HERE ARE SOME GENERAL TERMS THAT ARE USED TO DESCRIBE THE INCOME ASSURER BENEFIT
RIDERS IN THE SECTIONS BELOW:
GUARANTEED INCOME BENEFIT BASE: The guaranteed income benefit base is the value
that will be used to determine minimum annuity payouts when the rider is
exercised. It is an amount we calculate, depending on the Income Assurer
Benefit(R) rider you choose, that establishes a benefit floor. When the benefit
floor amount is greater than the contract value, there may be a higher
annuitization payout than if you annuitized your contract without the Income
Assurer Benefit. Your annuitization payout will never be less than that provided
by your contract value.
EXCLUDED INVESTMENT OPTIONS: These investment options are listed in your
contract under contract data and will include the Columbia Variable
Portfolio - Cash Management Fund and, if available under your contract, the GPAs
and/or the one-year fixed account. Excluded investment options are not used in
the calculation of this riders' variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
EXCLUDED PAYMENTS: These are purchase payments and any purchase payment credits,
paid in the last five years before exercise of the benefit which we reserve the
right to exclude from the calculation of the guaranteed income benefit base.
PROPORTIONATE ADJUSTMENTS FOR PARTIAL WITHDRAWALS: These are calculated as the
product of (a) times (b) where:
(a) is the ratio of the amount of the partial withdrawal (including any
surrender charges or MVA) to the contract value on the date of (but prior
to) the partial withdrawal; and
(b) is the benefit on the date of (but prior to) the partial withdrawal.
PROTECTED INVESTMENT OPTIONS: All investment options available under this
contract that are not defined as Excluded Investment options under contract data
are known as protected investment options for purposes of this rider and are
used in the calculation of the variable account floor for the Income Assurer
Benefit - 5% Accumulation Benefit Base and the Income Assurer Benefit - Greater
of MAV or 5% Accumulation Benefit Base.
WAITING PERIOD: This rider can only be exercised after the expiration of a 10-
year waiting period. We reserve the right to restart the waiting period if you
elect to change your PN investment option to one that causes the rider charge to
increase.
THE FOLLOWING ARE GENERAL PROVISIONS THAT APPLY TO EACH INCOME ASSURER BENEFIT:
EXERCISING THE RIDER
Rider exercise conditions are:
you may only exercise the Income Assurer Benefit rider within 30 days after
any contract anniversary following the expiration of the waiting period;
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 151
the annuitant on the annuitization start date must be between 50 to 86 years
old; and
you can only take an annuity payment in one of the following annuity payout
plans:
Plan A -- Life Annuity - No Refund;
Plan B -- Life Annuity with Ten or Twenty Years Certain;
Plan D -- Joint and Last Survivor Life Annuity - No Refund;
Joint and Last Survivor Life Annuity with Twenty Years Certain; or
Plan E -- Twenty Years Certain.
After the expiration of the waiting period, the Income Assurer Benefit rider
guarantees a minimum amount of fixed annuity lifetime income during
annuitization or the option of variable annuity payouts with a guaranteed
minimum initial payout or a combination of the two options.
If your contract value falls to zero as the result of adverse market performance
or the deduction of fees and/or charges at any time, the contract and all its
riders, including this rider, will terminate without value and no benefits will
be paid on account of such termination. EXCEPTION: if you are still living, and
the annuitant is between 50 and 86 years old, an amount equal to the guaranteed
income benefit base will be paid to you under the annuity payout plan and
frequency that you select, based upon the fixed or variable annuity payouts
described above. The guaranteed income benefit base will be calculated and
annuitization will occur at the following times.
If the contract value falls to zero during the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur on the
valuation date after the expiration of the waiting period, or when the
annuitant attains age 50 if later.
If the contract value falls to zero after the waiting period, the guaranteed
income benefit base will be calculated and annuitization will occur
immediately, or when the annuitant attains age 50 if later.
Fixed annuity payouts under this rider will occur at the guaranteed annuity
purchase rates based on the "2000 Individual Annuitant Mortality Table A" with
100% Projection Scale G and a 2.0% interest rate for contracts purchased on or
after May 1, 2006 and if available in your state.(1) These are the same rates
used in Table B of the contract (see "The Annuity Payout Period -- Annuity
Tables"). Your annuity payouts remain fixed for the lifetime of the annuity
payout period.
First year variable annuity payouts are calculated in the same manner as fixed
annuity payouts. Once calculated, your variable annuity payouts remain unchanged
for the first year. After the first year, subsequent annuity payouts are
variable and depend on the performance of the subaccounts you select. Variable
annuity payouts after the first year are calculated using the following formula:
Pt-1 (1 + i)
------------ = Pt
1.05
Pt-1 = prior annuity payout
Pt = current annuity payout
i = annualized subaccount performance
Each subsequent variable annuity payout could be more or less than the previous
variable annuity payout if the subaccount investment performance is greater or
less than the 5% assumed investment rate. If your subaccount performance equals
5%, your variable annuity payout will be unchanged from the previous variable
annuity payout. If your subaccount performance is in excess of 5%, your variable
annuity payout will increase from the previous variable annuity payout. If your
subaccount investment performance is less than 5%, your variable annuity payout
will decrease from the previous variable annuity payout.
(1) For all other contracts, the guaranteed annuity purchase rates are based on
the "1983 Individual Annuitant Mortality Table A" with 100% Projection Scale
G and a 2.0% interest rate.
TERMINATING THE RIDER
Rider termination conditions are:
you may terminate the rider within 30 days following the first anniversary
after the effective date of the rider;
you may terminate the rider any time after the expiration of the waiting
period;
the rider will terminate on the date you make a full surrender from the
contract, or on the annuitization start date, or on the date that a death
benefit is payable; and
--------------------------------------------------------------------------------
152 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
the rider will terminate* 30 days following the contract anniversary after the
annuitant's 86th birthday.
when a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
* The rider and annual fee terminate 30 days following the contract
anniversary after the annuitant's 86th birthday, however, if you exercise
the Income Assurer Benefit rider before this time, your benefits will
continue according to the annuity payout plan you have selected.
YOU MAY SELECT ONE OF THE INCOME ASSURER BENEFIT RIDERS DESCRIBED BELOW:
INCOME ASSURER BENEFIT - MAV
The guaranteed income benefit base for the Income Assurer Benefit - MAV is the
greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the maximum anniversary value.
MAXIMUM ANNIVERSARY VALUE (MAV) -- is zero prior to the first contract
anniversary after the effective date of the rider. On the first contract
anniversary after the effective date of the rider, we set the MAV as the greater
of these two values:
(a) current contract value; or
(b) total payments and any purchase payment credits made to the contract minus
proportionate adjustments for partial surrenders.
Thereafter, we increase the MAV by any additional purchase payments and any
purchase payment credits and reduce the MAV by proportionate adjustments for
partial surrenders. Every contract anniversary after that prior to the earlier
of your or the annuitant's 81st birthday, we compare the MAV to the current
contract value and we reset the MAV to the higher amount.
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments; or
2. total purchase payments plus any purchase payment credits, less excluded
payments, less proportionate adjustments for partial surrenders; or
3. the MAV, less market value adjusted excluded payments.
MARKET VALUE ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each
excluded purchase payment and any purchase payment credit multiplied by the
ratio of the current contract value over the estimated contract value on the
anniversary prior to such purchase payment. The estimated contract value at such
anniversary is calculated by assuming that payments, any credits, and partial
surrenders occurring in a contract year take place at the beginning of the year
for that anniversary and every year after that to the current contract year.
INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - 5%
Accumulation Benefit Base is the greater of these three values:
1. contract value; or
2. the total purchase payments and any purchase payment credits made to the
contract minus proportionate adjustments for partial surrenders; or
3. the 5% variable account floor.
5% VARIABLE ACCOUNT FLOOR - is equal to the contract value in the excluded
investment options plus the variable account floor. The Income Assurer
Benefit(R) 5% variable account floor is calculated differently and is not the
same value as the death benefit 5% variable account floor.
The variable account floor is zero from the effective date of this rider and
until the first contract anniversary after the effective date of this rider. On
the first contract anniversary after the effective date of this rider the
variable account floor is:
the total purchase payments and any purchase payment credits made to the
protected investment options minus adjusted partial surrenders and transfers
from the protected investment options; plus
an amount equal to 5% of your initial purchase payment and any purchase
payment credit allocated to the protected investment options.
On any day after the first contract anniversary following the effective date of
this rider, when you allocate additional purchase payments and purchase payment
credits to or withdraw or transfer amounts from the protected investment
options, we adjust
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 153
the variable account floor by adding the additional purchase payment and any
purchase payment credit and subtracting adjusted surrenders and adjusted
transfers. On each subsequent contract anniversary after the first anniversary
of the effective date of this rider, prior to the earlier of your or the
annuitant's 81st birthday, we increase the variable account floor by adding the
amount ("roll-up amount") equal to 5% of the prior contract anniversary's
variable account floor.
The amount of purchase payment and any purchase payment credits surrendered from
or transferred between the excluded investment options and the protected
investment options is calculated as (a) times (b) where:
(a) is the amount of purchase payment and any purchase payment credits in the
investment options being surrendered or transferred on the date of but
prior to the current surrender or transfer; and
(b) is the ratio of the amount of the transfer or surrender to the value in
the investment options being surrendered or transferred on the date of
(but prior to) the current surrender or transfer.
The roll-up amount prior to the first anniversary is zero. Also, the roll-up
amount on every anniversary after the earlier of your or the annuitant's 81st
birthday is zero.
Adjusted surrenders and adjusted transfers for the variable account floor are
equal to the amount of the surrender or transfer from the protected investment
options as long as the sum of the surrenders and transfers from the protected
investment options in a contract year do not exceed the roll-up amount from the
prior contract anniversary.
If the current surrender or transfer from the protected investment options plus
the sum of all prior surrenders and transfers made from the protected investment
options in the current policy year exceeds the roll-up amount from the prior
contract anniversary we will calculate the adjusted surrender or adjusted
transfer for the variable account floor as the result of (a) plus [(b) times
(c)] where:
(a) is the roll-up amount from the prior contract anniversary less the sum of
any surrenders and transfers made from the protected investment options in
the current policy year but prior to the current surrender or transfer.
However, (a) can not be less than zero; and
(b) is the variable account floor on the date of (but prior to) the current
surrender or transfer from the protected investment options less the value
from (a); and
(c) is the ratio of [the amount of the current surrender (including any
surrender charges or MVA) or transfer from the protected investment
options less the value from (a)] to [the total in the protected investment
options on the date of (but prior to) the current withdrawal or transfer
from the protected investment options less the value from (a)].
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF THESE THREE VALUES:
1. contract value less the market value adjusted excluded payments
(described above); or
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders; or
3. the 5% variable account floor, less 5% adjusted excluded payments.
5% ADJUSTED EXCLUDED PAYMENTS are calculated as the sum of each excluded payment
and any credit accumulated at 5% for the number of full contract years they have
been in the contract.
INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT BASE
The guaranteed income benefit base for the Income Assurer Benefit - Greater of
MAV or 5% Accumulation Benefit Base is the greater of these four values:
1. the contract value;
2. the total purchase payments and any purchase payment credits made to
the contract minus proportionate adjustments for partial surrenders;
3. the MAV (described above); or
4. the 5% variable account floor (described above).
IF WE EXERCISE OUR RIGHT TO NOT REFLECT EXCLUDED PAYMENTS IN THE CALCULATION OF
THE GUARANTEED INCOME BENEFIT BASE, WE WILL CALCULATE THE GUARANTEED INCOME
BENEFIT BASE AS THE GREATEST OF:
1. contract value less the market value adjusted excluded payments
(described above);
2. total purchase payments and any purchase payment credits, less
excluded payments, less proportionate adjustments for partial
surrenders;
--------------------------------------------------------------------------------
154 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
3. the MAV, less market value adjusted excluded payments (described
above); or
4. the 5% Variable Account Floor, less 5% adjusted excluded payments
(described above).
EXAMPLES OF THE INCOME ASSURER BENEFIT RIDERS
The purpose of these examples is to illustrate the operation of the Income
Assurer Benefit Riders. The examples compare payouts available under the
contract's standard annuity payout provisions with annuity payouts available
under the riders based on the same set of assumptions. THE CONTRACT VALUES SHOWN
ARE HYPOTHETICAL AND DO NOT REPRESENT PAST OR FUTURE PERFORMANCE. Actual
contract values may be more or less than those shown and will depend on a number
of factors, including but not limited to the investment experience of the
subaccounts (referred to in the riders as "protected investment options") and
the fees and charges that apply to your contract.
For each of the riders, we provide two annuity payout plan comparisons based on
the hypothetical contract values we have assumed. The first comparison assumes
that you select annuity payout Plan B, Life Annuity with 10 Years Certain. The
second comparison assumes that you select annuity payout Plan D, Joint and Last
Survivor Annuity - No Refund.
Remember that the riders require you to choose a PN program investment option.
The riders are intended to offer protection against market volatility in the
subaccounts (protected investment options). Some PN program investment option
include protected investment options and excluded investment options (Columbia
Variable Portfolio - Cash Management Fund, and if available under the contract,
GPAs and the one-year fixed account). Excluded investment options are not
included in calculating the 5% variable account floor under the Income Assurer
Benefit - 5% Accumulation Benefit Base rider and the Income Assurer
Benefit - Greater of MAV or 5% Accumulation Benefit Base rider. Because the
examples which follow are based on hypothetical contract values, they do not
factor in differences in PN program investment options.
ASSUMPTIONS:
You purchase the contract during the 2006 calendar year with a payment of
$100,000; and
we immediately add a $3,000 purchase payment credit; and
you invest all contract value in the subaccounts (protected investment
options); and
you make no additional purchase payments, partial surrenders or changes in PN
program investment option; and
the annuitant is male and age 55 at contract issue; and
the joint annuitant is female and age 55 at contract issue.
EXAMPLE -- INCOME ASSURER BENEFIT - MAV
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
ASSUMED PURCHASE MAXIMUM GUARANTEED
CONTRACT CONTRACT PAYMENTS ANNIVERSARY INCOME BENEFIT
ANNIVERSARY VALUE AND CREDITS VALUE (MAV)(1) BASE MAV(2)
--------------------------------------------------------------------------------------
1 $111,000 $103,000 $111,000 $111,000
2 129,000 103,000 129,000 129,000
3 136,000 103,000 136,000 136,000
4 155,000 103,000 155,000 155,000
5 87,000 103,000 155,000 155,000
6 124,000 103,000 155,000 155,000
7 143,000 103,000 155,000 155,000
8 157,000 103,000 157,000 157,000
9 144,000 103,000 157,000 157,000
10 179,000 103,000 179,000 179,000
11 145,000 103,000 179,000 179,000
12 152,000 103,000 179,000 179,000
13 214,000 103,000 214,000 214,000
14 204,000 103,000 214,000 214,000
15 209,000 103,000 214,000 214,000
--------------------------------------------------------------------------------------
(1) The MAV is limited after age 81, but the guaranteed income benefit base may
increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - MAV is a calculated number, not an
amount that can be withdrawn. The Guaranteed Income Benefit Base - MAV does
not create contract value or guarantee the performance of any investment
option.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 155
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAV PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $ 794.76 $ 796.55 $179,000 $ 794.76
11 145,000 659.75 661.20 179,000 814.45
12 152,000 709.84 711.36 179,000 835.93
13 214,000 1,025.06 1,027.20 214,000 1,025.06
14 204,000 1,003.68 1,005.72 214,000 1,052.88
15 209,000 1,055.45 1,057.54 214,000 1,080.70
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 796.55
11 816.24
12 837.72
13 1,027.20
14 1,055.02
15 1,082.84
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAV PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN B - LIFE WITH IAB - MAV PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) 10 YEARS CERTAIN(2) BENEFIT BASE SURVIVOR NO REFUND(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $647.98 $640.82 $179,000 $647.98
11 145,000 536.50 530.70 179,000 662.30
12 152,000 574.56 568.48 179,000 676.62
13 214,000 830.32 819.62 214,000 830.32
14 204,000 809.88 801.72 214,000 849.58
15 209,000 850.63 842.27 214,000 870.98
----------------------------------------------------------------------------------------------------------------------
IAB - MAV
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $640.82
11 655.14
12 669.46
13 819.62
14 841.02
15 862.42
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
156 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
EXAMPLE -- INCOME ASSURER BENEFIT - 5% ACCUMULATION BENEFIT BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
ASSUMED PURCHASE BENEFIT BASE -
CONTRACT CONTRACT PAYMENT 5% ACCUMULATION 5% ACCUMULATION
ANNIVERSARY VALUE AND CREDITS BENEFIT BASE(1) BENEFIT BASE(2)
-------------------------------------------------------------------------------------
1 $111,000 $103,000 $108,150 $111,000
2 129,000 103,000 113,558 129,000
3 136,000 103,000 119,235 136,000
4 155,000 103,000 125,197 155,000
5 87,000 103,000 131,457 131,457
6 124,000 103,000 138,030 138,030
7 143,000 103,000 144,931 144,931
8 157,000 103,000 152,178 157,000
9 144,000 103,000 159,787 159,787
10 179,000 103,000 167,776 179,000
11 145,000 103,000 176,165 176,165
12 152,000 103,000 184,973 184,973
13 214,000 103,000 194,222 214,000
14 204,000 103,000 203,933 204,000
15 209,000 103,000 214,130 214,130
-------------------------------------------------------------------------------------
(1) The 5% Accumulation Benefit Base value is limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - 5% Accumulation Benefit Base is a
calculated number, not an amount that can be withdrawn. The Guaranteed
Income Benefit Base - 5% Accumulation Benefit Base does not create contract
value or guarantee the performance of any investment option.
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - 5% RF PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $ 794.76 $ 796.55 $179,000 $ 794.76
11 145,000 659.75 661.20 176,165 801.55
12 152,000 709.84 711.36 184,973 863.82
13 214,000 1,025.06 1,027.20 214,000 1,025.06
14 204,000 1,003.68 1,005.72 204,000 1,003.68
15 209,000 1,055.45 1,057.54 214,130 1,081.35
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 796.55
11 803.31
12 865.67
13 1,027.20
14 1,005.72
15 1,083.50
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 157
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - 5% RF PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN D - LAST PLAN B - LIFE WITH IAB - 5% RF PLAN D - LAST
AT EXERCISE CONTRACT VALUE SURVIVOR NO REFUND(2) 10 YEARS CERTAIN(2) BENEFIT BASE SURVIVOR NO REFUND(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $647.98 $640.82 $179,000 $647.98
11 145,000 536.50 530.70 176,165 651.81
12 152,000 574.56 568.48 184,973 699.20
13 214,000 830.32 819.62 214,000 830.32
14 204,000 809.88 801.72 204,000 809.88
15 209,000 850.63 842.27 214,130 871.51
----------------------------------------------------------------------------------------------------------------------
IAB - 5% RF
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $640.82
11 644.76
12 691.80
13 819.62
14 801.72
15 862.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th, 13th or the 14th contract anniversary, you would
not benefit from the rider because the monthly annuity payout in these examples
is the same as under the standard provisions of the contract. Because the
examples are based on assumed contract values, not actual investment results,
you should not conclude from the examples that the riders will provide higher
payments more frequently than the standard provisions of the contract.
EXAMPLE -- INCOME ASSURER BENEFIT - GREATER OF MAV OR 5% ACCUMULATION BENEFIT
BASE
Based on the above assumptions and taking into account fluctuations in contract
value due to market conditions, we calculate the guaranteed income benefit base
as:
GUARANTEED
INCOME
BENEFIT BASE -
GREATER OF
ASSUMED PURCHASE MAXIMUM MAV OR 5%
CONTRACT CONTRACT PAYMENTS ANNIVERSARY 5% ACCUMULATION ACCUMULATION
ANNIVERSARY VALUE AND CREDITS VALUE(1) BENEFIT BASE(1) BENEFIT BASE(2)
------------------------------------------------------------------------------------------------------
1 $111,000 $103,000 $111,000 $108,150 $111,000
2 129,000 103,000 129,000 113,558 129,000
3 136,000 103,000 136,000 119,235 136,000
4 155,000 103,000 155,000 125,197 155,000
5 87,000 103,000 155,000 131,457 155,000
6 124,000 103,000 155,000 138,030 155,000
7 143,000 103,000 155,000 144,931 155,000
8 157,000 103,000 157,000 152,178 157,000
9 144,000 103,000 157,000 159,787 159,787
10 179,000 103,000 179,000 167,776 179,000
11 145,000 103,000 179,000 176,165 179,000
12 152,000 103,000 179,000 184,973 184,973
13 214,000 103,000 214,000 194,222 214,000
14 204,000 103,000 214,000 203,933 214,000
15 209,000 103,000 214,000 214,130 214,130
------------------------------------------------------------------------------------------------------
(1) The MAV and 5% Accumulation Benefit Base are limited after age 81, but the
guaranteed income benefit base may increase if the contract value increases.
(2) The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base is a calculated number, not an amount that can be surrendered.
The Guaranteed Income Benefit Base - Greater of MAV or 5% Accumulation
Benefit Base does not create contract value or guarantee the performance of
any investment option.
--------------------------------------------------------------------------------
158 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
PLAN B - LIFE ANNUITY WITH 10 YEARS CERTAIN
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
B - Life Annuity with 10 Years Certain would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $ 794.76 $ 796.55 $179,000 $ 794.76
11 145,000 659.75 661.20 179,000 814.45
12 152,000 709.84 711.36 184,973 863.82
13 214,000 1,025.06 1,027.20 214,000 1,025.06
14 204,000 1,003.68 1,005.72 214,000 1,052.88
15 209,000 1,055.45 1,057.54 214,130 1,081.35
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $ 796.55
11 816.24
12 865.67
13 1,027.20
14 1,055.02
15 1,083.50
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
PLAN D - JOINT AND LAST SURVIVOR LIFE ANNUITY - NO REFUND
If you annuitize the contract within 30 days after the illustrated contract
anniversary, the minimum monthly income payment under a fixed annuity option
(which is the same for the first year of a variable annuity option) on Plan
D - Joint and Last Survivor Life Annuity - No Refund would be:
STANDARD PROVISIONS IAB - MAX PROVISIONS
-------------------------------------------------------------------------------------------------------
CONTRACT NEW TABLE(1) OLD TABLE(1) NEW TABLE(1)
ANNIVERSARY ASSUMED PLAN B - LIFE WITH PLAN B - LIFE WITH IAB - MAX PLAN B - LIFE WITH
AT EXERCISE CONTRACT VALUE 10 YEARS CERTAIN(2) 10 YEARS CERTAIN(2) BENEFIT BASE 10 YEARS CERTAIN(2)
----------------------------------------------------------------------------------------------------------------------
10 $179,000 $647.98 $640.82 $179,000 $647.98
11 145,000 536.50 530.70 179,000 662.30
12 152,000 574.56 568.48 184,973 699.20
13 214,000 830.32 819.62 214,000 830.32
14 204,000 809.88 801.72 214,000 849.58
15 209,000 850.63 842.27 214,130 871.51
----------------------------------------------------------------------------------------------------------------------
IAB - MAX
PROVISIONS
-------------------
CONTRACT OLD TABLE(1)
ANNIVERSARY PLAN B - LIFE WITH
AT EXERCISE 10 YEARS CERTAIN(2)
----------------------------------
10 $640.82
11 655.14
12 691.80
13 819.62
14 841.02
15 862.94
----------------------------------
(1) Effective May 1, 2006, we began calculating fixed annuity payments under
this rider using the guaranteed annuity purchase rates based on the "2000
Individual Annuitant Mortality Table A" (New Table), subject to state
approval. Previously, our calculations were based on the "1983 Individual
Annuity Mortality Table A" (Old Table). If you purchased a contract prior to
May 1, 2006, the references to Old Table apply to your contract. If you
purchased a contract on or after May 1, 2006, the table used under rider
depends on which state you live in. Ask your investment professional which
version of the rider, if any, is available in your state.
(2) The monthly annuity payments illustrated under the standard annuity payout
provisions of the contract and for the riders are computed using the rates
guaranteed in Table B of the contract. These are the minimum amounts that
could be paid under the standard annuity payout provisions of the contract
based on the above assumptions. Annuity payouts under the standard annuity
payout provisions of the contract when based on our current annuity payout
rates (which are generally higher than the rates guaranteed in Table B of
the contract) may be greater than the annuity payouts under the riders,
which are always based on the rates guaranteed in Table B of the contract.
If the annuity payouts under the standard contract provisions are more
favorable than the payouts available under the rider, you will receive the
higher standard payout.
NOTE: In the above examples, if you elected to begin receiving annuity payouts
within 30 days after the 10th or the 13th contract anniversary, you would not
benefit from the rider because the monthly annuity payout in these examples is
the same as under the standard provisions of the contract. Because the examples
are based on assumed contract values, not actual investment results, you should
not conclude from the examples that the riders will provide higher payments more
frequently than the standard provisions of the contract.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 159
APPENDIX L: EXAMPLE -- ACCUMULATION PROTECTOR BENEFIT RIDER
The following example shows how the Accumulation Protector Benefit rider works
based on hypothetical values. It is not intended to depict investment
performance of the contract.
THE EXAMPLE ASSUMES:
You purchase the contract (with the Accumulation Protector Benefit rider) with
a payment of $100,000. No purchase payment credit applies.
You make no additional purchase payments.
You do not exercise the elective step-up option.
100,000
INITIAL HYPOTHETICAL
END OF PARTIAL SURRENDER MCAV PAYMENT ASSUMED
CONTRACT (BEGINNING OF ADJUSTMENT FOR ACCUMULATION CONTRACT
YEAR YEAR) PARTIAL SURRENDER MCAV BENEFIT AMOUNT VALUE
1 $ 0 $ 0 $100,000 $ 0 $112,000
2 0 0 102,400 0 128,000
3 0 0 108,000 0 135,000
4 0 0 108,000 0 125,000
5 0 0 108,000 0 110,000
6 2,000 1,964 106,036 0 122,000
7 0 0 112,000 0 140,000
8 0 0 112,000 0 121,000
9 5,000 4,628 107,372 0 98,000
10 0 0 107,372 22,372 85,000
--------------------------------------------------------------------------------
160 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
APPENDIX M: SECURESOURCE RIDER DISCLOSURE
SECURESOURCE RIDERS
There are two optional SecureSource riders available under your contract:
SecureSource - Single Life; or
SecureSource - Joint Life.
The information in this section applies to both SecureSource riders, unless
otherwise noted.
The SecureSource - Single Life rider covers one person. The SecureSource - Joint
Life Rider covers two spouses jointly who are named at contract issue. You may
elect only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider, not both, and you may not switch riders later. You must elect the rider
when you purchase your contract. The rider effective date will be the contract
issue date.
The SecureSource rider is an optional benefit that you may select for an
additional annual charge if:
your contract application was signed on or after May 1, 2007; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource rider is not available under an inherited qualified annuity.
The SecureSource rider guarantees (unless the rider is terminated. See "Rider
Termination" heading below.) that regardless of the investment performance of
your contract you will be able to withdraw up to a certain amount each year from
the contract before the annuity payouts begin until:
SINGLE LIFE: you have recovered at minimum all of your purchase payments or,
if later, until death (see "At Death" heading below) -- even if the contract
value is zero.
JOINT LIFE: you have recovered at minimum all of your purchase payments or, if
later, until the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below), even if the contract
value is zero.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource rider may be appropriate for you if you intend to make periodic
withdrawals from your annuity contract and wish to ensure that market
performance will not adversely affect your ability to withdraw your principal
over time.
Under the terms of the SecureSource rider, the calculation of the amount which
can be withdrawn in each contract year varies depending on several factors,
including but not limited to the waiting period (see "Waiting period" heading
below) and whether or not the lifetime withdrawal benefit has become effective:
(1) The basic withdrawal benefit gives you the right to take limited withdrawals
in each contract year and guarantees that over time the withdrawals will
total an amount equal to, at minimum, your purchase payments (unless the
rider is terminated. See "Rider Termination" heading below). Key terms
associated with the basic withdrawal benefit are "Guaranteed Benefit Payment
(GBP)", "Remaining Benefit Payment (RBP)", "Guaranteed Benefit Amount (GBA)"
and "Remaining Benefit Amount (RBA)." See these headings below for more
information.
(2) The lifetime withdrawal benefit gives you the right, under certain limited
circumstances defined in the rider, to take limited withdrawals until the
later of:
SINGLE LIFE: death (see "At Death" heading below) or until the RBA (under the
basic withdrawal benefit) is reduced to zero (unless the rider is terminated.
See "Rider Termination" heading below);
JOINT LIFE: death of the last surviving covered spouse (see "At Death" heading
below) or until the RBA (under the basic withdrawal benefit) is reduced to
zero (unless the rider is terminated. See "Rider Termination" heading below).
Key terms associated with the lifetime withdrawal benefit are "Annual Lifetime
Payment (ALP)", "Remaining Annual Lifetime Payment (RALP)", "Single Life only:
Covered Person", "Joint Life only: Covered Spouses" and "Annual Lifetime Payment
Attained Age (ALPAA)." See these headings below for more information.
Only the basic withdrawal benefit will be in effect prior to the date that the
lifetime withdrawal benefit becomes effective. The lifetime withdrawal benefit
becomes effective automatically on the rider anniversary date after the:
SINGLE LIFE: covered person reaches age 65, or the rider effective date if the
covered person is age 65 or older on the rider effective date (see "Annual
Lifetime Payment Attained Age (ALPAA)" heading below);
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 161
JOINT LIFE: younger covered spouse reaches age 65, or the rider effective date
if the younger covered spouse is age 65 or older on the rider effective date
(see "Annual Lifetime Payment Attained Age (ALPAA)" and "Annual Lifetime
Payments (ALP)" headings below).
Provided annuity payouts have not begun, the SecureSource rider guarantees that
you may take the following withdrawal amounts each contract year:
Before the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RBP at the beginning of the contract year;
After the establishment of the ALP, the rider guarantees that each year you
have the option to cumulatively withdraw an amount equal to the value of the
RALP or the RBP at the beginning of the contract year, but the rider does not
guarantee withdrawal of the sum of both the RALP and the RBP in a contract
year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next contract year. As long as your
withdrawals in each contract year do not exceed the annual withdrawal amount
allowed under the rider:
SINGLE LIFE: and there has not been a contract ownership change or spousal
continuation of the contract, the guaranteed amounts available for withdrawal
will not decrease;
JOINT LIFE: the guaranteed amounts available for withdrawal will not decrease.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic withdrawal benefit and lifetime withdrawal benefit each
has its own definition of the allowed annual withdrawal amount. Therefore a
withdrawal may be considered an excess withdrawal for purposes of the lifetime
withdrawal benefit only, the basic withdrawal benefit only, or both.
If your withdrawals exceed the greater of the RBP or the RALP, surrender charges
under the terms of the contract may apply (see "Charges -- Surrender Charges").
The amount we actually deduct from your contract value will be the amount you
request plus any applicable surrender charge. Market value adjustments, if
applicable, will also be made (see "Guarantee Period Accounts (GPAs) -- Market
Value Adjustment"). We pay you the amount you request. Any withdrawals you take
under the contract will reduce the value of the death benefits (see "Benefits in
Case of Death"). Upon full withdrawal of the contract, you will receive the
remaining contract value less any applicable charges (see "Making the Most of
Your Contract -- Surrenders").
The rider's guaranteed amounts can be increased at the specified intervals if
your contract value has increased. An annual step up feature is available at
each contract anniversary, subject to certain conditions, and may be applied
automatically to your contract or may require you to elect the step up (see
"Annual Step Up" heading below). If you exercise the annual step up election,
the spousal continuation step up election (see "Spousal Continuation Step Up"
heading below) or change your Portfolio Navigator model portfolio, the rider
charge may change (see "Charges").
If you take withdrawals during the waiting period, any prior steps ups applied
will be reversed and step ups will not be available until the end of the waiting
period. You may take withdrawals after the waiting period without reversal of
prior step ups.
You should consider whether a SecureSource rider is appropriate for you because:
LIFETIME WITHDRAWAL BENEFIT LIMITATIONS: The lifetime withdrawal benefit is
subject to certain limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the oldest owner or annuitant is living (see "If Contract Value
Reduces to Zero" heading below). However, if the contract value is greater
than zero, the lifetime withdrawal benefit terminates at the first death
of any owner or annuitant except as otherwise provided below (see "At
Death" heading below). Therefore, if there are multiple contract owners or
the annuitant is not an owner, the rider may terminate or the lifetime
withdrawal benefit may be reduced. This possibility may present itself
when:
(i) There are multiple contract owners -- when one of the contract owners
dies the benefit terminates even though other contract owners are
still living (except if the contract is continued under the spousal
continuation provision of the contact); or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the benefit terminates even though
the owner is still living. This could happen, for example, when the
owner is younger than the annuitant. This risk increases as the age
difference between owner and annuitant increases.
--------------------------------------------------------------------------------
162 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime withdrawal benefit terminates at the death of the last
surviving covered spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If the both the ALP and the
contract value are zero, the lifetime withdrawal benefit will terminate.
(c) When the lifetime withdrawal benefit is first established, the initial ALP
is based on
(i) SINGLE LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below), unless there has been
a spousal continuation or ownership change; or
(ii) JOINT LIFE: the basic withdrawal benefit's RBA at that time (see
"Annual Lifetime Payment (ALP)" heading below).
Any withdrawal you take before the ALP is established reduces the RBA and
therefore may result in a lower amount of lifetime withdrawals you are
allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of investments. This means you will not be able
to allocate contract value to all of the subaccounts, GPAs or the one-year
fixed account that are available under the contract to contract owners who do
not elect the rider. (See "Making the Most of Your Contract -- Portfolio
Navigator Program.") You may allocate qualifying purchase payments and
purchase payment credits to the DCA fixed account, when available (see "DCA
Fixed Account"), and we will make monthly transfers into the investment option
you have chosen. You may make two elective investment option changes per
contract year; we reserve the right to limit elective investment option
changes if required to comply with the written instructions of a fund (see
"Market Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset as described below but prior to any subsequent withdrawal.
During these accumulation phases, you may request to change your investment
option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed investment option changes per contract
year and will not cause your rider fee to increase. The target investment
option is currently the Moderate investment option. We reserve the right to
change the target investment option to an investment option that is more
aggressive than the current target investment option after 30 days written
notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target investment option, your rider benefit will be
reset as follows:
(a) the total GBA will be reset to the lesser of its current value or the
contract value; and
(b) the total RBA will be reset to the lesser of its current value or the
contract value; and
(c) the ALP, if established, will be reset to the lesser of its current value
or 6% of the contract value; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
made during the current contract year, but not be less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
made during the current contract year, but not be less than zero.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
LIMITATIONS ON PURCHASE OF OTHER RIDERS UNDER YOUR CONTRACT: You may elect
only the SecureSource - Single Life rider or the SecureSource - Joint Life
rider. If you elect the SecureSource rider, you may not elect the Accumulation
Protector Benefit rider.
NON-CANCELABLE: Once elected, the SecureSource rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below). Dissolution of marriage does
not terminate the SecureSource - Joint Life rider and will not reduce the fee
we charge for this rider. The benefit under the SecureSource - Joint Life
rider continues for the covered
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 163
spouse who is the owner of the contract (or annuitant in the case of
nonnatural ownership). The rider will terminate at the death of the contract
owner (or annuitant in the case of nonnatural ownership) because the original
spouse will be unable to elect the spousal continuation provision of the
contract (see "Joint Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal continuation provision of the
contract upon the owner's death, only ownership arrangements that permit such
continuation are allowed at rider issue. In general, the covered spouses
should be joint owners, or one covered spouse should be the owner and the
other covered spouse should be named as the sole primary beneficiary. For non-
natural ownership arrangements that allow for spousal continuation one covered
spouse should be the annuitant and the other covered spouse should be the sole
primary beneficiary. For revocable trust ownerships, the grantor of the trust
must be the annuitant and the beneficiary must either be the annuitant's
spouse or a trust that names the annuitant's spouse as the sole primary
beneficiary. You are responsible for establishing ownership arrangements that
will allow for spousal continuation.
If you select the SecureSource - Joint Life rider, please consider carefully
whether or not you wish to change the beneficiary of your annuity contract.
The rider will terminate if the surviving covered spouse can not utilize the
spousal continuation provision of the contract when the death benefit is
payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds the RBP or RALP is
subject to the excess withdrawal processing described below for the GBA, RBA
and ALP.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
that exceeds the guaranteed amount of withdrawal available under the rider and
such withdrawals may reduce future benefits guaranteed under the rider. While
the rider permits certain excess withdrawals to be made for the purpose of
satisfying RMD requirements for your contract alone without reducing future
benefits guaranteed under the rider, there can be no guarantee that changes in
the federal income tax law after the effective date of the rider will not
require a larger RMD to be taken, in which case, future guaranteed withdrawals
under the rider could be reduced. See Appendix E for additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
KEY TERMS AND PROVISIONS OF THE SECURESOURCE RIDER ARE DESCRIBED BELOW:
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WAITING PERIOD: Any period of time starting on the rider effective date during
which the annual step up is not available if you take withdrawals. Currently,
there is no waiting period. For contracts purchased prior to June 1, 2008, the
waiting period is three years.
GUARANTEED BENEFIT AMOUNT (GBA): The total cumulative withdrawals guaranteed by
the rider under the basic withdrawal benefit. The maximum GBA is $5,000,000. The
GBA cannot be withdrawn and is not payable as a death benefit. It is an
--------------------------------------------------------------------------------
164 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
interim value used to calculate the amount available for withdrawals each year
under the basic withdrawal benefit (see "Guaranteed Benefit Payment" below). At
any time, the total GBA is the sum of the individual GBAs associated with each
purchase payment.
THE GBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBA is equal to the initial purchase payment.
When you make additional purchase payments -- each additional purchase payment
has its own GBA equal to the amount of the purchase payment.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA associated with each purchase payment will be reset to the amount of
that purchase payment. The step up reversal will only happen once during the
waiting period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBA remains unchanged. If there
have been multiple purchase payments, both the total GBA and each
payment's GBA remain unchanged.
(b) is greater than the total RBP -- GBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE GBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
REMAINING BENEFIT AMOUNT (RBA): Each withdrawal you make reduces the amount that
is guaranteed by the rider as future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
THE RBA IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the RBA is equal to the initial purchase payment plus any
purchase payment credit.
When you make additional purchase payments -- each additional purchase payment
has its own RBA initially set equal to that payment's GBA (the amount of the
purchase payment plus any purchase payment credit).
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the RBA associated with each purchase payment will be reset to the amount of
that purchase payment plus any purchase payment credit. The step up reversal
will only happen once during the waiting period, when the first withdrawal is
made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal. If there have been multiple purchase payments,
each payment's RBA is reduced in proportion to its RBP.
(b) is greater than the total RBP -- RBA EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE RBA. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 165
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic withdrawal benefit. At any point in time, each
purchase payment has its own GBP, which is equal to the lesser of that payment's
RBA or 7% of that payment's GBA, and the total GBP is the sum of the individual
GBPs.
During the waiting period, the guaranteed annual withdrawal amount may be less
than the GBP due to the limitations the waiting period imposes on your ability
to utilize both annual step-ups and withdrawals (see "Waiting Period" heading
above). The guaranteed annual withdrawal amount during the waiting period is
equal to the value of the RBP at the beginning of the contract year.
THE GBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At contract issue -- the GBP is established as 7% of the GBA value.
At each contract anniversary -- each payment's GBP is reset to the lesser of
that payment's RBA or 7% of that payment's GBA value.
When you make additional purchase payments -- each additional purchase payment
has its own GBP equal to 7% of the purchase payment amount plus any purchase
payment credit.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When an individual RBA is reduced to zero -- the GBP associated with that RBA
will also be reset to zero.
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the GBA and the RBA associated with each purchase payment will be reset to the
amount of that purchase payment plus any purchase payment credit. Each
payment's GBP will be reset to 7% of that purchase payment plus any purchase
payment credit. The step up reversal will only happen once during the waiting
period, when the first withdrawal is made.
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the total RBP -- the GBP remains unchanged.
(b) is greater than the total RBP -- each payment's GBP is reset to the
lesser of that payment's RBA or 7% of that payment's GBA value, based on
the RBA and GBA after the withdrawal. If the withdrawal is made during
the waiting period, the excess withdrawal processing is applied AFTER any
previously applied annual step ups have been reversed.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic withdrawal benefit. At any point
in time, the total RBP is the sum of the RBPs for each purchase payment. During
the waiting period, when the guaranteed amount may be less than the GBP, the
value of the RBP at the beginning of the contract year will be that amount that
is actually guaranteed each contract year.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At the beginning of each contract year during the waiting period and prior to
any withdrawal -- the RBP for each purchase payment is set equal to that
purchase payment plus any purchase payment credit multiplied by 7%.
At the beginning of any other contract year -- the RBP for each purchase
payment is set equal to that purchase payment's GBP.
When you make additional purchase payments -- each additional purchase payment
has its own RBP equal to that payment's GBP.
At step up -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract"
heading below).
When an individual RBA is reduced to zero -- the RBP associated with that RBA
will also be reset to zero.
When you make any withdrawal -- the total RBP is reset to equal the total RBP
immediately prior to the withdrawal less the amount of the withdrawal, but not
less than zero. If there have been multiple purchase payments, each payment's
RBP is reduced proportionately. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE
RBP, GBA EXCESS WITHDRAWAL PROCESSING AND RBA EXCESS WITHDRAWAL PROCESSING ARE
APPLIED and the amount available for future withdrawals for the remainder of
the contract's life may be reduced by more than the amount of withdrawal. When
determining if a withdrawal will result in the excess withdrawal processing,
the applicable RBP will not yet reflect the amount of the current withdrawal.
--------------------------------------------------------------------------------
166 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant. A spousal
continuation or a change of contract ownership may reduce the amount of the
lifetime withdrawal benefit and may change the covered person.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): Once established, the ALP under the lifetime
withdrawal benefit is at any time the amount available for withdrawals in each
contract year after the waiting period until the later of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
withdrawal benefit is not in effect and the ALP is zero.
During the waiting period, the guaranteed annual lifetime withdrawal amount may
be less than the ALP due to the limitations the waiting period imposes on your
ability to utilize both annual step-ups and withdrawals (see "Waiting Period"
heading above). The guaranteed annual lifetime withdrawal amount during the
waiting period is equal to the value of the RALP at the beginning of the
contract year.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: The later of the contract effective date or the contract
anniversary date on/following the date the covered person reaches age
65 -- the ALP is established as 6% of the total RBA.
JOINT LIFE: The ALP is established as 6% of the total RBA on the earliest of
the following dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
When you make additional purchase payments -- each additional purchase payment
increases the ALP by 6% of the amount of the purchase payment plus any
purchase payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
SINGLE LIFE: At spousal continuation or contract ownership change -- (see
"Spousal Option to Continue the Contract" and "Contract Ownership Change"
headings below).
When you make a withdrawal during the waiting period and after a step
up -- Any prior annual step ups will be reversed. Step up reversal means that
the ALP will be reset to equal total purchase payments plus any purchase
payment credits multiplied by 6%. The step up reversal will only happen once
during the waiting period, when the first withdrawal is made.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 167
When you make a withdrawal at any time and the amount withdrawn is:
(a) less than or equal to the RALP -- the ALP remains unchanged.
(b) is greater than the RALP -- ALP EXCESS WITHDRAWAL PROCESSING WILL BE
APPLIED TO THE ALP. If the withdrawal is made during the waiting period,
the excess withdrawal processing is applied AFTER any previously applied
annual step ups have been reversed.
20% RIDER CREDIT (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE 1,
2008)
If you do not make a withdrawal during the first three rider years, then a 20%
rider credit may increase your ALP. This credit is 20% of purchase payments
received in the first 180 days that the rider is in effect and is used to
establish the enhanced lifetime base. The enhanced lifetime base is an amount
that may be used to increase the ALP. The 20% rider credit does not increase the
basic withdrawal benefit or the contract value. Because step ups and purchase
payment credits may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (FOR CONTRACTS WITH APPLICATIONS SIGNED ON OR AFTER JUNE
1, 2008)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not make a withdrawal during the first three rider years,
then the enhanced lifetime base will be the sum of all purchase payments
received during the first three rider years and the 20% rider credit. If you
make a withdrawal during the first three rider years, then the 20% rider credit
does not apply and the enhanced lifetime base will be established as zero and
will always be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the lesser of its current value and the contract value, if you
choose an asset allocation model that is more aggressive than the target model
while you are in the withdrawal phase.
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You selected the Single Life rider, and there is a change in the covered
person, including changes due to spousal continuations and ownership changes.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn or annuitized.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE (FOR CONTRACTS WITH
APPLICATIONS PURCHASED ON OR AFTER JUNE 1, 2008)
As of the later of the third rider anniversary and the date the initial ALP is
established, the ALP will be increased to equal the enhanced lifetime base
multiplied by 6%, if this amount is greater than the current ALP. Thereafter,
the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or 6% of the contract value immediately following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime withdrawal benefit.
During the waiting period, when the guaranteed annual withdrawal amount may be
less than the ALP, the value of the RALP at the beginning of the contract year
will be the amount that is actually guaranteed each contract year. Prior to
establishment of the ALP, the lifetime withdrawal benefit is not in effect and
the RALP is zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period and prior to any withdrawals -- the RALP is
established equal to 6% of purchase payments plus any purchase payment
credits.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals made in the contract year but not less than zero.
At the beginning of each contract year during the waiting period and prior to
any withdrawals -- the RALP is set equal to the total purchase payments plus
any purchase payment credits, multiplied by 6%.
--------------------------------------------------------------------------------
168 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
At the beginning of any other contract year -- the RALP is set equal to ALP.
When you make additional purchase payments -- each additional purchase payment
increases the RALP by 6% of the purchase payment amount plus any purchase
payment credits.
At step ups -- (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
When you make any withdrawal -- the RALP equals the RALP immediately prior to
the withdrawal less the amount of the withdrawal but not less than zero. IF
YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP EXCESS WITHDRAWAL PROCESSING
IS APPLIED and may reduce the amount available for future withdrawals. When
determining if a withdrawal will result in excess withdrawal processing, the
applicable RALP will not yet reflect the amount of the current withdrawal.
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the RBP or RALP on the most recent rider anniversary will not be subject
to excess withdrawal processing provided that the following conditions are met:
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a)(9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing.
Withdrawal amounts greater than the RBP or RALP on the contract anniversary date
that do not meet these conditions will result in excess withdrawal processing as
described above. See Appendix E for additional information.
STEP UP DATE: The date any step up becomes effective, and depends on the type of
step up being applied (see "Annual Step Up" and "Spousal Continuation Step Up"
headings below).
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the GBA, RBA, GBP, RBP, ALP and/or RALP values may be available. A step up does
not create contract value, guarantee the performance of any investment option,
or provide a benefit that can be withdrawn or paid upon death. Rather, a step up
determines the current values of the GBA, RBA, GBP, RBP, ALP and RALP, and may
extend the payment period or increase the allowable payment.
The annual step up may be available as described below, subject to the following
rules:
The annual step up is effective on the step up date.
Only one step up is allowed each contract year.
If you take any withdrawals during the waiting period, any previously applied
step ups will be reversed and the Annual step up will not be available until
the end of the waiting period.
On any rider anniversary where the RBA or, if established, the ALP would
increase and the application of the step up would not increase the rider
charge, the annual step up will be automatically applied to your contract, and
the step up date is the contract anniversary date.
If the application of the step up would increase the rider charge, the annual
step up is not automatically applied. Instead, you have the option to step up
for 30 days after the contract anniversary as long as either the contract
value is greater than the total RBA or 6% of the contract value is greater
than the ALP, if established, on the step-up date. If you exercise the
elective annual step up option, you will pay the rider charge in effect on the
step up date. If you wish to exercise the elective annual step up option, we
must receive a request from you or your investment professional. The step up
date is the date we receive your request to step up. If your request is
received after the close of business, the step up date will be the next
valuation day.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be reset to the greater of the total RBA immediately prior
to the step up date or the contract value on the step up date.
The total GBA will be reset to the greater of the total GBA immediately prior
to the step up date or the contract value on the step up date.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 169
The total RBP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RBP will not
be affected by the step up.
(b) At any other time, the RBP will be reset to the increased GBP less all
prior withdrawals made in the current contract year, but not less than
zero.
The ALP will be reset to the greater of the ALP immediately prior to the step
up date or 6% of the contract value on the step up date.
The RALP will be reset as follows:
(a) During the waiting period and prior to any withdrawals, the RALP will not
be affected by the step up.
(b) At any other time, the RALP will be reset to the increased ALP less all
prior withdrawals made in the current contract year, but not less than
zero.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource - Single Life rider also continues. When the spouse
elects to continue the contract, any remaining waiting period is cancelled and
any waiting period limitations on withdrawals and step-ups terminate; if the
covered person changes due to spousal continuation the GBA, RBA, GBP, RBP, ALP
and RALP values are affected as follows:
The GBA, RBA and GBP values remain unchanged.
The RBP is automatically reset to the GBP less all prior withdrawals made in
the current contract year, but not less than zero.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the date of continuation -- the ALP will be established
on the contract anniversary following the date the covered person reaches age
65 as the lesser of the RBA or the contract anniversary value, multiplied by
6%. The RALP will be established on the same date equal to the ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the date of continuation -- the ALP will be established on the
date of continuation as the lesser of the RBA or the contract value,
multiplied by 6%. The RALP will be established on the same date in an amount
equal to the ALP less all prior withdrawals made in the current contract year,
but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the date of continuation -- the ALP and RALP will be
automatically reset to zero for the period of time beginning with the date of
continuation and ending with the contract anniversary following the date the
covered person reaches age 65. At the end of this time period, the ALP will be
reset to the lesser of the RBA or the anniversary contract value, multiplied
by 6%, and the RALP will be reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the date of continuation -- the ALP will be automatically reset to the
lesser of the current ALP or 6% of the contract value on the date of
continuation. The RALP will be reset to the ALP less all prior withdrawals
made in the current contract year, but not less than zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the spousal continuation.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the
SecureSource - Joint Life rider also continues. When the spouse elects to
continue the contract, any remaining waiting period is cancelled and any waiting
period limitations on withdrawals and step-ups terminate. The surviving covered
spouse can name a new beneficiary, however, a new covered spouse cannot be added
to the rider.
SPOUSAL CONTINUATION STEP UP: At the time of spousal continuation, a step-up may
be available. All annual step-up rules (see "Annual Step-Up" heading above),
other than those that apply to the waiting period, also apply to the spousal
continuation step-up. If the spousal continuation step-up is processed
automatically, the step-up date is the valuation date spousal continuation is
effective. If not, the spouse must elect the step up and must do so within 30
days of the spousal continuation date. If the spouse elects the spousal
continuation step up, the step-up date is the valuation date we receive the
spouse's written request to step-up if we receive the request by the close of
business on that day, otherwise the next valuation date.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be made from the variable subaccounts, guarantee period accounts
(where available), the one-year fixed account (if applicable) and the DCA fixed
account in the same proportion as your interest in each bears to the contract
value. You cannot specify from which accounts the withdrawal is to be made.
--------------------------------------------------------------------------------
170 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero and the
total RBA remains greater than zero, you will be paid in the following
scenarios:
1) The ALP has not yet been established and the contract value is reduced to
zero as a result of fees or charges or a withdrawal that is less than or
equal to the RBP. In this scenario, you can choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero; or
(c) JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established and the contract value reduces to zero as a
result of fees or charges, or a withdrawal that is less than or equal to both
the RBP and the RALP. In this scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero; or
(c) JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in the frequency you elect. You may
elect a frequency offered by us at the time payments begin. Available payment
frequencies will be no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate; and
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero.
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource rider and the contract will terminate under either of the
following two scenarios:
If the contract value falls to zero as a result of a withdrawal that is
greater than both the RALP and the RBP. This is full withdrawal of the
contract value.
If the contract value falls to zero as a result of a withdrawal that is
greater than the RALP but less than or equal to the RBP, and the total RBA is
reduced to zero.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the fixed payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract above.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 171
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the fixed payout option available under this rider, or
3) continue the contract under the spousal continuation provision of the
contract above.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If the contract changes ownership (see "Changing Ownership"), the
GBA, RBA, GBP, RBP values will remain unchanged and the ALP and RALP will be
reset as follows. Our current administrative practice is to only reset the ALP
and RALP if the covered person changes due to the ownership change.
If the ALP has not yet been established and the new covered person has not yet
reached age 65 as of the ownership change date -- the ALP and the RALP will be
established on the contract anniversary following the date the covered person
reaches age 65. The ALP will be set equal to the lesser of the RBA or the
anniversary contract value, multiplied by 6%. If the anniversary date occurs
during the waiting period and prior to a withdrawal, the RALP will be set
equal to the lesser of the ALP or total purchase payments multiplied by 6%. If
the anniversary date occurs at any other time, the RALP will be set to the
ALP.
If the ALP has not yet been established but the new covered person is age 65
or older as of the ownership change date -- the ALP and the RALP will be
established on the ownership change date. The ALP will be set equal to the
lesser of the RBA or the contract value, multiplied by 6%. If the ownership
change date occurs during the waiting period and prior to a withdrawal, the
RALP will be set to the lesser of the ALP or total purchase payments
multiplied by 6%. If the ownership change date occurs at any other time, the
RALP will be set to the ALP less all prior withdrawals made in the current
contract year but not less than zero.
If the ALP has been established but the new covered person has not yet reached
age 65 as of the ownership change date -- the ALP and the RALP will be reset
to zero for the period of time beginning with the ownership change date and
ending with the contract anniversary following the date the covered person
reaches age 65. At the end of this time period, the ALP will be reset to the
lesser of the RBA or the anniversary contract value, multiplied by 6%. If the
time period ends during the waiting period and prior to any withdrawals, the
RALP will be reset to equal the lesser of the ALP or total purchase payments
multiplied by 6%. If the time period ends at any other time, the RALP will be
reset to the ALP.
If the ALP has been established and the new covered person is age 65 or older
as of the ownership change date -- the ALP and the RALP will be reset on the
ownership change date. The ALP will be reset to the lesser of the current ALP
or 6% of the contract value. If the ownership change date occurs during the
waiting period and prior to a withdrawal, the RALP will be reset to the lesser
of the ALP or total purchase payments multiplied by 6%. If the ownership
change date occurs at any other time, the RALP will be reset to the ALP less
all prior withdrawals made in the current contract year but not less than
zero.
Please note that the lifetime withdrawal benefit amount may be reduced as a
result of the ownership change.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s). No other ownership changes are allowed as long as the
rider is in force.
--------------------------------------------------------------------------------
172 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
GUARANTEED WITHDRAWAL BENEFIT ANNUITY OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource rider.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid over the life of the annuity will
not exceed the current total RBA at the time you begin this fixed annuity payout
option. These annualized amounts will be paid in the frequency that you elect.
The frequencies will be among those offered by us at that time but will be no
less frequent than annually. If, at the death of the owner, total payouts have
been made for less than the RBA, the remaining payouts will be paid to the
beneficiary (see "The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary of a contract
as a settlement option. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: After the death benefit is payable the rider will terminate if
your spouse does not use the spousal continuation provision of the contract
to continue the contract.
2. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
3. Annuity payouts under an annuity payout plan will terminate the rider.
4. Termination of the contract for any reason will terminate the rider.
5. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 173
APPENDIX N: SECURESOURCE 20 RIDER DISCLOSURE
SECURESOURCE 20 RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary values. The SecureSource 20
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw your principal over time. This benefit
is intended for assets you plan to hold and let accumulate for at least three
years. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they will
be re-established based on your contract value at that time and you will not
receive 20% credit offered under this rider.
There are two optional SecureSource 20 riders available under your contract:
SecureSource 20 -- Single Life; or
SecureSource 20 -- Joint Life.
The information in this section applies to both Secure Source 20 riders, unless
otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource 20 -- Single Life rider covers one person. The SecureSource
20 -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource 20 -- Single Life rider or the
SecureSource 20 -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource 20 rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if:
your contract application is signed on or after Aug. 10, 2009, but prior to
Nov. 30, 2009; and
SINGLE LIFE: you and the annuitant are 80 or younger on the date the contract
is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource 20 riders are not available under an inherited qualified
annuity.
The SecureSource 20 rider guarantees that after the waiting period, regardless
of the investment performance of your contract, you will be able to withdraw up
to a certain amount each year from the contract before the annuity payouts begin
until:
SINGLE LIFE: until death (see "At Death" heading below) or until the depletion
of the basic benefit.
JOINT LIFE: until the death of the last surviving covered spouse (see "Joint
Life only: Covered Spouses" and "At Death" headings below) or until the
depletion of the basic benefit.
KEY TERMS
The key terms associated with the SecureSource 20 rider are:
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and until your death (JOINT LIFE: the
death of both covered spouses). After the waiting period, the annual withdrawal
amount guaranteed by the rider can vary each contract year. The maximum ALP is
$300,000.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA): the age at which the lifetime
benefit is established.
ENHANCED LIFETIME BASE (ELB): used in the calculation of the ALP on the later of
the ELB date or the establishment of the ALP. The ELB cannot be withdrawn or
annuitized and is not payable as a death benefit.
GUARANTEED BENEFIT AMOUNT (GBA): the total cumulative withdrawals guaranteed by
the rider under the basic benefit. The maximum GBA is $5,000,000. The GBA cannot
be withdrawn or annuitized and is not payable as a death benefit. It is an
interim value used to calculate the amount available for withdrawals each year
after the waiting period under the basic benefit (see "Guaranteed Benefit
Payment" below). At any time, the total GBA is the sum of the individual GBAs
associated with each purchase payment.
GUARANTEED BENEFIT PAYMENT (GBP): the basic benefit amount available each
contract year after the waiting period until the RBA is reduced to zero. After
the waiting period the annual withdrawal amount guaranteed by the rider can vary
each contract year.
--------------------------------------------------------------------------------
174 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. The RALP is the lifetime benefit amount
that can be withdrawn during the remainder of the current contract year.
REMAINING BENEFIT AMOUNT (RBA): each withdrawal you make reduces the amount that
is guaranteed by the rider for future withdrawals. At any point in time, the RBA
equals the amount of GBA that remains available for withdrawals for the
remainder of the contract's life, and total RBA is the sum of the individual
RBAs associated with each purchase payment. The maximum RBA is $5,000,000.
REMAINING BENEFIT PAYMENT (RBP): as you make withdrawals during a contract year,
the remaining amount that the rider guarantees will be available for withdrawal
that year is reduced. The RBP is the basic benefit amount that can be withdrawn
during the remainder of the current contract year.
WAITING PERIOD: The period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
GBP Percentage and ALP Percentage. The WAB cannot be withdrawn or annuitized and
is not payable as a death benefit.
WITHDRAWAL: The amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
DESCRIPTION OF THE SECURESOURCE 20 RIDER
Before the lifetime benefit is established, the annual withdrawal amount
guaranteed by the riders after the waiting period is the basic benefit amount.
After the lifetime benefit is established and after the waiting period, the
riders guarantee that you have the option each contract year to cumulatively
withdraw an amount up to the lifetime benefit amount or the basic benefit
amount, but the riders do not guarantee withdrawal of both in a contract year.
The lifetime withdrawal benefit is established automatically:
SINGLE LIFE: on the rider anniversary date after the covered person reaches
age 65, or on the rider effective date if the covered person is age 65 or
older on the rider effective date (see "Annual Lifetime Payment Attained Age
(ALPAA)" heading below);
JOINT LIFE: on the rider anniversary date after the younger covered spouse
reaches age 65, or on the rider effective date if the younger covered spouse
is age 65 or older on the rider effective date (see "Annual Lifetime Payment
Attained Age (ALPAA)" and "Annual Lifetime Payments (ALP)" headings below).
The basic benefit amount and the lifetime benefit amount can vary based on the
relationship of your contract value to the Withdrawal Adjustment Base (WAB).
When the first withdrawal is taken each contract year after the waiting period,
the percentages used to determine the benefit amounts are set and fixed for the
remainder of that year.
If you withdraw less than the allowed withdrawal amount in a contract year, the
unused portion cannot be carried over to the next year.
If you withdraw more than the allowed withdrawal amount in a contract year, we
call this an "excess withdrawal" under the rider. Excess withdrawals trigger an
adjustment of a benefit's guaranteed amount, which may cause it to be reduced
(see "GBA Excess Withdrawal Processing," "RBA Excess Withdrawal Processing," and
"ALP Excess Withdrawal Processing" headings below).
Please note that basic benefit and lifetime benefit each has its own definition
of the allowed annual withdrawal amount. Therefore a withdrawal may be
considered an excess withdrawal for purposes of the lifetime benefit only, the
basic benefit only, or both.
At any time after the waiting period, as long as your withdrawal does not exceed
the greater of the basic benefit amount or the lifetime benefit amount, if
established, you will not be assessed a surrender charge or any market value
adjustment. If your withdrawals exceed the greater of the RBP or the RALP,
surrender charges under the terms of the contract may apply (see
"Charges -- Surrender Charges"). The amount we actually deduct from your
contract value will be the amount you request plus any applicable surrender
charge. Market value adjustments, if applicable, will also be made (see
"Guarantee Period Accounts (GPAs) -- Market Value Adjustment"). We pay you the
amount you request. Any withdrawals you take under the contract will reduce the
value of the death benefits (see "Benefits in Case of Death"). Upon full
withdrawal, you will receive the remaining contract value less any applicable
charges (see "Making the Most of Your Contract -- Withdrawals").
Subject to conditions and limitations, an annual step-up can increase the basic
benefit amount and the lifetime benefit amount, if your contract value has
increased on a rider anniversary.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 175
Subject to conditions and limitations, if no withdrawals are taken prior to the
third rider anniversary, the 20% rider credit may increase the lifetime benefit
(if already established) or the Enhanced Lifetime Base (ELB) may increase the
lifetime benefit (when established).
The values associated with the basic benefit are GBA, RBA, GBP and RBP. The
values associated with the lifetime benefit are ALP, RALP and ELB. ALP and GBP
are similar in that they are the annual withdrawal amount for each benefit after
the waiting period. RALP and RBP are similar in that they are the remaining
amount that can be withdrawn during the current contract year for each benefit.
IMPORTANT SECURESOURCE 20 RIDER CONSIDERATIONS
You should consider whether a SecureSource 20 rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
(a) SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the first death of any owner or
annuitant even if the covered person is still living (see "At Death"
heading below). Therefore, the rider will terminate when a death benefit
becomes payable. This possibility may present itself when:
(i) There are multiple contract owners -- when one of the contract owners
dies the lifetime benefit terminates even though other contract
owners are still living; or
(ii) The owner and the annuitant are not the same persons -- if the
annuitant dies before the owner, the lifetime benefit terminates even
though the owner is still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as
long as either covered spouse is living (see "If Contract Value Reduces to
Zero" heading below). However, if the contract value is greater than zero,
the lifetime benefit terminates at the death of the last surviving covered
spouse (see "At Death" heading below).
(b) Excess withdrawals can reduce the ALP to zero even though the GBA, RBA,
GBP and/or RBP values are greater than zero. If both the ALP and the
contract value are zero, the lifetime benefit will terminate.
(c) If the lifetime benefit is first established prior to the third rider
anniversary, the initial ALP is based on the basic benefit's RBA at that
time (see "Annual Lifetime Payment (ALP)" heading below). If the lifetime
benefit is first established on/after the third rider anniversary, the
initial ALP is based on the greater of the basic benefit's RBA and the ELB
at that time. Any withdrawal you take before the ALP is established
reduces the RBA and ELB and therefore may result in a lower amount of
lifetime withdrawals you are allowed to take.
(d) Withdrawals can reduce both the contract value and the RBA to zero prior
to the establishment of the ALP. If this happens, the contract and the
rider will terminate.
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be re-established based on your contract value at that time and you will
not receive 20% credit offered under this rider. Any withdrawal request within
the 3-year waiting period must be submitted in writing. Also, after the
waiting period if you withdraw more than the allowed withdrawal amount in a
contract year ("excess withdrawal"), the guaranteed amounts under the rider
may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options of the PN program. This
requirement limits your choice of subaccounts, one-year fixed account and GPAs
(if available) to the PN program investment options (if applicable) you have
selected. This means you will not be able to allocate contract value to all of
the subaccounts, GPAs or the one-year fixed account that are available under
the contract to contract owners who do not elect the rider. (See "Making the
Most of Your Contract -- Portfolio Navigator Program.") You may allocate
purchase payments to the DCA fixed account, when available, and we will make
monthly transfers into the investment option you have chosen. You may make two
elective investment option changes per contract year; we reserve the right to
limit elective investment option changes if required to comply with the
written instructions of a fund (see "Market Timing").
You can allocate your contract value to any available investment options during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior to
any subsequent withdrawal. During these accumulation phases, you may request to
change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model
--------------------------------------------------------------------------------
176 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
portfolio, this reallocation will be made to the applicable fund of funds
investment option. This automatic reallocation is not included in the total
number of allowed investment option changes per contract year. The target
investment option classification is currently the Moderate investment option. We
reserve the right to change the target investment option to an investment option
that is more aggressive than the current target investment option after 30 days
written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase and
you choose to allocate your contract value to an investment option that is more
aggressive than the target investment option, you will be in the accumulation
phase again. If this is done after the waiting period, your rider benefit will
be reset as follows:
(a) the total GBA will be reset to the contract value, if your contract value
is less; and
(b) the total RBA will be reset to the contract value, if your contract value
is less; and
(c) the ALP, if established, will be reset to your current ALP Percentage
(either 6% or 5% as described under "GBP Percentage and ALP Percentage"
heading below) times the contract value, if this amount is less than the
current ALP; and
(d) the GBP will be recalculated as described below, based on the reset GBA
and RBA; and
(e) the RBP will be recalculated as the reset GBP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(f) the RALP will be recalculated as the reset ALP less all prior withdrawals
taken during the current contract year, but not less than zero; and
(g) the WAB will be reset as follows:
- if the ALP has not been established, the WAB will be equal to the reset
GBA.
if the ALP has been established, the WAB will be equal to the reset ALP,
divided by the current ALP Percentage; and
(h) the ELB, if greater than zero, will be reset to the contract value, if
your contract value is less.
You may request to change your investment option by written request on an
authorized form or by another method agreed to by us.
NON-CANCELABLE: Once elected, the SecureSource 20 rider may not be cancelled
(except as provided under "Rider Termination" heading below) and the fee will
continue to be deducted until the contract or rider is terminated or the
contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource 20 - Joint Life
rider and will not reduce the fee we charge for this rider. The benefit under
the SecureSource 20 - Joint Life rider continues for the covered spouse who is
the owner of the contract (or annuitant in the case of nonnatural ownership).
The rider will terminate at the death of the contract owner (or annuitant in
the case of nonnatural ownership) because the original covered spouse will be
unable to elect the spousal continuation provision of the contract (see "Joint
Life only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary. The
annuitant must also be an owner. For non-natural ownership arrangements that
allow for spousal continuation one covered spouse should be the annuitant and
the other covered spouse should be the sole primary beneficiary. For revocable
trust ownerships, the grantor of the trust must be the annuitant and the
beneficiary must either be the annuitant's spouse or a trust that names the
annuitant's spouse as the sole primary beneficiary. You are responsible for
establishing ownership arrangements that will allow for spousal continuation.
If you select the SecureSource 20 - Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse can not
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the RBP or RALP under this rider. Any amount you
withdraw under the contract's FA provision that exceeds
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 177
the RBP or RALP is subject to the excess withdrawal processing described below
for the GBA, RBA and ALP. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawals of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
BASIC BENEFIT DESCRIPTION
THE GBA AND RBA ARE DETERMINED AT THE FOLLOWING TIMES, SUBJECT TO THE MAXIMUM
AMOUNT OF $5,000,000, CALCULATED AS DESCRIBED:
At contract issue -- the GBA and RBA are equal to the initial purchase
payment.
When you make additional purchase payments -- If a withdrawal is taken during
the waiting period, the GBA and RBA will not change when a subsequent purchase
payment is made during the waiting period. Prior to any withdrawal during the
waiting period and after the waiting period, each additional purchase payment
will have its own GBA and RBA established equal to the amount of the purchase
payment.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When an individual RBA is reduced to zero -- the GBA that is associated with
that RBA will also be set to zero.
When you take a withdrawal during the waiting period -- the total GBA and
total RBA will be set equal to zero until the end of the waiting period.
When you take a withdrawal after the waiting period and the amount withdrawn
is:
(a) less than or equal to the total RBP -- the total RBA is reduced by the
amount of the withdrawal and the GBA remains unchanged. If there have been
multiple purchase payments, both the total GBA and each payment's GBA
remain unchanged, and each payment's RBA is reduced in proportion to its
RBP.
(b) greater than the total RBP -- EXCESS WITHDRAWAL PROCESSING WILL BE APPLIED
TO THE GBA AND RBA.
On the rider anniversary at the end of the waiting period -- If the first
withdrawal is taken during the waiting period and you did not decline a rider
fee increase, the total GBA and the total RBA will be reset to the contract
value.
If the first withdrawal is taken during the waiting period and you decline a
rider fee increase, the total GBA and the total RBA will be reset to the
lesser of (1) the GBA at the time of the first withdrawal, plus any additional
purchase payments since the time of the first withdrawal, minus all
withdrawals, or (2) the contract value.
--------------------------------------------------------------------------------
178 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
Upon certain changes to your PN program investment options under the PN
program as described under "Use of Portfolio Navigator Program Required,"
above.
GBA EXCESS WITHDRAWAL PROCESSING
The total GBA will automatically be reset to the lesser of (a) the total GBA
immediately prior to the withdrawal; or (b) the contract value immediately
following the withdrawal. If there have been multiple purchase payments, each
payment's GBA after the withdrawal will be reset to equal that payment's RBA
after the withdrawal plus (a) times (b), where:
(a) is the ratio of the total GBA after the withdrawal less the total RBA after
the withdrawal to the total GBA before the withdrawal less the total RBA
after the withdrawal; and
(b) is each payment's GBA before the withdrawal less that payment's RBA after
the withdrawal.
RBA EXCESS WITHDRAWAL PROCESSING
The total RBA will automatically be reset to the lesser of (a) the contract
value immediately following the withdrawal, or (b) the total RBA immediately
prior to the withdrawal, less the amount of the withdrawal.
If there have been multiple purchase payments, both the total RBA and each
payment's RBA will be reset. The total RBA will be reset according to the excess
withdrawal processing described above. Each payment's RBA will be reset in the
following manner:
1. The withdrawal amount up to the total RBP is taken out of each RBA bucket in
proportion to its individual RBP at the time of the withdrawal; and
2. The withdrawal amount above the total RBP and any amount determined by the
excess withdrawal processing are taken out of each RBA bucket in proportion
to its RBA at the time of the withdrawal.
GBP PERCENTAGE AND ALP PERCENTAGE: We use two percentages (6% and 5%) to
calculate your GBP and ALP. The percentage used can vary as described below:
During the waiting period, 6% will be used to determine the amount payable to
beneficiaries under the RBA Payout Option described below. After the waiting
period, a comparison of your contract value and the WAB determines your GBP
Percentage and ALP Percentage, unless the percentage is fixed as described
below. On each valuation date, if the benefit determining percentage is less
than the 20% adjustment threshold, then 6% is used in calculating your GBP and
ALP; otherwise, 5% is used. Market volatility and returns, the deduction of fees
and the 20% credit could impact your benefit determining percentage. The benefit
determining percentage is calculated as follows but will not be less than zero:
1 - (A/B)
A = contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
When the first withdrawal in a contract year is taken, the GBP Percentage and
ALP Percentage will be set and fixed for the remainder of that contract year.
Beginning on the next rider anniversary, the GBP Percentage and ALP Percentage
can change on each valuation date as described above until a withdrawal is taken
in that contract year.
Under certain limited situations, your GBP Percentage and ALP Percentage will
not vary each contract year. They will be set at the earliest of (1), (2) or (3)
below and remain fixed for as long as the benefit is payable:
(1) when the RBA Payout Option is elected, or
(2) if the ALP is established, when your contract value on a rider anniversary
is less than two times the ALP (for the purpose of this calculation only,
the ALP is determined using 5%; the ALP Percentage used to determine your
ALP going forward will be either 6% or 5%), or
(3) when the contract value reduces to zero.
For certain periods of time at our discretion and on a non-discriminatory basis,
your GBP Percentage and ALP Percentage may be set by us to 6% if more favorable
to you.
WITHDRAWAL ADJUSTMENT BASE (WAB): One of the components used to determine GBP
Percentage and ALP Percentage. The maximum WAB is $5,000,000. The WAB cannot be
withdrawn or annuitized and is not payable as a death benefit,
THE WAB IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
At Rider Effective Date -- the WAB is set equal to the initial purchase
payment.
When a subsequent purchase payment is made -- before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB will be
increased by the amount of each additional purchase payment.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 179
When a withdrawal is taken -- if the first withdrawal is taken during the
waiting period, the WAB will be set equal to zero until the end of the waiting
period.
Whenever a withdrawal is taken after the waiting period, the WAB will be reduced
by the amount in (A) unless the withdrawal is an excess withdrawal for the
lifetime benefit (or the basic benefit if the ALP is not established) when it
will be set equal to the amount in (B).
(A) The WAB is reduced by an amount as calculated below:
A X B
----- where:
C
A = the amount the contract value is reduced by the withdrawal
B = WAB on the date of (but prior to) the withdrawal
C = the contract value on the date of (but prior to) the withdrawal.
(B) If the ALP is not established and the current withdrawal exceeds the RBP,
the WAB will be reset to the GBA immediately following excess withdrawal
processing.
If the ALP is established and the current withdrawal exceeds the RALP, the WAB
will be reset to the ALP divided by the current ALP Percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above). In this
calculation, we use the ALP immediately following excess withdrawal processing.
On rider anniversaries -- unless you decline a rider fee increase, the WAB
will be increased to the contract value on each rider anniversary, if the
contract value is greater, except as follows:
(A) If a withdrawal is taken during the waiting period, the WAB will be
increased to the contract value on each rider anniversary beginning at the
end of the waiting period, if the contract value is greater.
(B) If you decline a rider fee increase and a withdrawal is taken during the
waiting period, the WAB will be reset to the lesser of (1) the GBA at the
time of the first withdrawal, plus any additional purchase payments since
the time of the first withdrawal, minus all withdrawals, or (2) the
contract value.
Upon certain changes to your PN program investment option as described under
"Use of Portfolio Navigator Program Required," above.
On the later of the third rider anniversary or the rider anniversary when the
ALP is established -- unless you decline a rider fee increase, if the ELB is
greater than zero, the WAB will be increased by an amount as calculated below,
but not less than zero.
(A) The ELB, minus
(B) the greater of:
i) your contract value, or
ii) the ALP before the ELB is applied, divided by the ALP Percentage (if
the ALP is established) or the total RBA (if the ALP is established
on the third rider anniversary).
GUARANTEED BENEFIT PAYMENT (GBP): At any time, the amount available for
withdrawal in each contract year after the waiting period, until the RBA is
reduced to zero, under the basic benefit. After the waiting period the annual
withdrawal amount guaranteed under the rider can vary each contract year. At any
point in time, each payment's GBP is the lesser of (a) and (b) where (a) is the
GBA for that payment multiplied by the current GBP percentage (either 5% or 6%
as described under "GBP Percentage and ALP Percentage" heading above) and (b) is
the RBA for that payment. The total GBP is the sum of the GBPs for each purchase
payment.
REMAINING BENEFIT PAYMENT (RBP): The amount available for withdrawal for the
remainder of the contract year under the basic benefit. At any point in time,
the total RBP is the sum of the RBPs for each purchase payment.
THE RBP IS DETERMINED AT THE FOLLOWING TIMES, CALCULATED AS DESCRIBED:
During the waiting period -- the RBP will be zero.
At the beginning of any contract year after the waiting period and when the
GBP Percentage changes -- the RBP for each purchase payment is set equal to
that purchase payment's GBP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment has its own RBP equal to the purchase payment,
multiplied by the GBP Percentage.
At step up -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
--------------------------------------------------------------------------------
180 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
When you make any withdrawal after the waiting period -- the total RBP is
reset to equal the total RBP immediately prior to the withdrawal less the
amount of the withdrawal, but not less than zero. If there have been multiple
purchase payments, each payment's RBP is reduced proportionately. IF YOU
WITHDRAW AN AMOUNT GREATER THAN THE RBP, GBA EXCESS WITHDRAWAL PROCESSING AND
RBA EXCESS WITHDRAWAL PROCESSING ARE APPLIED and the amount available for
future withdrawals for the remainder of the contract's life may be reduced by
more than the amount of withdrawal. When determining if a withdrawal will
result in the excess withdrawal processing, the applicable RBP will not yet
reflect the amount of the current withdrawal.
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: The person whose life is used to determine
when the ALP is established, and the duration of the ALP payments (see "Annual
Lifetime Payment (ALP)" heading below). The covered person is the oldest
contract owner or annuitant. If the owner is a nonnatural person, i.e., a trust
or corporation, the covered person is the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: The contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If the contract owner is a
nonnatural person (e.g., a trust), the covered spouses are the annuitant and the
legally married spouse of the annuitant. The covered spouses lives are used to
determine when the ALP is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT ATTAINED AGE (ALPAA):
SINGLE LIFE: The covered person's age after which time the lifetime benefit
can be established. Currently, the lifetime benefit can be established on the
later of the contract effective date or the contract anniversary date
on/following the date the covered person reaches age 65.
JOINT LIFE: The age of the younger covered spouse at which time the lifetime
benefit is established.
ANNUAL LIFETIME PAYMENT (ALP): The ALP is the lifetime benefit amount available
for withdrawals in each contract year after the waiting period until the later
of:
SINGLE LIFE: death; or
JOINT LIFE: death of the last surviving covered spouse; or
the RBA is reduced to zero.
The maximum ALP is $300,000. Prior to establishment of the ALP, the lifetime
benefit is not in effect and the ALP is zero.
THE ALP IS DETERMINED AT THE FOLLOWING TIMES:
SINGLE LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the covered person has already reached age 65.
(b) the rider anniversary following the date the covered person reaches age
65,
- if during the waiting period and no prior withdrawal has been taken; or
- if after the waiting period.
(c) the rider anniversary following the end of the waiting period if the
covered person is age 65 before the end of the waiting period and a prior
withdrawal had been taken.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
JOINT LIFE: Initially the ALP is established on the earliest of the following
dates:
(a) the rider effective date if the younger covered spouse has already reached
age 65.
(b) the rider anniversary on/following the date the younger covered spouse
reaches age 65.
(c) upon the first death of a covered spouse, then
(1) the date we receive written request when the death benefit is not
payable and the surviving covered spouse has already reached age 65;
or
(2) the date spousal continuation is effective when the death benefit is
payable and the surviving covered spouse has already reached age 65;
or
(3) the rider anniversary on/following the date the surviving covered
spouse reaches age 65.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 181
(d) Following dissolution of marriage of the covered spouses,
(1) the date we receive written request if the remaining covered spouse
who is the owner (or annuitant in the case of nonnatural ownership)
has already reached age 65; or
(2) the rider anniversary on/following the date the remaining covered
spouse who is the owner (or annuitant in the case of nonnatural
ownership) reaches age 65.
For (b), (c) and (d) above, if the date described occurs during the waiting
period and a prior withdrawal had been taken, we use the rider anniversary
following the end of the waiting period to establish the ALP.
If the ALP is established prior to the third rider anniversary, the ALP is set
equal to the total RBA multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above). If the ALP
is established on or following the third rider anniversary, the ALP is set equal
to the ALP Percentage multiplied by the greater of the ELB or the total RBA.
Whenever the ALP Percentage changes --
(a) If the ALP Percentage is changing from 6% to 5%, the ALP is reset to the
ALP multiplied by 5%, divided by 6%.
(b) If the ALP Percentage is changing from 5% to 6%, the ALP is reset to the
ALP multiplied by 6%, divided by 5%.
When you make an additional purchase payment -- Before a withdrawal is taken
in the waiting period and at any time after the waiting period, each
additional purchase payment increases the ALP by the amount of the purchase
payment, multiplied by the ALP Percentage.
When you make a withdrawal:
(a) During the waiting period, the ALP, if established, will be set equal to
zero until the end of the waiting period.
(b) After the waiting period, if the amount withdrawn is:
(i) less than or equal to the RALP, the ALP is unchanged.
(ii) greater than the RALP, ALP EXCESS WITHDRAWAL PROCESSING will occur.
If you withdraw less than the ALP in a contract year, there is no carry over
to the next contract year.
On the rider anniversary at the end of the waiting period -- If you took a
withdrawal during the waiting period, the ALP is set equal to the contract
value multiplied by the ALP Percentage if the covered person (JOINT LIFE:
younger covered spouse) has reached age 65.
At step ups -- (see "Annual Step Up" heading below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
Upon certain changes to your PN program investment option under the PN program
as described under "Use of Portfolio Navigator Program Required," above.
20% RIDER CREDIT
If you do not make a withdrawal during the first three rider years and you don't
decline a rider fee increase, then a 20% rider credit may increase your ALP.
This credit is 20% of purchase payments received in the first 180 days that the
rider is in effect and is used to establish the enhanced lifetime base. The
enhanced lifetime base is an amount that may be used to increase the ALP. The
20% rider credit does not increase the basic benefit or the contract value.
Because step ups may increase your ALP, they may reduce or eliminate any benefit
of the 20% rider credit.
ENHANCED LIFETIME BASE (ELB)
The enhanced lifetime base will be established initially on the third rider
anniversary. If you do not decline a rider fee increase and you do not make a
withdrawal during the first three rider years, then the enhanced lifetime base
will be the sum of all purchase payments received during the first three rider
years plus the 20% rider credit. If you make a withdrawal during the first three
rider years or decline a rider fee increase, then the 20% rider credit does not
apply and the enhanced lifetime base will be established as zero and will always
be zero.
The maximum enhanced lifetime base at any time is $5,000,000.
If the enhanced lifetime base is greater than zero, then it will:
increase by the amount of any purchase payments received on or after the third
rider anniversary.
be reduced by any withdrawal in the same proportion as the withdrawal reduces
the RBA and, if the withdrawal exceeds the RBP, it will then be set to the
lesser of this reduced value and the contract value immediately following the
withdrawal.
be set to the contract value (if your contract value is less), if you choose
an asset allocation model that is more aggressive than the target model while
you are in the withdrawal phase.
--------------------------------------------------------------------------------
182 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
If any of the following events occur, then the enhanced lifetime base will be
established as or reset to zero and will always be zero:
The total RBA is reduced to zero.
You decline a rider fee increase.
The enhanced lifetime base is an amount that may be used to increase the ALP and
cannot be withdrawn, annuitized or payable as a death benefit.
INCREASE IN ALP BECAUSE OF THE ENHANCED LIFETIME BASE
If the ALP is already established, on the third rider anniversary, the ALP will
be increased to equal the enhanced lifetime base multiplied by the ALP
Percentage (either 5% or 6% as described under "GBP Percentage and ALP
Percentage" heading above), if this amount is greater than the current ALP.
Thereafter, the enhanced lifetime base will always be zero.
ALP EXCESS WITHDRAWAL PROCESSING
The ALP is reset to the lesser of the ALP immediately prior to the withdrawal,
or the ALP Percentage (either 5% or 6% as described under "GBP Percentage and
ALP Percentage" heading above) multiplied by the contract value immediately
following the withdrawal.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): The amount available for withdrawal
for the remainder of the contract year under the lifetime benefit. Prior to
establishment of the ALP, the lifetime benefit is not in effect and the RALP is
zero.
THE RALP IS DETERMINED AT THE FOLLOWING TIMES:
The RALP is established at the same time as the ALP, and:
(a) During the waiting period -- the RALP will be zero.
(b) At any other time -- the RALP is established equal to the ALP less all
prior withdrawals taken in the contract year but not less than zero.
At the beginning of each contract year after the waiting period and when the
ALP Percentage changes -- the RALP is set equal to the ALP.
When you make additional purchase payments after the waiting period -- each
additional purchase payment increases the RALP by the purchase payment, if
applicable multiplied by the ALP Percentage (either 5% or 6% as described
under "GBP Percentage and ALP Percentage" heading above).
At step ups -- (see "Annual Step Up" headings below).
At spousal continuation -- (see "Spousal Option to Continue the Contract upon
Owner's Death" heading below).
When you make any withdrawal after the waiting period -- the RALP equals the
RALP immediately prior to the withdrawal less the amount of the withdrawal but
not less than zero. IF YOU WITHDRAW AN AMOUNT GREATER THAN THE RALP, ALP
EXCESS WITHDRAWAL PROCESSING IS APPLIED and may reduce the amount available
for future withdrawals. When determining if a withdrawal will result in excess
withdrawal processing, the applicable RALP will not yet reflect the amount of
the current withdrawal.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the RBP or
the RALP on the most recent contract anniversary, the portion of your RMD that
exceeds the benefit amount will not be subject to excess withdrawal processing
provided that the following conditions are met:
The withdrawal is after the waiting period;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
effective date of the rider.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. Any withdrawal during the waiting
period will reset the basic benefit and lifetime benefit at the end of the
waiting period. After the waiting period, withdrawal amounts greater than the
RALP or RBP that do not meet the conditions above will result in excess
withdrawal processing. The amount in excess of the RBP and/or RALP that is not
subject to excess withdrawal processing will be recalculated if the RALP and RBP
change due to GBP Percentage and ALP Percentage changes. See Appendix F for
additional information.
ANNUAL STEP UP: Beginning with the first contract anniversary, an increase of
the benefit values may be available. A step up does not create contract value,
guarantee the performance of any investment option, or provide a benefit that
can be withdrawn
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 183
in a lump sum or paid upon death. Rather, a step up determines the current
values of the GBA, RBA, GBP, RBP, ALP and RALP, and may extend the payment
period or increase the allowable payment. If there have been multiple payments
and the GBA increases due to the step up, the individual GBAs, RBAs, GBPs, and
RBPs will be combined.
The annual step up may be available as described below, subject to the maximum
GBA, RBA and ALP and subject to the following rules:
You have not declined a rider fee increase.
If you take any withdrawals during the waiting period the annual step up will
not be available until the rider anniversary following the end of the waiting
period.
On any rider anniversary where your contract value is greater than the RBA or,
your contract value multiplied by the ALP Percentage (either 5% or 6% as
described under "GBP Percentage and ALP Percentage" heading above) is greater
than the ALP, if established, the annual step up will be applied to your
contract on the rider anniversary.
The ALP and RALP are not eligible for step ups until they are established.
Prior to being established, the ALP and RALP values are both zero.
Please note it is possible for the ALP to step up even if the RBA or GBA do
not step up, and it is also possible for the RBA and GBA to step up even if
the ALP does not step up.
The annual step up resets the GBA, RBA, GBP, RBP, ALP and RALP values as
follows:
The total RBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBA will be increased to the contract value on the rider
anniversary, if the contract value is greater.
The total GBP will be reset using the calculation as described above based on
the increased GBA and RBA.
The total RBP will be reset as follows:
(a) During the waiting period, the RBP will not be affected by the step up.
(b) After the waiting period, the RBP will be reset to the increased GBP.
The ALP will be increased to the contract value on the rider anniversary
multiplied by the ALP Percentage (either 5% or 6% as described under "GBP
Percentage and ALP Percentage" heading above), if greater than the current
ALP.
The RALP will be reset as follows:
(a) During the waiting period, the RALP will not be affected by the step up.
(b) After the waiting period, the RALP will be reset to the increased ALP.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource 20 -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
20 -- Joint Life rider also continues. The surviving covered spouse can name a
new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Annual Step-Up" heading above) also apply to the spousal
continuation step-up except that a) the RBP will be calculated as the GBP after
the step-up less all prior withdrawals taken during the current contract year,
but not less than zero, and b) the RALP will be calculated as the ALP after the
step-up less all prior withdrawals taken during the current contract year, but
not less than zero. The spousal continuation step-up is processed on the
valuation date spousal continuation is effective.
RULES FOR WITHDRAWAL PROVISION OF YOUR CONTRACT: Minimum account values
following a withdrawal no longer apply to your contract. For withdrawals, the
withdrawal will be taken from the variable subaccounts, guarantee period
accounts (where available), the one-year fixed account (if applicable) and the
DCA fixed account in the same proportion as your interest in each bears to the
contract value. You cannot specify from which accounts the withdrawal is to be
taken.
IF CONTRACT VALUE REDUCES TO ZERO: If the contract value reduces to zero, you
will be paid in the following scenarios:
1) The ALP has not yet been established, the total RBA is greater than zero and
the contract value is reduced to zero as a result of fees or charges or a
withdrawal that is less than or equal to the RBP. In this scenario, you can
choose to:
(a) receive the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: wait until the rider anniversary following the date the
covered person reaches age 65, and then receive the ALP annually until
the latter of (i) the death of the covered person, or (ii) the RBA is
reduced to zero.
--------------------------------------------------------------------------------
184 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
JOINT LIFE: wait until the rider anniversary following the date the
younger covered spouse reaches age 65, and then receive the ALP annually
until the latter of (i) the death of the last surviving covered spouse,
or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
2) The ALP has been established, the total RBA is greater than zero and the
contract value reduces to zero as a result of fees or charges, or a
withdrawal that is less than or equal to both the RBP and the RALP. In this
scenario, you can choose to receive:
(a) the remaining schedule of GBPs until the RBA equals zero; or
(b) SINGLE LIFE: the ALP annually until the latter of (i) the death of the
covered person, or (ii) the RBA is reduced to zero.
JOINT LIFE: the ALP annually until the latter of (i) the death of the
last surviving covered spouse, or (ii) the RBA is reduced to zero.
We will notify you of this option. If no election is made, the ALP will be paid.
3) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RALP but less than or equal to the
RBP. In this scenario, the remaining schedule of GBPs will be paid until the
RBA equals zero.
4) The ALP has been established and the contract value falls to zero as a result
of a withdrawal that is greater than the RBP but less than or equal to the
RALP. In this scenario, the ALP will be paid annually until the death of the:
- SINGLE LIFE: covered person;
- JOINT LIFE: last surviving covered spouse.
Under any of these scenarios:
The annualized amounts will be paid to you in monthly installments. If the
monthly payment is less than $100, we have the right to change the frequency
but no less frequent than annually;
We will no longer accept additional purchase payments;
You will no longer be charged for the rider;
Any attached death benefit riders will terminate;
In determining the remaining schedule of GBPs, the current GBP is fixed for as
long as payments are made.
SINGLE LIFE: The death benefit becomes the remaining payments, if any, until
the RBA is reduced to zero; and
JOINT LIFE: If the owner had been receiving the ALP, upon the first death the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero. In all other
situations the death benefit becomes the remaining payments, if any, until the
RBA is reduced to zero.
The SecureSource 20 rider and the contract will terminate under either of the
following two scenarios:
If the ALP is established and the RBA is zero, and if the contract value falls
to zero as a result of a withdrawal that is greater than the RALP. This is
full withdrawal of the contract value.
If the ALP is not established and the RBA is zero, and if the contract value
falls to zero as a result of fees, charges or a withdrawal.
AT DEATH:
SINGLE LIFE: If the contract value is greater than zero when the death benefit
becomes payable, the beneficiary may: 1) elect to take the death benefit under
the terms of the contract, 2) take the RBA payout option available under this
rider, or 3) continue the contract under the spousal continuation provision of
the contract which terminates the rider.
If the contract value equals zero and the death benefit becomes payable, the
following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the covered person dies and the RBA is greater than zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the RBA equals zero.
If the covered person is still alive and the RBA is greater than zero and the
owner has been receiving the ALP each year, the ALP will continue to be paid
to the beneficiary until the later of the death of the covered person or the
RBA equals zero.
If the covered person is still alive and the RBA equals zero and the owner has
been receiving the ALP each year, the ALP will continue to be paid to the
beneficiary until the death of the covered person.
If the covered person dies and the RBA equals zero, the benefit terminates. No
further payments will be made.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 185
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
provision of the contract and continue the contract as the new owner to continue
the joint benefit. If spousal continuation is not available under the terms of
the contract, the rider terminates. The lifetime benefit of this rider ends at
the death of the last surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may: 1) elect to take the death benefit under the terms
of the contract, 2) take the RBA payout option available under this rider, or 3)
continue the contract under the spousal continuation provision of the contract.
If the contract value equals zero at the first death of a covered spouse, the
ALP will continue to be paid annually until the later of: 1) the death of the
last surviving covered spouse or 2) the RBA is reduced to zero.
If the contract value equals zero at the death of the last surviving covered
spouse, the following will occur:
If the RBA is greater than zero and the owner has been receiving the GBP each
year, the GBP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA is greater than zero and the owner has been receiving the ALP each
year, the ALP will continue to be paid to the beneficiary until the RBA equals
zero.
If the RBA equals zero, the benefit terminates. No further payments will be
made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
REMAINING BENEFIT AMOUNT (RBA) PAYOUT OPTION: Several annuity payout plans are
available under the contract. As an alternative to these annuity payout plans, a
fixed annuity payout option is available under the SecureSource 20 rider after
the waiting period.
Under this option the amount payable each year will be equal to the remaining
schedule of GBPs, but the total amount paid will not exceed the current total
RBA at the time you begin this fixed annuity payout option. These annualized
amounts will be paid in monthly installments. If the monthly payment is less
than $100, we have the right to change the frequency, but no less frequently
than annually. If, at the death of the owner, total payouts have been made for
less than the RBA, the remaining payouts will be paid to the beneficiary (see
"The Annuity Payout Period" and "Taxes").
This option may not be available if the contract is issued to qualify under
section 403 or 408 of the Code, as amended. For such contracts, this option will
be available only if the guaranteed payment period is less than the life
expectancy of the owner at the time the option becomes effective. Such life
expectancy will be computed using a life expectancy table published by the IRS.
This annuity payout option may also be elected by the beneficiary when the death
benefit is payable. Whenever multiple beneficiaries are designated under the
contract, each such beneficiary's share of the proceeds if they elect this
option will be in proportion to their applicable designated beneficiary
percentage. Beneficiaries of nonqualified contracts may elect this settlement
option subject to the distribution requirements of the contract. We reserve the
right to adjust the remaining schedule of GBPs if necessary to comply with the
Code.
RIDER TERMINATION
The SecureSource 20 rider cannot be terminated either by you or us except as
follows:
1. SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
2. SINGLE LIFE: After the death benefit is payable, continuation of the contract
will terminate the rider.
3. JOINT LIFE: After the death benefit is payable the rider will terminate if:
(a) any one other than a covered spouse continues the contract, or
(b) a covered spouse does not use the spousal continuation provision of the
contract to continue the contract.
4. Annuity payouts under an annuity payout plan will terminate the rider.
5. You may terminate the rider if your annual rider fee after any fee increase
is more than 0.25 percentage points higher than your fee before the increase
(See "Charges -- SecureSource 20 rider fee").
--------------------------------------------------------------------------------
186 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
6. When the RBA and contract value is reduced to zero and either the withdrawal
is taken when the ALP is not established or an excess withdrawal of the RALP
is taken, the rider will terminate.
7. Termination of the contract for any reason will terminate the rider.
8. When a beneficiary elects an alternative payment plan which is an inherited
IRA, the rider will terminate.
For an example, see Appendix D.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 187
APPENDIX O: SECURESOURCE STAGES RIDER DISCLOSURE
SECURESOURCE STAGES RIDERS
This is an optional benefit that you can add to your contract for an additional
charge. The benefit is intended to provide to you, after the waiting period, a
specified withdrawal amount annually for life, even if your contract value is
zero, subject to the terms and provisions described in this section. This
benefit offers a credit feature to help in low or poor performing markets and a
step up feature to lock in contract anniversary gains. The SecureSource Stages
rider may be appropriate for you if you intend to make periodic withdrawals from
your annuity contract and wish to ensure that market performance will not
adversely affect your ability to withdraw income over your lifetime.
This benefit is intended for assets you plan to hold and let accumulate for at
least three years. Your benefits under the rider can be reduced if any of the
following occurs:
If you take any withdrawals during the 3-year waiting period, your benefits
will be set to zero until the end of the waiting period when they will be re-
established based on your contract value at that time;
If you take a withdrawal after the waiting period and if you withdraw more
than the allowed withdrawal amount in a contract year, or you take withdrawals
before the lifetime benefit is available;
If you take a withdrawal and later choose to allocate your contract value to
an investment option that is more aggressive than the target investment
option.
If the contract value is 20% or more below purchase payments increased by any
step ups or rider credits and adjusted for withdrawals (see withdrawal
adjustment base described below).
The SecureSource Stages rider guarantees that, regardless of investment
performance, you may take withdrawals up to the lifetime benefit amount each
contract year that the lifetime benefit is available. The lifetime benefit
amount can vary based on your attained age and based on the relationship of your
contract value to the withdrawal adjustment base. Each contract year after the
waiting period, the percentage used to determine the benefit amount is set when
the first withdrawal is taken and fixed for the remainder of that year.
At any time after the waiting period, as long as your total withdrawals during
the current year do not exceed the lifetime benefit amount, you will not be
assessed a surrender charge and no market value adjustment will be applied. If
you withdraw a larger amount, the excess amount will be assessed any applicable
surrender charges and any applicable market value adjustment. At any time, you
may withdraw any amount up to your entire surrender value, subject to excess
withdrawal processing under the rider.
Subject to conditions and limitations, the rider also guarantees that you or
your beneficiary will get back purchase payments you have made, increased by
annual step-ups, through withdrawals over time. Any amount we pay in excess of
your contract value is subject to our financial strength and claims-paying
ability.
Subject to conditions and limitations, the lifetime benefit amount can be
increased if a rider credit is available or your contract value has increased on
a rider anniversary. The principal back guarantee can also be increased if your
contract value has increased on a rider anniversary.
AVAILABILITY
There are two optional SecureSource Stages riders available under your contract:
SecureSource Stages - Single Life
SecureSource Stages - Joint Life
The information in this section applies to both SecureSource Stages riders,
unless otherwise noted.
For the purpose of this rider, the term "withdrawal" is equal to the term
"surrender" in the contract or any riders. Withdrawals will adjust contract
values and benefits in the same manner as surrenders.
The SecureSource Stages -- Single Life rider covers one person. The SecureSource
Stages -- Joint Life Rider covers two spouses jointly who are named at contract
issue. You may elect only the SecureSource Stages -- Single Life rider or the
SecureSource Stages -- Joint Life rider, not both, and you may not switch riders
later. You must elect the rider when you purchase your contract. The rider
effective date will be the contract issue date.
The SecureSource Stages rider is an optional benefit that you may select, if
approved in your state, for an additional annual charge if you purchase your
contract on or after Nov. 30, 2009; and
SINGLE LIFE: you are 80 or younger on the date the contract is issued; or
JOINT LIFE: you and your spouse are 80 or younger on the date the contract is
issued.
The SecureSource Stages riders are not available under an inherited qualified
annuity.
--------------------------------------------------------------------------------
188 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
The SecureSource Stages rider guarantees that after the waiting period,
regardless of the investment performance of your contract, you will be able to
withdraw up to a certain amount each year from the contract before the
annuitization start date until:
SINGLE LIFE: death (see "At Death" heading below).
JOINT LIFE: the death of the last surviving covered spouse (see "Joint Life
only: Covered Spouses" and "At Death" headings below).
KEY TERMS
The key terms associated with the SecureSource Stages rider are:
AGE BANDS: Each age band is associated with a set of lifetime payment
percentages. The covered person (JOINT LIFE: the younger covered spouse) must be
at least the youngest age shown in the first age band for the annual lifetime
payment to be established. After the annual lifetime payment is established,
other factors determine when you move to a higher age band.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
the younger covered spouse) has reached the youngest age in the first age band.
When the ALP is available, the annual withdrawal amount guaranteed by the rider
can vary each contract year.
ANNUAL STEP-UP: an increase in the benefit base or the principal back guarantee
and a possible increase in the lifetime payment percentage that is available
each rider anniversary if your contract value increases, subject to certain
conditions.
BENEFIT BASE (BB): used to calculate the annual lifetime payment and the annual
rider charge. The BB cannot be withdrawn in a lump sum or annuitized and is not
payable as a death benefit.
CREDIT BASE (CB): used to calculate the rider credit. The CB cannot be withdrawn
or annuitized and is not payable as a death benefit.
EXCESS WITHDRAWAL: (1) a withdrawal taken after the waiting period and before
the annual lifetime payment is established, or (2) a withdrawal that is greater
than the remaining annual lifetime payment when the annual lifetime payment is
available.
EXCESS WITHDRAWAL PROCESSING: after the waiting period, a reduction in benefits
if a withdrawal is taken before the annual lifetime payment is established or if
a withdrawal exceeds the remaining annual lifetime payment.
LIFETIME PAYMENT PERCENTAGE: used to calculate your annual lifetime payment. Two
percentages ("percentage A" and "percentage B") are used for each age band.
PRINCIPAL BACK GUARANTEE (PBG): a guarantee that total withdrawals will not be
less than purchase payments you have made, increased by annual step-ups, as long
as there is no excess withdrawal or benefit reset.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): as you make withdrawals during a
contract year, the remaining amount that the rider guarantees will be available
for withdrawal that year is reduced. Whenever the annual lifetime payment is
available, the RALP is the guaranteed amount that can be withdrawn during the
remainder of the current contract year.
RIDER CREDIT: an amount that can be added to the benefit base on each of the
first ten rider anniversaries, based on a rider credit percentage of 8% in year
one and 6% for years two through ten, as long as no withdrawals have been taken
since the rider effective date and you do not decline any annual rider fee
increase. Investment performance and withdrawals in the waiting period may
reduce or eliminate the benefit of any rider credits. Rider credits may result
in higher rider charges that may exceed the benefit from the credits.
WAITING PERIOD: the period of time before you can take a withdrawal without
affecting benefits under the rider. The waiting period starts on the rider
effective date and ends on the day prior to the third rider anniversary.
WITHDRAWAL: the amount by which your contract value is reduced as a result of
any withdrawal request. It may differ from the amount of your request due to any
surrender charge and any market value adjustment.
WITHDRAWAL ADJUSTMENT BASE (WAB): one of the components used to determine the
lifetime payment percentage. The WAB cannot be withdrawn or annuitized and is
not payable as a death benefit.
IMPORTANT SECURESOURCE STAGES RIDER CONSIDERATIONS
You should consider whether a SecureSource Stages rider is appropriate for you
taking into account the following considerations:
LIFETIME BENEFIT LIMITATIONS: The lifetime benefit is subject to certain
limitations, including but not limited to:
SINGLE LIFE: Once the contract value equals zero, payments are made for as
long as the covered person is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the first death of any owner even if the
covered person is still living (see "At Death" heading below). This
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 189
possibility may present itself when there are multiple contract owners -- when
one of the contract owners dies the lifetime benefit terminates even though
other contract owners are still living.
JOINT LIFE: Once the contract value equals zero, payments are made for as long
as either covered spouse is living (see "If Contract Value Reduces to Zero"
heading below). However, if the contract value is greater than zero, the
lifetime benefit terminates at the death of the last surviving covered spouse
(see "At Death" heading below).
WITHDRAWALS: Please consider carefully when you start taking withdrawals from
this rider. If you take any withdrawals during the 3-year waiting period, your
benefits will be set to zero until the end of the waiting period when they
will be reestablished based on your contract value at that time. Although your
benefits will be set to zero until the end of waiting period, we will deduct
rider fees, based on the anniversary contract value for the remainder of the
waiting period. Any withdrawal request within the 3-year waiting period must
be submitted in writing. In addition, any withdrawals in the first 10 years
will terminate the rider credits. Also, after the waiting period if you
withdraw more than the allowed withdrawal amount in a contract year or take
withdrawals before the lifetime benefit is available ("excess withdrawal"),
the guaranteed amounts under the rider may be reduced.
USE OF PORTFOLIO NAVIGATOR PROGRAM REQUIRED: You must be invested in one of
the available PN program investment options. This requirement limits your
choice of investments. This means you will not be able to allocate contract
value to all of the subaccounts, GPAs or the regular fixed account that are
available under the contract to contract owners who do not elect the rider.
(See "Making the Most of Your Contract -- Portfolio Navigator Program.") You
may allocate purchase payments to the Special DCA fixed account, when
available, and we will make monthly transfers into the investment option you
have chosen. You may make two elective investment option changes per contract
year; we reserve the right to limit elective investment option changes if
required to comply with the written instructions of a fund (see "Market
Timing").
You can allocate your contract value to any available investment option during
the following times: (1) prior to your first withdrawal and (2) following a
benefit reset due to an investment option change as described below but prior
to any subsequent withdrawal. During these accumulation phases, you may
request to change your investment option to any available investment option.
Immediately following a withdrawal your contract value will be reallocated to
the target investment option as shown in your contract if your current
investment option is more aggressive than the target investment option. If you
are in a static model portfolio, this reallocation will be made to the
applicable fund of funds investment option. This automatic reallocation is not
included in the total number of allowed model portfolio changes per contract
year. The target investment option is currently the Moderate investment
option. We reserve the right to change the target investment option to an
investment option that is more aggressive than the target investment option
after 30 days written notice.
After you have taken a withdrawal and prior to any benefit reset as described
below, you are in a withdrawal phase. During withdrawal phases you may request
to change your investment option to the target investment option or any
investment option that is more conservative than the target investment option
without a benefit reset as described below. If you are in a withdrawal phase
and you choose to allocate your contract value to an investment option that is
more aggressive than the target or investment option, you will be in the
accumulation phase again. If this is done after the waiting period, your rider
benefit will be reset as follows: the BB, PBG and WAB will be reset to the
contract value, if less than their current amount; and the ALP and RALP, if
available, will be recalculated. You may request to change your investment
option by written request on an authorized form or by another method agreed to
by us.
NON-CANCELABLE: Once elected, the SecureSource Stages rider may not be
cancelled (except as provided under "Rider Termination" heading below) and the
fee will continue to be deducted until the contract or rider is terminated or
the contract value reduces to zero (described below).
Dissolution of marriage does not terminate the SecureSource Stages -- Joint
Life rider and will not reduce the fee we charge for this rider. The benefit
under the SecureSource Stages -- Joint Life rider continues for the covered
spouse who is the owner of the contract (or annuitant in the case of
nonnatural or revocable trust ownership). The rider will terminate at the
death of the contract owner because the original covered spouse will be unable
to elect the spousal continuation provision of the contract (see "Joint Life
only: Covered Spouses" below).
JOINT LIFE: LIMITATIONS ON CONTRACT OWNERS, ANNUITANTS AND BENEFICIARIES:
Since the joint life benefit will terminate unless the surviving covered
spouse continues the contract under the spousal option to continue the
contract upon the owner's death provision, only ownership arrangements that
permit such continuation are allowed at rider issue. In general, the covered
spouses should be joint owners, or one covered spouse should be the owner and
the other covered spouse should be named as the sole primary beneficiary.
For non-natural ownership arrangements that allow for spousal continuation one
covered spouse should be the annuitant and the other covered spouse should be
the sole primary beneficiary. For revocable trust ownerships, the grantor of
the trust must be the annuitant and the beneficiary must either be the
annuitant's spouse or a trust that names the annuitant's spouse
--------------------------------------------------------------------------------
190 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
as the sole primary beneficiary. You are responsible for establishing
ownership arrangements that will allow for spousal continuation.
If you select the SecureSource Stages -- Joint Life rider, please consider
carefully whether or not you wish to change the beneficiary of your annuity
contract. The rider will terminate if the surviving covered spouse cannot
utilize the spousal continuation provision of the contract when the death
benefit is payable.
LIMITATIONS ON PURCHASE PAYMENTS: We reserve the right to limit the cumulative
amount of purchase payments, subject to state restrictions. For current
purchase payment restrictions, please see "Buying Your Contract -- Purchase
Payments".
INTERACTION WITH TOTAL FREE AMOUNT (FA) CONTRACT PROVISION: The FA is the
amount you are allowed to withdraw from the contract in each contract year
without incurring a surrender charge (see "Charges -- Surrender Charge"). The
FA may be greater than the remaining annual lifetime payment under this rider.
Any amount you withdraw under the contract's FA provision that exceeds the
remaining annual lifetime payment is subject to the excess withdrawal
processing described below. Also, any amount you withdraw during the waiting
period will set all benefits under the rider to zero until the end of the
waiting period when they will be reestablished based on the contract value at
that time.
You should consult your tax advisor before you select this optional rider if you
have any questions about the use of the rider in your tax situation because:
TAX CONSIDERATIONS FOR NONQUALIFIED ANNUITIES: Under current federal income
tax law, withdrawals under nonqualified annuities, including withdrawals taken
from the contract under the terms of the rider, are treated less favorably
than amounts received as annuity payments under the contract (see
"Taxes -- Nonqualified Annuities"). Withdrawals are taxable income to the
extent of earnings. Withdrawal of earnings before age 59 1/2 may also incur a
10% IRS early withdrawal penalty. You should consult your tax advisor before
you select this optional rider if you have any questions about the use of the
rider in your tax situation.
TAX CONSIDERATIONS FOR QUALIFIED ANNUITIES: Qualified annuities have minimum
distribution rules that govern the timing and amount of distributions from the
annuity contract (see "Taxes -- Qualified Annuities -- Required Minimum
Distributions"). If you have a qualified annuity, you may need to take an RMD
during the waiting period and such withdrawals will set all benefits under the
rider to zero until the end of the waiting period when they will be
reestablished based on the contract value at that time. While the rider
permits certain excess withdrawals to be taken after the waiting period for
the purpose of satisfying RMD requirements for your contract alone without
reducing future benefits guaranteed under the rider, there can be no guarantee
that changes in the federal income tax law after the effective date of the
rider will not require a larger RMD to be taken, in which case, future
guaranteed withdrawals under the rider could be reduced. See Appendix E for
additional information.
TREATMENT OF CIVIL UNIONS AND DOMESTIC PARTNERS: The Federal Defense of
Marriage Act ("DOMA") does not recognize same-sex marriages or civil unions,
even if permitted under applicable state law. As a result, a beneficiary of a
deceased owner who was treated as married to the owner under state law and for
purposes of this rider, but whose marriage is not recognized under DOMA, will
be required to take distributions from the contract in the manner applicable
to non-spouse beneficiaries. In some circumstances, these required
distributions could substantially reduce or eliminate the value of the rider.
See "Taxes -- Other -- Spousal status."
LIMITATIONS ON TSAS: Your right to take withdrawals is restricted if your
contract is a TSA (see "TSA -- Special Provisions").
LIFETIME BENEFIT DESCRIPTION
SINGLE LIFE ONLY: COVERED PERSON: the person whose life is used to determine
when the annual lifetime payment is established, and the duration of the ALP
payments (see "Annual Lifetime Payment (ALP)" heading below). The covered person
is the oldest contract owner. If any owner is a nonnatural person (e.g., an
irrevocable trust or corporation) or a revocable trust, the covered person is
the oldest annuitant.
JOINT LIFE ONLY: COVERED SPOUSES: the contract owner and his or her legally
married spouse as defined under federal law, as named on the application for as
long as the marriage is valid and in effect. If any contract owner is a
nonnatural person (e.g., an irrevocable trust or corporation) or a revocable
trust, the covered spouses are the annuitant and the legally married spouse of
the annuitant. The covered spouses lives are used to determine when the annual
lifetime payment is established, and the duration of the ALP payments (see
"Annual Lifetime Payment (ALP)" heading below). The covered spouses are
established on the rider effective date and cannot be changed.
ANNUAL LIFETIME PAYMENT (ALP): the lifetime benefit amount available each
contract year after the waiting period and after the covered person (JOINT LIFE:
younger covered spouses) has reached age 50. When the ALP is established and at
all times thereafter, the ALP is equal to the BB multiplied by the lifetime
payment percentage. Anytime the lifetime payment percentage or BB changes as
described below, the ALP will be recalculated. When the ALP is available, the
first withdrawal taken in each contract year will set and fix the lifetime
payment percentage for the remainder of the contract year.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 191
If you withdraw less than the ALP in a contract year, the unused portion does
not carry over to future contract years.
SINGLE LIFE: The ALP is established on the later of the rider effective date if
the covered person has reached age 50, or the date the covered person's attained
age equals age 50. The ALP will be available on later of the rider anniversary
after the waiting period, or the date the covered person's attained age equals
age 50.
JOINT LIFE: The ALP is established on the earliest of the following dates:
The rider effective date if the younger covered spouse has already reached age
50.
The date the younger covered spouse's attained age equals age 50.
Upon the first death of a covered spouse, then either: (a) the date we receive
a written request when the death benefit is not payable and the surviving
covered spouse has already reached age 50, (b) the date spousal continuation
is effective when the death benefit is payable and the surviving covered
spouse has already reached age 50, or (c) the date the surviving covered
spouse reaches age 50.
Following dissolution of marriage of the covered spouses, then either (a) the
date we receive a written request if the remaining covered spouse who is the
owner (or annuitant in the case of nonnatural or revocable trust ownership)
has already reached age 50, or (b) the date the remaining covered spouse who
is the owner (or annuitant in the case of nonnatural or revocable trust
ownership) reaches age 50.
The ALP will be available on later of the rider anniversary after the waiting
period, or the date the ALP is established.
REMAINING ANNUAL LIFETIME PAYMENT (RALP): the remaining annual lifetime payment
guaranteed for withdrawal after any withdrawals are made. The RALP is
established at the same time as the ALP. The RALP will be zero during the
waiting period. After the waiting period, the RALP equals the ALP less all
withdrawals in the current contract year, but it will not be less than zero.
LIFETIME PAYMENT PERCENTAGE: used to calculate the annual lifetime payment. Two
percentages are used for a given age band, percentage A or percentage B,
depending on the factors described below.
For ages:
50-58, percentage A is 4% and percentage B is 3%.
59-64, percentage A is 5% and percentage B is 4%.
65-79, percentage A is 6% and percentage B is 5%.
80 and older, percentage A is 7% and percentage B is 6%.
The age band for the lifetime payment percentage is determined at the following
times:
When the ALP is established: The age band for the lifetime payment percentage
used to calculate the initial ALP is the percentage for the covered person's
attained age (JOINT LIFE: younger covered spouses attained age).
On the covered person's subsequent birthdays (JOINT LIFE: younger covered
spouses subsequent birthdays): Except as noted below, if the covered person's
new attained age (JOINT LIFE: younger covered spouses attained age) is in a
higher age band, then the higher age band will be used to determine the
appropriate lifetime payment percentage. (However, if you decline any annual
rider fee increase or if a withdrawal has been taken since the ALP was made
available, then the lifetime payment percentage will not change on subsequent
birthdays.)
Upon annual step-ups (see "Annual step ups" below).
For the Joint life rider, upon death or change in marital status: In the event
of death or dissolution of marriage: (A) If no withdrawal has been taken since
the ALP was available and no annual rider fee increase has been declined, the
lifetime payment percentage will be reset based on the Age Band for the
remaining covered spouse's attained age. (B) If the ALP is not established but
the remaining covered spouse has reached the youngest age in the first Age
Band, the remaining covered spouse's attained age will be used to determine
the age band for the lifetime payment percentage. In the event of remarriage
of the covered spouses to each other, the lifetime payment percentage used is
the percentage for the younger covered spouse's attained age.
The following determines whether Percentage A or Percentage B is used for each
applicable age band:
During the waiting period, percentage A will be used to determine the amount
payable to beneficiaries under the principal back guarantee (PBG).
After the waiting period, a comparison of your contract value and the withdrawal
adjustment base (WAB) determines whether percentage A or percentage B is used to
calculate the ALP unless the percentage is fixed as described below.
--------------------------------------------------------------------------------
192 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
On each valuation date, if the benefit determining percentage is less than the
20% adjustment threshold, then percentage A is used in calculating your ALP,
otherwise percentage B is used. The benefit determining percentage is calculated
as follows, but it will not be less than zero:
1 - (A/B) where:
A = Contract value at the end of the prior valuation period
B = WAB at the end of the prior valuation period
After the ALP is available, the first withdrawal taken in each contract year
will set and fix the lifetime payment percentage for the remainder of the
contract year. Beginning on the next rider anniversary, the lifetime payment
percentage can change on each valuation day as described above until a
withdrawal is taken in that contract year.
Under certain limited situations, your Lifetime Payment Percentage will not vary
each contract year. Percentage A or percentage B will be determined at the
earliest of (1), (2) or (3) below and remain fixed for as long as the benefit is
payable:
if the ALP is established, when your contract value on a rider anniversary is
less than two times the benefit base (BB) multiplied by percentage B for your
current age band, or
when the contract value reduces to zero, or
on the date of death (JOINT LIFE: remaining covered spouse's date of death)
when a death benefit is payable.
For certain periods of time at our discretion and on a non-discriminatory basis,
your lifetime payment percentage may be set by us to percentage A if more
favorable to you.
DETERMINATION OF ADJUSTMENTS OF BENEFIT VALUES: Your lifetime benefit values and
principal back guarantee (PBG) are determined at the following times and are
subject to a maximum benefit base (BB), credit base (CB), withdrawal adjustment
base (WAB) and PBG amount of $10 million each:
On the contract date: The WAB, CB, BB and PBG are set equal to the initial
purchase payment.
When an additional purchase payment is made: Before a withdrawal is taken in
the waiting period and at any time after the waiting period, the WAB, CB
(unless it has been permanently set to zero), BB and PBG will be increased by
the amount of each additional purchase payment.
When a withdrawal is taken: If the CB is greater than zero, the CB will be
permanently reset to zero when the first withdrawal is taken, and there will
be no additional rider credits. If the first withdrawal is taken during the
waiting period, the WAB, BB and PBG will be set equal to zero until the end of
the waiting period.
Whenever a withdrawal is taken after the waiting period:
(a) the WAB will be reduced by the "adjustment for withdrawal," as defined
below.
(b) if the ALP is established and the withdrawal is less than or equal to
the RALP, the BB does not change and the PBG is reduced by the amount of
the withdrawal, but it will not be less than zero.
(c) if the ALP is not established, excess withdrawal processing will occur
as follows. The BB will be reduced by the "adjustment for withdrawal," and
the PBG will be reduced by the greater of the amount of the withdrawal or
the "adjustment for withdrawal," but it will not be less than zero.
(d) If the ALP is established and the withdrawal is greater than the RALP,
excess withdrawal processing will occur as follows:
The PBG will be reset to the lesser of:
(i) the PBG reduced by the amount of the withdrawal, but it will not
be less than zero; or
(ii) the PBG minus the RALP on the date of (but prior to) the
withdrawal and further reduced by an amount calculated as follows, but it
will not be less than zero:
A = the amount of the withdrawal minus the RALP
B = the PBG minus the RALP on the date of (but prior to) the
withdrawal
C = the contract value on the date of (but prior to) the withdrawal
minus the RALP
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 193
The BB will be reduced by an amount as calculated below:
D = the amount of the withdrawal minus the RALP
E = the BB on the date of (but prior to) the withdrawal
F = the contract value on the date of (but prior to) the withdrawal
minus the RALP.
ADJUSTMENT FOR WITHDRAWAL DEFINITION: When the WAB, PBG or BB is
reduced by a withdrawal in the same proportion as the contract value
is reduced, the proportional amount deducted is the "adjustment for
withdrawal." The "adjustment for withdrawal" is calculated as follows:
G = the amount the contract value is reduced by the withdrawal
H = the WAB, BB or PGB (as applicable) on the date of (but prior to)
the withdrawal
I = the contract value on the date of (but prior to) the withdrawal.
RIDER ANNIVERSARY PROCESSING: The following describes how the WAB, BB and PBG
are calculated on rider anniversaries, subject to the maximum amount of $10
million for each, and how the lifetime payment percentage can change on rider
anniversaries.
On the rider anniversary following the waiting period: If a withdrawal was
taken during the waiting period and you did not decline any annual rider fee
increase as described in the rider charges provision, the BB, WAB and PBG are
reset to the contract value. If a withdrawal was taken during the waiting
period and you declined any annual rider fee increase, the BB and PBG are
reset to the lesser of (1) the BB or PBG (as applicable) at the time of the
first withdrawal, plus any additional purchase payments since the time of the
first withdrawal, minus all withdrawals, or (2) the contract value. The WAB
will be reset to the BB.
The WAB on rider anniversaries: Unless you decline any annual rider fee
increase or take a withdrawal during the waiting period, the WAB (after any
rider credit is added) will be increased to the contract value, if the
contract value is greater. If a withdrawal was taken during the waiting
period, the WAB will be increased to the contract value, if the contract value
is greater, starting on the rider anniversary following the waiting period.
RIDER CREDITS: If you did not take any withdrawals and you did not decline any
annual rider fee increase, a rider credit may be available for the first ten
rider anniversaries. On the first rider anniversary, the rider credit equals the
credit base (CB) 180 days following the rider effective date multiplied by 8%.
On any subsequent rider credit anniversaries, the rider credit equals the CB as
of the prior rider anniversary multiplied by 6%. On the first rider anniversary
the BB and WAB will be set to the greater of the current BB, or the BB 180 days
following the contract date increased by the rider credit and any additional
purchase payments since 180 days following the rider effective date. On any
subsequent rider credit anniversaries the BB and WAB will be set to the greater
of the current BB, or the BB on the prior rider anniversary increased by the
rider credit and any additional purchase payments since the prior rider
anniversary. If the CB is greater than zero, the CB will be permanently reset to
zero on the 10(th) rider anniversary after any adjustment to the WAB and BB, and
there will be no additional rider credits.
ANNUAL STEP UPS: Beginning with the first rider anniversary, an annual step-up
may be available. If you take any withdrawals during the waiting period, the
annual step-up will not be available until the 3(rd) rider anniversary. If you
decline any annual rider fee increase, future annual step-ups will no longer be
available.
The annual step-up will be executed on any rider anniversary where the contract
value is greater than the PBG or the BB after any rider credit is added. If an
annual step-up is executed, the PBG, BB and lifetime payment percentage will be
adjusted as follows: The PBG will be increased to the contract value, if the
contract value is greater. The BB (after any rider credit is added) will be
increased to the contract value, if the contract value is greater. If the
covered person's attained age (Joint Life: younger covered spouses attained age)
on the rider anniversary is in a higher age band and (1) there is an increase to
BB due to a step-up or (2) the BB is at the maximum of $10,000,000 so there was
no step-up of the BB, then the higher age band will be used to determine the
appropriate lifetime payment percentage, regardless of any prior withdrawals.
OTHER PROVISIONS
REQUIRED MINIMUM DISTRIBUTIONS (RMD): If you are taking RMDs from your contract
and your RMD calculated separately for your contract is greater than the
remaining annual lifetime payment on the most recent contract anniversary, the
portion of
--------------------------------------------------------------------------------
194 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
your RMD that exceeds the benefit amount will not be subject to excess
withdrawal processing provided that the following conditions are met:
The withdrawal is after the waiting period;
The annual lifetime payment is available;
The RMD is for your contract alone;
The RMD is based on your recalculated life expectancy taken from the Uniform
Lifetime Table under the Code; and
The RMD amount is otherwise based on the requirements of section 401(a) (9),
related Code provisions and regulations thereunder that were in effect on the
contract date.
RMD rules follow the calendar year which most likely does not coincide with your
contract year and therefore may limit when you can take your RMD and not be
subject to excess withdrawal processing. A withdrawal during the waiting period
will reset the benefit base, the withdrawal adjustment base and the principal
back guarantee to the contract value at the end of the waiting period. After the
waiting period, a withdrawal taken before the annual lifetime payment is
established or withdrawing amounts greater than the remaining annual lifetime
payment that do not meet these conditions will result in excess withdrawal
processing. The amount in excess of the RALP that is not subject to excess
withdrawal processing will be recalculated if the ALP changes due to lifetime
payment percentage changes. See Appendix E for additional information.
SPOUSAL OPTION TO CONTINUE THE CONTRACT UPON OWNER'S DEATH (SPOUSAL
CONTINUATION):
SINGLE LIFE: If a surviving spouse elects to continue the contract and continues
the contract as the new owner under the spousal continuation provision of the
contract, the SecureSource Stages -- Single Life rider terminates.
JOINT LIFE: If a surviving spouse is a covered spouse and elects the spousal
continuation provision of the contract as the new owner, the SecureSource
Stages -- Joint Life rider also continues. The surviving covered spouse can name
a new beneficiary; however, a new covered spouse cannot be added to the rider.
At the time of spousal continuation, a step-up may be available. If you decline
a rider fee increase or the spousal continuation occurs during the waiting
period and a withdrawal was taken, a step up is not available. All annual step-
up rules (see "Rider Anniversary Processing -- Annual Step-Up" heading above)
also apply to the spousal continuation step-up. The WAB will be increased to the
contract value if the contract value is greater. The spousal continuation step-
up is processed on the valuation date spousal continuation is effective.
RULES FOR SURRENDER: Minimum account values following a surrender no longer
apply to your contract. For withdrawals, the withdrawal will be taken from all
accounts and the variable subaccounts in the same proportion as your interest in
each bears to the contract value. You cannot specify from which accounts the
withdrawal is to be taken.
If your contract value is reduced to zero, the CB, if greater than zero, will be
permanently reset to zero, and there will be no additional rider credits. Also,
the following will occur:
If the ALP is not established and if the contract value is reduced to zero as
a result of fees or charges, then the owner must wait until the ALP would be
established, and the ALP will be paid annually until the death of the covered
person (JOINT LIFE: both covered spouses).
If the ALP is established and if the contract value is reduced to zero as a
result of fees or charges, or as a result of a withdrawal that is less than or
equal to the RALP, then the owner will receive the ALP paid annually until the
death of the covered person (JOINT LIFE: both covered spouses).
In either case above:
- These annualized amounts will be paid in monthly installments. If the
monthly payment is less than $100, We have the right to change the
frequency, but no less frequently than annually.
- We will no longer accept additional purchase payments.
- No more charges will be collected for the rider.
- The current ALP is fixed for as long as payments are made.
- The death benefit becomes the remaining schedule of annual lifetime
payments, if any, until total payments to the owner and the beneficiary are
equal to the PBG at the time the contract value falls to zero.
- The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
If the ALP is not established and if the contract value is reduced to zero as
a result of a withdrawal, this rider and the contract will terminate.
If the ALP is established and if the contract value is reduced to zero as a
result of a withdrawal that is greater than the RALP, this rider and the
contract will terminate.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 195
AT DEATH:
SINGLE LIFE: If the contract is jointly owned and an owner dies when the
contract value is greater than zero, the lifetime benefit for the covered person
will cease even if the covered person is still living or if the contract is
continued under the spousal continuation option.
JOINT LIFE: If the death benefit becomes payable at the death of a covered
spouse, the surviving covered spouse must utilize the spousal continuation
option to continue the lifetime benefit. If spousal continuation is not
available, the rider terminates. The lifetime benefit ends at the death of the
surviving covered spouse.
If the contract value is greater than zero when the death benefit becomes
payable, the beneficiary may:
elect to take the death benefit under the terms of the contract, or
elect to take the principal back guarantee available under this rider, or
continue the contract and the SecureSource Stages rider under the spousal
continuation option.
For single and joint life, if the beneficiary elects the principal back
guarantee under this rider, the following will occur:
If the PBG is greater than zero and the ALP is established, the ALP on the
date of death will be paid until total payments to the beneficiary are equal
to the PBG on the date of death.
If the PBG is greater than zero and the ALP is not established, the BB on the
date of death multiplied by the lifetime payment percentage used for the
youngest age of the covered spouses in the first age band shown on the
contract data page will be paid annually until total payments to the
beneficiary are equal to the PBG on the date of death.
In either of the above cases:
After the date of death, there will be no additional rider credits or annual
step-ups.
The lifetime payment percentage used will be set as of the date of death.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year.
On the date of death (JOINT LIFE: remaining covered spouse's date of death), if
the CB is greater than zero, the CB will be permanently reset to zero, and there
will be no additional rider credits.
If the PBG equals zero, the benefit terminates. No further payments are made.
CONTRACT OWNERSHIP CHANGE:
SINGLE LIFE: If allowed by state law, change of ownership is subject to our
approval. If there is a change of ownership and the covered person remains the
same, the rider continues with no change to any of the rider benefits. If there
is a change of ownership and the covered person would be different, the rider
terminates.
JOINT LIFE: Ownership changes are only allowed between the covered spouses or
their revocable trust(s) and are subject to our approval, if allowed by state
law. No other ownership changes are allowed as long as the rider is in force.
ASSIGNMENT: If allowed by state law, an assignment is subject to our approval.
ANNUITY PROVISIONS: You can choose one of the payout options available under the
contract or an alternative fixed annuity payout option available under the
SecureSource Stages rider. Under the rider's payout option, the minimum amount
payable shown in Table B, will not apply and you will receive the annual
lifetime payment provided by this rider until the later of the death of the
covered person (JOINT LIFE: both covered spouses) or depletion of the principal
back guarantee. If you choose to receive the ALP, the amount payable each year
will be equal to the annual lifetime payment on the annuitization start date.
The amount paid in the current contract year will be reduced for any prior
withdrawals in that year. These annualized amounts will be paid in monthly
installments. If the monthly payment is less than $100, we have the right to
change the frequency, but no less frequently than annually.
If you choose to receive the ALP rather than a payout option available under the
contract, all other contract features, rider features and charges terminate
after the annuitization start date except for the PBG.
RIDER TERMINATION
The SecureSource Stages rider cannot be terminated either by you or us except as
follows:
SINGLE LIFE: a change of ownership that would result in a different covered
person will terminate the rider.
SINGLE LIFE: after the death benefit is payable, the rider will terminate.
SINGLE LIFE: spousal continuation will terminate the rider.
JOINT LIFE: After the death benefit is payable the rider will terminate if
anyone other than a covered spouse continues the contract. However, if the
covered spouse continues the contract as an inherited IRA or as a beneficiary
of a participant in an employer sponsored retirement plan, the rider will
terminate.
On the annuitization start date, the rider will terminate.
--------------------------------------------------------------------------------
196 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
- You may terminate the rider if your annual rider fee would increase more
than 0.25 percentage points (See "Charges -- SecureSource Stages rider fee")
When the contract value is reduced to zero and either the withdrawal taken
when the annual lifetime payment is not established or a withdrawal in excess
of the remaining annual lifetime payment is taken, the rider will terminate.
Termination of the contract for any reason will terminate the rider.
For an example, see Appendix D.
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 197
APPENDIX P: CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
the subaccounts representing the lowest and highest total annual variable
account expense combinations. The date in which operations commenced in each
subaccount is noted in parentheses. The SAI contains tables that give per-unit
information about the financial history of each existing subaccount. We have not
provided this information for subaccounts that were not available under your
contract as of Dec. 31, 2011. You may obtain a copy of the SAI without charge by
contacting us at the telephone number or address listed on the first page of the
prospectus.
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (09/22/1999)
Accumulation unit value at beginning of
period $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46 $0.79
Accumulation unit value at end of period $0.60 $0.79 $0.68 $0.45 $0.86 $0.73 $0.68 $0.67 $0.65 $0.46
Number of accumulation units outstanding at
end of period (000 omitted) 350 428 503 570 717 914 1,202 1,283 1,451 1,387
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (08/30/2002)
Accumulation unit value at beginning of
period $1.29 $1.16 $0.98 $1.68 $1.62 $1.41 $1.36 $1.24 $0.95 $1.00
Accumulation unit value at end of period $1.35 $1.29 $1.16 $0.98 $1.68 $1.62 $1.41 $1.36 $1.24 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 118 138 208 358 387 427 407 363 215 2
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.17 $0.88 $1.91 $1.83 $1.38 $1.20 $1.00 -- --
Accumulation unit value at end of period $0.95 $1.20 $1.17 $0.88 $1.91 $1.83 $1.38 $1.20 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,925 1,887 4,304 5,706 3,754 3,031 2,056 303 -- --
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP INFLATION PROTECTION, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.25 $1.20 $1.11 $1.14 $1.06 $1.06 $1.05 $1.00 -- --
Accumulation unit value at end of period $1.37 $1.25 $1.20 $1.11 $1.14 $1.06 $1.06 $1.05 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,741 2,182 2,188 2,112 3,349 3,584 3,417 474 -- --
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of
period $1.00 $0.86 $0.67 $0.90 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.98 $1.00 $0.86 $0.67 $0.90 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 16 16 16 18 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (05/01/2006)
Accumulation unit value at beginning of
period $1.00 $0.88 $0.66 $1.15 $0.96 $1.00 -- -- -- --
Accumulation unit value at end of period $1.00 $1.00 $0.88 $0.66 $1.15 $0.96 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- 1,477 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 $1.00 -- --
Accumulation unit value at end of period $1.16 $1.17 $1.05 $0.89 $1.23 $1.32 $1.13 $1.09 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 13 13 13 13 12 13 13 5 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26 $1.26
Accumulation unit value at end of period $1.30 $1.31 $1.33 $1.35 $1.34 $1.29 $1.26 $1.24 $1.25 $1.26
Number of accumulation units outstanding at
end of period (000 omitted) 3,784 4,615 4,417 4,753 3,976 3,923 6,630 7,059 5,254 8,572
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53 $1.47
Accumulation unit value at end of period $2.04 $1.94 $1.82 $1.61 $1.75 $1.68 $1.63 $1.62 $1.58 $1.53
Number of accumulation units outstanding at
end of period (000 omitted) 2,171 2,609 9,757 10,453 12,248 8,733 8,279 9,515 7,119 7,272
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87 $1.09
Accumulation unit value at end of period $1.58 $1.69 $1.46 $1.16 $1.98 $1.86 $1.58 $1.41 $1.21 $0.87
Number of accumulation units outstanding at
end of period (000 omitted) 1,827 2,123 9,137 8,505 6,387 5,210 2,698 1,026 605 238
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18 $1.53
Accumulation unit value at end of period $1.58 $1.53 $1.32 $1.08 $1.89 $1.86 $1.64 $1.56 $1.50 $1.18
Number of accumulation units outstanding at
end of period (000 omitted) 2,533 3,074 3,447 3,843 4,871 5,898 4,590 4,708 4,663 5,116
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $2.57 $2.18 $1.27 $2.78 $2.04 $1.55 $1.17 $1.00 -- --
Accumulation unit value at end of period $2.00 $2.57 $2.18 $1.27 $2.78 $2.04 $1.55 $1.17 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 490 474 1,632 2,462 1,621 1,522 1,033 198 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
198 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.17 $1.14 $1.08 $1.09 $1.03 $1.00 -- -- -- --
Accumulation unit value at end of period $1.27 $1.17 $1.14 $1.08 $1.09 $1.03 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 239 288 8,475 4,590 5,249 4,355 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (05/01/2006)
Accumulation unit value at beginning of
period $1.24 $1.13 $0.79 $1.07 $1.07 $1.00 -- -- -- --
Accumulation unit value at end of period $1.31 $1.24 $1.13 $0.79 $1.07 $1.07 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 24 24 24 4 4 551 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (08/26/1999)
Accumulation unit value at beginning of
period $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85 $0.93
Accumulation unit value at end of period $1.71 $1.64 $1.46 $0.96 $1.30 $1.30 $1.19 $1.16 $1.05 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 1,146 1,400 1,627 2,018 3,017 4,475 3,380 3,074 2,699 2,403
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.33 $1.19 $0.85 $1.06 $1.05 $1.00 -- -- -- --
Accumulation unit value at end of period $1.39 $1.33 $1.19 $0.85 $1.06 $1.05 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 111 132 5,971 3,980 3,766 782 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (02/21/1995)
Accumulation unit value at beginning of
period $1.63 $1.45 $1.15 $1.96 $1.76 $1.44 $1.28 $1.11 $0.88 $1.09
Accumulation unit value at end of period $1.41 $1.63 $1.45 $1.15 $1.96 $1.76 $1.44 $1.28 $1.11 $0.88
Number of accumulation units outstanding at
end of period (000 omitted) 467 507 570 676 832 1,048 1,332 1,736 2,080 2,254
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (05/02/2000)
Accumulation unit value at beginning of
period $0.48 $0.41 $0.31 $0.56 $0.55 $0.50 $0.47 $0.44 $0.37 $0.50
Accumulation unit value at end of period $0.46 $0.48 $0.41 $0.31 $0.56 $0.55 $0.50 $0.47 $0.44 $0.37
Number of accumulation units outstanding at
end of period (000 omitted) 158 198 308 1,533 1,159 411 413 471 499 270
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of
period $1.00 $0.84 $0.67 $1.12 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.96 $1.00 $0.84 $0.67 $1.12 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 242 272 10,019 7,564 5,188 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of
period $0.88 $0.79 $0.58 $1.14 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.73 $0.88 $0.79 $0.58 $1.14 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 26 27 27 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP GROWTH OPPORTUNITY FUND (CLASS 3) (08/30/2002)
Accumulation unit value at beginning of
period $1.73 $1.39 $0.86 $1.59 $1.41 $1.44 $1.32 $1.23 $1.02 $1.00
Accumulation unit value at end of period $1.45 $1.73 $1.39 $0.86 $1.59 $1.41 $1.44 $1.32 $1.23 $1.02
Number of accumulation units outstanding at
end of period (000 omitted) 906 1,009 1,184 1,418 1,722 2,222 377 159 29 --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.91 $0.75 $0.54 $1.00 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.82 $0.91 $0.75 $0.54 $1.00 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (01/29/2003)
Accumulation unit value at beginning of
period $1.49 $1.31 $1.06 $1.71 $1.65 $1.45 $1.41 $1.29 $1.00 --
Accumulation unit value at end of period $1.49 $1.49 $1.31 $1.06 $1.71 $1.65 $1.45 $1.41 $1.29 --
Number of accumulation units outstanding at
end of period (000 omitted) 94 96 106 116 193 219 241 223 175 --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (03/03/2000)
Accumulation unit value at beginning of
period $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16 $1.11
Accumulation unit value at end of period $1.25 $1.25 $1.23 $1.18 $1.23 $1.18 $1.15 $1.15 $1.16 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 803 893 2,339 2,088 2,176 2,281 2,359 2,330 1,256 248
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (05/01/2006)
Accumulation unit value at beginning of
period $1.08 $0.87 $0.70 $0.99 $1.03 $1.00 -- -- -- --
Accumulation unit value at end of period $1.00 $1.08 $0.87 $0.70 $0.99 $1.03 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 132 144 7,188 5,290 4,395 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of
period $0.98 $0.85 $0.72 $1.10 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.84 $0.98 $0.85 $0.72 $1.10 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 21 23 41 24 7 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS INVESTMENT PORTFOLIOS TECHNOLOGY GROWTH PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.40 $1.09 $0.71 $1.22 $1.08 $1.05 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.27 $1.40 $1.09 $0.71 $1.22 $1.08 $1.05 $1.03 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 259 304 387 477 517 1,235 542 80 -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 199
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND APPRECIATION PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.21 $1.06 $0.88 $1.27 $1.21 $1.06 $1.03 $1.00 -- --
Accumulation unit value at end of period $1.30 $1.21 $1.06 $0.88 $1.27 $1.21 $1.06 $1.03 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 30 32 58 58 58 58 58 33 -- --
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.83 $0.76 $0.62 $1.09 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.69 $0.83 $0.76 $0.62 $1.09 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (05/01/2006)
Accumulation unit value at beginning of
period $0.89 $0.87 $0.67 $1.09 $1.06 $1.00 -- -- -- --
Accumulation unit value at end of period $0.71 $0.89 $0.87 $0.67 $1.09 $1.06 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of
period $1.08 $1.01 $0.71 $0.98 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.09 $1.08 $1.01 $0.71 $0.98 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 135 156 4,120 3,241 2,619 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (08/30/2002)
Accumulation unit value at beginning of
period $1.77 $1.54 $1.15 $2.03 $1.76 $1.60 $1.39 $1.23 $0.97 $1.00
Accumulation unit value at end of period $1.70 $1.77 $1.54 $1.15 $2.03 $1.76 $1.60 $1.39 $1.23 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 2,842 3,363 5,125 8,294 9,083 10,127 5,827 3,099 1,289 8
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (05/01/2006)
Accumulation unit value at beginning of
period $1.22 $1.15 $1.01 $1.07 $1.04 $1.00 -- -- -- --
Accumulation unit value at end of period $1.29 $1.22 $1.15 $1.01 $1.07 $1.04 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 216 257 5,166 4,823 4,731 150 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (05/01/2001)
Accumulation unit value at beginning of
period $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94 $1.06
Accumulation unit value at end of period $2.12 $2.41 $1.90 $1.38 $2.32 $2.04 $1.84 $1.58 $1.29 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 812 1,103 2,608 3,630 3,308 3,045 2,336 1,901 1,151 250
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (01/29/2003)
Accumulation unit value at beginning of
period $1.96 $1.77 $1.42 $2.57 $2.22 $1.91 $1.63 $1.46 $1.00 --
Accumulation unit value at end of period $1.60 $1.96 $1.77 $1.42 $2.57 $2.22 $1.91 $1.63 $1.46 --
Number of accumulation units outstanding at
end of period (000 omitted) 600 625 855 968 947 1,091 906 193 1 --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN GLOBAL REAL ESTATE SECURITIES FUND - CLASS 2 (09/22/1999)
Accumulation unit value at beginning of
period $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34 $1.33
Accumulation unit value at end of period $1.80 $1.93 $1.62 $1.38 $2.43 $3.11 $2.61 $2.34 $1.80 $1.34
Number of accumulation units outstanding at
end of period (000 omitted) 253 310 433 475 605 706 734 760 676 542
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.74 $1.56 $1.17 $1.69 $1.65 $1.41 $1.41 $1.26 $0.97 $0.99
Accumulation unit value at end of period $1.75 $1.74 $1.56 $1.17 $1.69 $1.65 $1.41 $1.41 $1.26 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 520 611 767 778 1,317 1,595 1,286 1,054 597 224
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.87 $1.66 $1.42 $1.35 $1.24 $1.11 $1.16 $1.00 -- --
Accumulation unit value at end of period $1.83 $1.87 $1.66 $1.42 $1.35 $1.24 $1.11 $1.16 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 705 821 4,488 4,555 5,432 3,551 1,290 196 -- --
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (05/01/2006)
Accumulation unit value at beginning of
period $0.87 $0.82 $0.63 $1.11 $1.10 $1.00 -- -- -- --
Accumulation unit value at end of period $0.80 $0.87 $0.82 $0.63 $1.11 $1.10 -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 48 51 52 59 18 6 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (10/04/1999)
Accumulation unit value at beginning of
period $2.69 $2.18 $1.66 $2.68 $2.63 $2.30 $2.06 $1.66 $1.31 $1.40
Accumulation unit value at end of period $2.48 $2.69 $2.18 $1.66 $2.68 $2.63 $2.30 $2.06 $1.66 $1.31
Number of accumulation units outstanding at
end of period (000 omitted) 677 832 1,840 2,222 2,403 2,113 1,230 591 432 423
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (09/22/1999)
Accumulation unit value at beginning of
period $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67 $0.87
Accumulation unit value at end of period $0.93 $0.91 $0.82 $0.68 $1.10 $1.13 $1.02 $0.97 $0.85 $0.67
Number of accumulation units outstanding at
end of period (000 omitted) 244 348 522 746 1,109 1,487 1,581 1,430 1,449 1,109
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
200 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (03/01/2002)
Accumulation unit value at beginning of
period $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79 $1.00
Accumulation unit value at end of period $0.90 $1.00 $0.88 $0.74 $1.30 $1.18 $1.13 $1.06 $1.01 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 108 113 584 602 874 1,950 234 212 71 --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (08/30/2002)
Accumulation unit value at beginning of
period $1.64 $1.40 $1.00 $1.92 $1.76 $1.54 $1.43 $1.25 $0.94 $1.00
Accumulation unit value at end of period $1.50 $1.64 $1.40 $1.00 $1.92 $1.76 $1.54 $1.43 $1.25 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 44 49 68 87 98 101 108 109 86 --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.94 $0.91 $0.72 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.96 $0.94 $0.91 $0.72 $1.03 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.90 $0.81 $0.61 $1.04 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.83 $0.90 $0.81 $0.61 $1.04 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 186 197 8,059 3,477 2,234 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (08/30/2002)
Accumulation unit value at beginning of
period $1.51 $1.33 $1.05 $1.66 $1.72 $1.50 $1.46 $1.26 $0.98 $1.00
Accumulation unit value at end of period $1.46 $1.51 $1.33 $1.05 $1.66 $1.72 $1.50 $1.46 $1.26 $0.98
Number of accumulation units outstanding at
end of period (000 omitted) 2,208 2,626 5,001 6,104 5,949 6,248 3,864 1,094 458 --
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/02/2000)
Accumulation unit value at beginning of
period $0.66 $0.59 $0.44 $0.74 $0.65 $0.60 $0.58 $0.57 $0.44 $0.61
Accumulation unit value at end of period $0.62 $0.66 $0.59 $0.44 $0.74 $0.65 $0.60 $0.58 $0.57 $0.44
Number of accumulation units outstanding at
end of period (000 omitted) 869 962 12,886 12,008 9,966 1,523 1,775 1,862 2,188 2,583
-----------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of
period $1.05 $0.85 $0.60 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.05 $0.85 $0.60 $1.03 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 5 10 15 10 10 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of
period $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93 $1.00
Accumulation unit value at end of period $1.28 $1.27 $1.18 $1.02 $1.33 $1.29 $1.17 $1.16 $1.06 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 881 1,125 1,365 2,120 3,307 3,207 3,304 3,221 1,510 11
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (03/01/2002)
Accumulation unit value at beginning of
period $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85 $1.00
Accumulation unit value at end of period $2.57 $2.45 $2.19 $1.67 $2.72 $2.16 $1.67 $1.46 $1.14 $0.85
Number of accumulation units outstanding at
end of period (000 omitted) 74 96 100 106 163 161 159 55 38 6
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.78 $0.65 $0.47 $0.85 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.69 $0.78 $0.65 $0.47 $0.85 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 28 30 1,824 2,687 1,243 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $1.19 $0.91 $0.59 $1.12 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.09 $1.19 $0.91 $0.59 $1.12 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (08/30/2002)
Accumulation unit value at beginning of
period $1.32 $1.23 $0.86 $1.61 $1.44 $1.35 $1.31 $1.25 $0.97 $1.00
Accumulation unit value at end of period $1.29 $1.32 $1.23 $0.86 $1.61 $1.44 $1.35 $1.31 $1.25 $0.97
Number of accumulation units outstanding at
end of period (000 omitted) 56 78 93 180 289 319 300 302 167 --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77 $1.00
Accumulation unit value at end of period $1.45 $1.60 $1.40 $1.02 $1.74 $1.66 $1.43 $1.28 $1.09 $0.77
Number of accumulation units outstanding at
end of period (000 omitted) 296 371 429 566 864 940 833 690 347 12
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03 $1.00
Accumulation unit value at end of period $1.63 $1.64 $1.45 $1.24 $1.47 $1.36 $1.29 $1.27 $1.19 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 2,158 2,738 9,304 8,701 9,868 6,464 4,642 2,922 1,544 10
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 201
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (07/31/2002)
Accumulation unit value at beginning of
period $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95 $1.00
Accumulation unit value at end of period $1.82 $1.90 $1.56 $1.16 $1.89 $1.95 $1.72 $1.59 $1.35 $0.95
Number of accumulation units outstanding at
end of period (000 omitted) 91 140 191 210 307 330 355 322 247 4
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of
period $1.14 $1.03 $0.86 $1.03 $1.00 -- -- -- -- --
Accumulation unit value at end of period $1.15 $1.14 $1.03 $0.86 $1.03 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 145 167 4,498 6,698 6,219 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL HEALTH CARE FUND - CLASS IB SHARES (05/01/2002)
Accumulation unit value at beginning of
period $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84 $1.00
Accumulation unit value at end of period $1.15 $1.18 $1.16 $0.94 $1.14 $1.17 $1.15 $1.03 $0.98 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 71 94 120 136 185 196 167 147 87 12
-----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT SMALL CAP VALUE FUND - CLASS IB SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $0.97 $0.74 $1.25 $1.45 $1.25 $1.19 $1.00 -- --
Accumulation unit value at end of period $1.13 $1.20 $0.97 $0.74 $1.25 $1.45 $1.25 $1.19 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 14 13 14 14 54 946 27 4 -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 125 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.12 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.12 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 9,333 9,511 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,227 125 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.04 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 8,368 9,048 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.85 $0.78 $0.60 $0.99 $1.00 -- -- -- -- --
Accumulation unit value at end of period $0.81 $0.85 $0.78 $0.60 $0.99 -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 218 243 10,555 6,225 4,468 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.32 $1.09 $0.81 $1.30 $1.25 $1.09 $1.10 $1.00 -- --
Accumulation unit value at end of period $1.21 $1.32 $1.09 $0.81 $1.30 $1.25 $1.09 $1.10 -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,658 1,229 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.09 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.09 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 59,483 64,190 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 650 227 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.08 $1.11 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 32,058 35,114 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,084 860 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
202 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 1.40% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.07 $1.00 -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.07 -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 9,729 10,627 -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (05/01/2002)
Accumulation unit value at beginning of
period $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79 $1.00
Accumulation unit value at end of period $1.55 $1.64 $1.34 $0.99 $1.47 $1.57 $1.33 $1.27 $1.07 $0.79
Number of accumulation units outstanding at
end of period (000 omitted) 1,139 1,364 1,800 2,045 2,297 2,129 2,323 692 192 35
-----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (09/22/1999)
Accumulation unit value at beginning of
period $2.43 $1.97 $1.33 $2.49 $2.17 $1.60 $1.34 $1.04 $0.71 $0.83
Accumulation unit value at end of period $2.04 $2.43 $1.97 $1.33 $2.49 $2.17 $1.60 $1.34 $1.04 $0.71
Number of accumulation units outstanding at
end of period (000 omitted) 199 215 1,491 2,249 1,387 742 484 439 2,509 479
-----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (09/22/1999)
Accumulation unit value at beginning of
period $1.91 $1.57 $1.12 $1.88 $1.81 $1.70 $1.55 $1.33 $0.94 $1.15
Accumulation unit value at end of period $1.81 $1.91 $1.57 $1.12 $1.88 $1.81 $1.70 $1.55 $1.33 $0.94
Number of accumulation units outstanding at
end of period (000 omitted) 659 787 2,050 2,146 1,967 1,384 1,171 455 382 351
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INDEX ASSET ALLOCATION FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.09 $0.98 $0.86 $1.23 $1.15 $1.04 $1.01 $0.94 $0.78 $0.90
Accumulation unit value at end of period $1.14 $1.09 $0.98 $0.86 $1.23 $1.15 $1.04 $1.01 $0.94 $0.78
Number of accumulation units outstanding at
end of period (000 omitted) 648 844 989 1,141 1,532 1,765 1,736 1,457 1,313 1,043
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTERNATIONAL EQUITY FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93 $1.00
Accumulation unit value at end of period $1.43 $1.66 $1.44 $1.27 $2.20 $1.95 $1.61 $1.41 $1.20 $0.93
Number of accumulation units outstanding at
end of period (000 omitted) 277 324 434 491 679 717 623 663 493 12
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.14 $1.01 $0.88 $1.41 $1.39 $1.19 $1.14 $1.04 $0.84 $1.05
Accumulation unit value at end of period $1.10 $1.14 $1.01 $0.88 $1.41 $1.39 $1.19 $1.14 $1.04 $0.84
Number of accumulation units outstanding at
end of period (000 omitted) 995 1,173 1,566 1,247 1,750 1,970 2,186 1,526 1,128 922
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND - CLASS 2 (07/31/2002)
Accumulation unit value at beginning of
period $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96 $1.00
Accumulation unit value at end of period $1.82 $1.96 $1.66 $1.17 $1.64 $1.49 $1.43 $1.40 $1.33 $0.96
Number of accumulation units outstanding at
end of period (000 omitted) 1,779 2,121 276 333 464 531 573 580 441 13
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT OPPORTUNITY FUND - CLASS 2 (08/26/2011)
Accumulation unit value at beginning of
period $1.00 -- -- -- -- -- -- -- -- --
Accumulation unit value at end of period $1.05 -- -- -- -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 501 -- -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25 $0.42
Accumulation unit value at end of period $0.58 $0.62 $0.49 $0.33 $0.57 $0.50 $0.42 $0.40 $0.35 $0.25
Number of accumulation units outstanding at
end of period (000 omitted) 627 785 586 966 992 1,281 1,363 1,351 1,424 1,243
-----------------------------------------------------------------------------------------------------------------------------------
WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND - CLASS 2 (03/03/2000)
Accumulation unit value at beginning of
period $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19 $1.12
Accumulation unit value at end of period $1.78 $1.67 $1.58 $1.43 $1.42 $1.35 $1.32 $1.31 $1.28 $1.19
Number of accumulation units outstanding at
end of period (000 omitted) 1,785 2,234 2,406 2,685 3,965 5,543 2,193 622 225 167
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT.
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GLOBAL THEMATIC GROWTH PORTFOLIO (CLASS B) (05/01/2007)
Accumulation unit value at beginning of
period $1.03 $0.89 $0.59 $1.15 $1.00 -- -- --
Accumulation unit value at end of period $0.77 $1.03 $0.89 $0.59 $1.15 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS GROWTH AND INCOME PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $0.98 $0.89 $0.75 $1.30 $1.26 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.02 $0.98 $0.89 $0.75 $1.30 $1.26 $1.10 $1.08
Number of accumulation units outstanding at
end of period (000 omitted) 1 1 1 1 1 1 2 19
-----------------------------------------------------------------------------------------------------------------------------------
ALLIANCEBERNSTEIN VPS INTERNATIONAL VALUE PORTFOLIO (CLASS B) (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $1.12 $0.85 $1.86 $1.80 $1.36 $1.19 $1.00
Accumulation unit value at end of period $0.90 $1.14 $1.12 $0.85 $1.86 $1.80 $1.36 $1.19
Number of accumulation units outstanding at
end of period (000 omitted) 1,095 1,143 2,948 3,883 2,568 1,868 1,180 367
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 203
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP MID CAP VALUE, CLASS II (05/01/2007)
Accumulation unit value at beginning of
period $0.98 $0.84 $0.66 $0.89 $1.00 -- -- --
Accumulation unit value at end of period $0.95 $0.98 $0.84 $0.66 $0.89 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 7 7 7 6 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP ULTRA(R), CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.01 $0.89 $0.68 $1.18 $1.00 $1.06 $1.06 $1.00
Accumulation unit value at end of period $1.00 $1.01 $0.89 $0.68 $1.18 $1.00 $1.06 $1.06
Number of accumulation units outstanding at
end of period (000 omitted) 671 830 972 1,039 1,098 3,076 1,002 303
-----------------------------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY VP VALUE, CLASS II (04/30/2004)
Accumulation unit value at beginning of
period $1.12 $1.01 $0.86 $1.20 $1.29 $1.12 $1.09 $1.00
Accumulation unit value at end of period $1.10 $1.12 $1.01 $0.86 $1.20 $1.29 $1.12 $1.09
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - CASH MANAGEMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.01 $1.03 $1.05 $1.05 $1.02 $1.00 $0.99 $1.00
Accumulation unit value at end of period $0.99 $1.01 $1.03 $1.05 $1.05 $1.02 $1.00 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 1,125 1,266 2,602 959 883 744 237 4
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.18 $1.11 $1.00 $1.08 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.24 $1.18 $1.11 $1.00 $1.08 $1.05 $1.03 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 419 533 7,805 7,577 7,791 5,167 31 20
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.32 $1.16 $0.93 $1.59 $1.50 $1.28 $1.15 $1.00
Accumulation unit value at end of period $1.23 $1.32 $1.16 $0.93 $1.59 $1.50 $1.28 $1.15
Number of accumulation units outstanding at
end of period (000 omitted) 1,184 1,424 6,746 6,318 4,403 3,648 1,145 12
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - DYNAMIC EQUITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05 $1.00
Accumulation unit value at end of period $1.01 $0.98 $0.85 $0.70 $1.24 $1.23 $1.09 $1.05
Number of accumulation units outstanding at
end of period (000 omitted) 1,000 1,375 1,651 1,706 1,699 1,950 2,164 1,042
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - EMERGING MARKETS OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $2.45 $2.09 $1.23 $2.71 $2.00 $1.53 $1.17 $1.00
Accumulation unit value at end of period $1.90 $2.45 $2.09 $1.23 $2.71 $2.00 $1.53 $1.17
Number of accumulation units outstanding at
end of period (000 omitted) 389 416 1,345 1,926 1,273 1,208 706 264
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - GLOBAL INFLATION PROTECTED SECURITIES FUND (CLASS 3) (05/01/2006)
Accumulation unit value at beginning of
period $1.13 $1.11 $1.06 $1.08 $1.02 $1.00 -- --
Accumulation unit value at end of period $1.22 $1.13 $1.11 $1.06 $1.08 $1.02 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 286 378 5,689 3,061 3,486 3,284 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH INCOME FUND (CLASS 2) (04/28/2006)
Accumulation unit value at beginning of
period $1.20 $1.10 $0.78 $1.06 $1.06 $1.00 -- --
Accumulation unit value at end of period $1.26 $1.20 $1.10 $0.78 $1.06 $1.06 -- --
Number of accumulation units outstanding at
end of period (000 omitted) 386 501 564 677 840 1,798 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - HIGH YIELD BOND FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.47 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08 $1.00
Accumulation unit value at end of period $1.52 $1.47 $1.31 $0.87 $1.19 $1.19 $1.10 $1.08
Number of accumulation units outstanding at
end of period (000 omitted) 267 385 579 748 899 1,062 683 196
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INCOME OPPORTUNITIES FUND (CLASS 3) (06/01/2004)
Accumulation unit value at beginning of
period $1.44 $1.30 $0.93 $1.18 $1.17 $1.11 $1.09 $1.00
Accumulation unit value at end of period $1.50 $1.44 $1.30 $0.93 $1.18 $1.17 $1.11 $1.09
Number of accumulation units outstanding at
end of period (000 omitted) 119 184 3,633 2,386 2,246 1,168 -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - INTERNATIONAL OPPORTUNITY FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.38 $1.24 $0.99 $1.70 $1.54 $1.27 $1.14 $1.00
Accumulation unit value at end of period $1.19 $1.38 $1.24 $0.99 $1.70 $1.54 $1.27 $1.14
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - LARGE CAP GROWTH FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.05 $0.91 $0.68 $1.25 $1.24 $1.14 $1.07 $1.00
Accumulation unit value at end of period $0.99 $1.05 $0.91 $0.68 $1.25 $1.24 $1.14 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 48 52 118 316 203 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO GROWTH FUND (CLASS 1) (05/01/2007)
Accumulation unit value at beginning of
period $0.98 $0.82 $0.66 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $0.93 $0.98 $0.82 $0.66 $1.12 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 187 231 6,690 4,924 3,253 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
204 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MARSICO INTERNATIONAL OPPORTUNITIES FUND (CLASS 2) (05/01/2007)
Accumulation unit value at beginning of
period $0.86 $0.77 $0.57 $1.13 $1.00 -- -- --
Accumulation unit value at end of period $0.70 $0.86 $0.77 $0.57 $1.13 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 16 16 16 13 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - MID CAP VALUE OPPORTUNITY FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.88 $0.74 $0.53 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.79 $0.88 $0.74 $0.53 $0.99 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 8 8 8 7 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - S&P 500 INDEX FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.10 $0.98 $0.79 $1.28 $1.25 $1.11 $1.08 $1.00
Accumulation unit value at end of period $1.09 $1.10 $0.98 $0.79 $1.28 $1.25 $1.11 $1.08
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- 22 30 63 7 --
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SHORT DURATION U.S. GOVERNMENT FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.03 $1.02 $0.99 $1.04 $1.01 $0.99 $0.99 $1.00
Accumulation unit value at end of period $1.02 $1.03 $1.02 $0.99 $1.04 $1.01 $0.99 $0.99
Number of accumulation units outstanding at
end of period (000 omitted) 317 475 1,632 928 951 794 390 75
-----------------------------------------------------------------------------------------------------------------------------------
COLUMBIA VARIABLE PORTFOLIO - SMALL CAP VALUE FUND (CLASS 2) (04/30/2004)
Accumulation unit value at beginning of
period $1.43 $1.15 $0.94 $1.34 $1.41 $1.20 $1.16 $1.00
Accumulation unit value at end of period $1.31 $1.43 $1.15 $0.94 $1.34 $1.41 $1.20 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 122 136 3,544 2,710 2,205 4 -- --
-----------------------------------------------------------------------------------------------------------------------------------
CREDIT SUISSE TRUST - COMMODITY RETURN STRATEGY PORTFOLIO (05/01/2007)
Accumulation unit value at beginning of
period $0.95 $0.83 $0.71 $1.10 $1.00 -- -- --
Accumulation unit value at end of period $0.81 $0.95 $0.83 $0.71 $1.10 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 10 11 11 7 5 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL EQUITY PORTFOLIO, SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.81 $0.75 $0.61 $1.09 $1.00 -- -- --
Accumulation unit value at end of period $0.67 $0.81 $0.75 $0.61 $1.09 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
DREYFUS VARIABLE INVESTMENT FUND INTERNATIONAL VALUE PORTFOLIO, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.21 $1.19 $0.93 $1.52 $1.49 $1.24 $1.14 $1.00
Accumulation unit value at end of period $0.96 $1.21 $1.19 $0.93 $1.52 $1.49 $1.24 $1.14
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
EATON VANCE VT FLOATING-RATE INCOME FUND (05/01/2007)
Accumulation unit value at beginning of
period $1.06 $0.99 $0.70 $0.98 $1.00 -- -- --
Accumulation unit value at end of period $1.06 $1.06 $0.99 $0.70 $0.98 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 72 100 2,636 2,023 1,799 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP CONTRAFUND(R) PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.35 $1.18 $0.89 $1.58 $1.38 $1.26 $1.10 $1.00
Accumulation unit value at end of period $1.28 $1.35 $1.18 $0.89 $1.58 $1.38 $1.26 $1.10
Number of accumulation units outstanding at
end of period (000 omitted) 1,778 2,267 3,812 6,343 6,113 6,881 2,677 818
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP INVESTMENT GRADE BOND PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.20 $1.14 $1.01 $1.07 $1.05 $1.03 $1.03 $1.00
Accumulation unit value at end of period $1.26 $1.20 $1.14 $1.01 $1.07 $1.05 $1.03 $1.03
Number of accumulation units outstanding at
end of period (000 omitted) 917 1,193 4,611 4,369 5,217 2,104 1,449 257
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP MID CAP PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.77 $1.41 $1.03 $1.74 $1.54 $1.40 $1.21 $1.00
Accumulation unit value at end of period $1.55 $1.77 $1.41 $1.03 $1.74 $1.54 $1.40 $1.21
Number of accumulation units outstanding at
end of period (000 omitted) 202 254 1,551 2,267 1,493 1,028 275 36
-----------------------------------------------------------------------------------------------------------------------------------
FIDELITY(R) VIP OVERSEAS PORTFOLIO SERVICE CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.26 $1.14 $0.93 $1.69 $1.47 $1.28 $1.10 $1.00
Accumulation unit value at end of period $1.02 $1.26 $1.14 $0.93 $1.69 $1.47 $1.28 $1.10
Number of accumulation units outstanding at
end of period (000 omitted) 401 441 570 644 620 854 742 388
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT FRANKLIN INCOME SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.32 $1.20 $0.90 $1.31 $1.29 $1.11 $1.12 $1.00
Accumulation unit value at end of period $1.32 $1.32 $1.20 $0.90 $1.31 $1.29 $1.11 $1.12
Number of accumulation units outstanding at
end of period (000 omitted) 151 155 211 288 291 261 59 12
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GLOBAL BOND SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.78 $1.59 $1.37 $1.32 $1.21 $1.10 $1.16 $1.00
Accumulation unit value at end of period $1.73 $1.78 $1.59 $1.37 $1.32 $1.21 $1.10 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) 632 805 3,313 3,291 4,169 3,093 1,162 295
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 205
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
FTVIPT TEMPLETON GROWTH SECURITIES FUND - CLASS 2 (04/30/2004)
Accumulation unit value at beginning of
period $1.09 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12 $1.00
Accumulation unit value at end of period $0.99 $1.09 $1.03 $0.80 $1.42 $1.42 $1.19 $1.12
Number of accumulation units outstanding at
end of period (000 omitted) 109 134 135 138 120 44 7 --
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT MID CAP VALUE FUND - INSTITUTIONAL SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.49 $1.22 $0.93 $1.51 $1.50 $1.32 $1.19 $1.00
Accumulation unit value at end of period $1.37 $1.49 $1.22 $0.93 $1.51 $1.50 $1.32 $1.19
Number of accumulation units outstanding at
end of period (000 omitted) 553 671 1,899 2,327 2,412 2,053 924 317
-----------------------------------------------------------------------------------------------------------------------------------
GOLDMAN SACHS VIT STRUCTURED U.S. EQUITY FUND - INSTITUTIONAL SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.76 $0.68 $0.58 $0.93 $1.00 -- -- --
Accumulation unit value at end of period $0.77 $0.76 $0.68 $0.58 $0.93 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL APPRECIATION FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $0.96 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06 $1.00
Accumulation unit value at end of period $0.86 $0.96 $0.85 $0.72 $1.28 $1.17 $1.13 $1.06
Number of accumulation units outstanding at
end of period (000 omitted) 27 34 139 146 127 126 -- --
*Invesco V.I. Capital Appreciation Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Capital Growth
Fund, Series II Shares on April 27, 2012. In addition, Invesco Van Kampen V.I. Capital Growth Fund, Series II Shares changed its
name to Invesco Van Kampen V.I. American Franchise Fund, Series II Shares.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. CAPITAL DEVELOPMENT FUND, SERIES II SHARES* (04/30/2004)
Accumulation unit value at beginning of
period $1.21 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10 $1.00
Accumulation unit value at end of period $1.10 $1.21 $1.04 $0.75 $1.45 $1.34 $1.18 $1.10
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
*Invesco V.I. Capital Development Fund, Series II Shares is scheduled to be merged into Invesco Van Kampen V.I. Mid Cap Growth
Fund, Series II Shares on April 27, 2012.
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. GLOBAL HEALTH CARE FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.92 $0.89 $0.72 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $0.93 $0.92 $0.89 $0.72 $1.03 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO V.I. INTERNATIONAL GROWTH FUND, SERIES II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.88 $0.80 $0.60 $1.04 $1.00 -- -- --
Accumulation unit value at end of period $0.80 $0.88 $0.80 $0.60 $1.04 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 153 179 5,423 2,489 1,537 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
INVESCO VAN KAMPEN V.I. COMSTOCK FUND, SERIES II SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.12 $0.99 $0.78 $1.25 $1.31 $1.15 $1.13 $1.00
Accumulation unit value at end of period $1.07 $1.12 $0.99 $0.78 $1.25 $1.31 $1.15 $1.13
Number of accumulation units outstanding at
end of period (000 omitted) 2,197 2,697 4,887 5,937 5,631 5,950 3,199 890
-----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES JANUS PORTFOLIO: SERVICE SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.92 $0.82 $0.62 $1.05 $1.00 -- -- --
Accumulation unit value at end of period $0.85 $0.92 $0.82 $0.62 $1.05 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 162 193 5,730 5,119 3,863 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
LEGG MASON CLEARBRIDGE VARIABLE SMALL CAP GROWTH PORTFOLIO - CLASS I (05/01/2007)
Accumulation unit value at beginning of
period $1.02 $0.83 $0.60 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.01 $1.02 $0.83 $0.60 $1.03 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) TOTAL RETURN SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of
period $1.14 $1.06 $0.92 $1.21 $1.19 $1.09 $1.09 $1.00
Accumulation unit value at end of period $1.14 $1.14 $1.06 $0.92 $1.21 $1.19 $1.09 $1.09
Number of accumulation units outstanding at
end of period (000 omitted) 12 12 31 30 30 30 33 41
-----------------------------------------------------------------------------------------------------------------------------------
MFS(R) UTILITIES SERIES - SERVICE CLASS (04/30/2004)
Accumulation unit value at beginning of
period $1.99 $1.79 $1.38 $2.26 $1.81 $1.41 $1.24 $1.00
Accumulation unit value at end of period $2.08 $1.99 $1.79 $1.38 $2.26 $1.81 $1.41 $1.24
Number of accumulation units outstanding at
end of period (000 omitted) 48 50 107 80 63 29 -- --
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF GLOBAL REAL ESTATE PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $0.76 $0.64 $0.46 $0.84 $1.00 -- -- --
Accumulation unit value at end of period $0.67 $0.76 $0.64 $0.46 $0.84 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 42 45 1,250 1,786 771 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY UIF MID CAP GROWTH PORTFOLIO, CLASS II SHARES (05/01/2007)
Accumulation unit value at beginning of
period $1.16 $0.90 $0.58 $1.12 $1.00 -- -- --
Accumulation unit value at end of period $1.06 $1.16 $0.90 $0.58 $1.12 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 57 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
206 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER CAPITAL APPRECIATION FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.02 $0.96 $0.68 $1.28 $1.14 $1.09 $1.06 $1.00
Accumulation unit value at end of period $0.99 $1.02 $0.96 $0.68 $1.28 $1.14 $1.09 $1.06
Number of accumulation units outstanding at
end of period (000 omitted) 791 988 1,061 1,218 1,209 1,390 1,125 320
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL SECURITIES FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.38 $1.22 $0.90 $1.53 $1.47 $1.28 $1.15 $1.00
Accumulation unit value at end of period $1.24 $1.38 $1.22 $0.90 $1.53 $1.47 $1.28 $1.15
Number of accumulation units outstanding at
end of period (000 omitted) 14 14 24 22 22 22 14 --
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER GLOBAL STRATEGIC INCOME FUND/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.32 $1.17 $1.01 $1.21 $1.12 $1.07 $1.07 $1.00
Accumulation unit value at end of period $1.30 $1.32 $1.17 $1.01 $1.21 $1.12 $1.07 $1.07
Number of accumulation units outstanding at
end of period (000 omitted) 1,033 1,290 6,485 5,630 6,179 3,663 1,908 552
-----------------------------------------------------------------------------------------------------------------------------------
OPPENHEIMER MAIN STREET SMALL- & MID-CAP FUND(R)/VA, SERVICE SHARES (04/30/2004)
Accumulation unit value at beginning of
period $1.33 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16 $1.00
Accumulation unit value at end of period $1.27 $1.33 $1.10 $0.82 $1.35 $1.40 $1.25 $1.16
Number of accumulation units outstanding at
end of period (000 omitted) -- -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT ALL ASSET PORTFOLIO, ADVISOR SHARE CLASS (05/01/2007)
Accumulation unit value at beginning of
period $1.12 $1.01 $0.85 $1.03 $1.00 -- -- --
Accumulation unit value at end of period $1.11 $1.12 $1.01 $0.85 $1.03 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 88 114 2,958 4,286 4,060 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 194 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.11 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.11 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 5,125 5,722 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 801 -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.04 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.05 $1.04 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 6,482 8,040 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - DAVIS NEW YORK VENTURE FUND (CLASS 3) (05/01/2007)
Accumulation unit value at beginning of
period $0.83 $0.76 $0.59 $0.99 $1.00 -- -- --
Accumulation unit value at end of period $0.79 $0.83 $0.76 $0.59 $0.99 -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 206 243 7,096 4,344 3,056 -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - GOLDMAN SACHS MID CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.26 $1.05 $0.79 $1.27 $1.22 $1.08 $1.09 $1.00
Accumulation unit value at end of period $1.15 $1.26 $1.05 $0.79 $1.27 $1.22 $1.08 $1.09
Number of accumulation units outstanding at
end of period (000 omitted) 5 5 5 5 3 3 -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.08 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 2,061 1,347 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.08 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.08 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 33,819 37,728 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 208 185 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY AGGRESSIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.10 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.07 $1.10 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 17,486 19,238 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 207
VARIABLE ACCOUNT CHARGES OF 2.10% OF THE DAILY NET ASSETS OF THE VARIABLE ACCOUNT. (CONTINUED)
YEAR ENDED DEC. 31, 2011 2010 2009 2008 2007 2006 2005 2004
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 2) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 1,201 209 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - MODERATELY CONSERVATIVE PORTFOLIO (CLASS 4) (05/07/2010)
Accumulation unit value at beginning of
period $1.06 $1.00 -- -- -- -- -- --
Accumulation unit value at end of period $1.06 $1.06 -- -- -- -- -- --
Number of accumulation units outstanding at
end of period (000 omitted) 7,016 7,951 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
VARIABLE PORTFOLIO - PARTNERS SMALL CAP VALUE FUND (CLASS 3) (04/30/2004)
Accumulation unit value at beginning of
period $1.42 $1.17 $0.87 $1.30 $1.40 $1.19 $1.15 $1.00
Accumulation unit value at end of period $1.33 $1.42 $1.17 $0.87 $1.30 $1.40 $1.19 $1.15
Number of accumulation units outstanding at
end of period (000 omitted) 781 966 1,307 1,543 1,737 1,608 1,538 533
-----------------------------------------------------------------------------------------------------------------------------------
WANGER INTERNATIONAL (04/30/2004)
Accumulation unit value at beginning of
period $2.09 $1.71 $1.16 $2.18 $1.92 $1.43 $1.20 $1.00
Accumulation unit value at end of period $1.74 $2.09 $1.71 $1.16 $2.18 $1.92 $1.43 $1.20
Number of accumulation units outstanding at
end of period (000 omitted) 332 360 1,418 2,018 1,224 1,154 648 213
-----------------------------------------------------------------------------------------------------------------------------------
WANGER USA (04/30/2004)
Accumulation unit value at beginning of
period $1.36 $1.12 $0.81 $1.37 $1.32 $1.25 $1.15 $1.00
Accumulation unit value at end of period $1.28 $1.36 $1.12 $0.81 $1.37 $1.32 $1.25 $1.15
Number of accumulation units outstanding at
end of period (000 omitted) 460 587 1,785 1,833 1,633 1,011 769 250
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
208 RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Calculating Annuity Payouts.............. p. 3
Rating Agencies.......................... p. 4
Revenues Received During Calendar Year
2011................................... p. 4
Principal Underwriter.................... p. 5
Independent Registered Public Accounting
Firms.................................. p. 5
Condensed Financial Information
(Unaudited)............................ p. 6
Financial Statements
--------------------------------------------------------------------------------
RIVERSOURCE BUILDER SELECT VARIABLE ANNUITY -- PROSPECTUS 209
(RIVERSOURCE ANNUITIES LOGO)
RiverSource Life Insurance Company
829 Ameriprise Financial Center
Minneapolis, MN 55474
1-800-333-3437
RiverSource Distributors, Inc. (Distributor), Member FINRA.
Insurance and annuity products are issued by RiverSource Life Insurance Company.
(C)2008-2012 RiverSource Life Insurance Company. All rights reserved.
45303 N (4/12)
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
ESTIMATED
ITEM OF EXPENSE EXPENSE
--------------------------------------------------------- ---------
Registration fees $ 0
Federal taxes N/A
State taxes and fees (based on 50 state average) N/A
Printing and filing fees $ 2,900*
Legal fees $ 11,000*
Accounting fees N/A
Audit fees $ 2,000*
* Estimated expense.
Item 15. Indemnification
The amended By-Laws of the depositor provide that the depositor will indemnify,
to the fullest extent now or hereafter provided for or permitted by law, each
person involved in, or made or threatened to be made a party to, any action,
suit, claim or proceeding, whether civil or criminal, including any
investigative, administrative, legislative, or other proceeding, and including
any action by or in the right of the depositor or any other corporation, or any
partnership, joint venture, trust, employee benefit plan, or other enterprise
(any such entity, other than the depositor, being hereinafter referred to as an
"Enterprise"), and including appeals therein (any such action or process being
hereinafter referred to as a "Proceeding"), by reason of the fact that such
person, such person's testator or intestate (i) is or was a director or officer
of the depositor, or (ii) is or was serving, at the request of the depositor, as
a director, officer, or in any other capacity, or any other Enterprise, against
any and all judgments, amounts paid in settlement, and expenses, including
attorney's fees, actually and reasonably incurred as a result of or in
connection with any Proceeding, except as provided below.
No indemnification will be made to or on behalf of any such person if a judgment
or other final adjudication adverse to such person establishes that such
person's acts were committed in bad faith or were the result of active and
deliberate dishonesty and were material to the cause of action so adjudicated,
or that such person personally gained in fact a financial profit or other
advantage to which such person was not legally entitled. In addition, no
indemnification will be made with respect to any Proceeding initiated by any
such person against the depositor, or a director or officer of the depositor,
other than to enforce the terms of this indemnification provision, unless such
Proceeding was authorized by the Board of Directors of the depositor. Further,
no indemnification will be made with respect to any settlement or compromise of
any Proceeding unless and until the depositor has consented to such settlement
or compromise.
The depositor may, from time to time, with the approval of the Board of
Directors, and to the extent authorized, grant rights to indemnification, and to
the advancement of expenses, to any employee or agent of the depositor or to any
person serving at the request of the depositor as a director or officer, or in
any other capacity, of any other Enterprise, to the fullest extent of the
provisions with respect to the indemnification and advancement of expenses of
directors and officers of the depositor.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the depositor or the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 16. (a) Exhibits
1. Principal Underwriter Agreement for RiverSource Life Insurance Company
Variable Annuities and Variable Life Insurance Between RiverSource
Distributors, Inc. and RiverSource Life Insurance Company, filed as
Exhibit 3.1 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760 on January 3,
2007, is incorporated by reference.
2. Certificate of Merger of IDS Life Insurance Company and Articles of
Merger of IDS Life Insurance Company and American Enterprise Life
Insurance Company, filed as Exhibit 2 to the Post-Effective Amendment
No. 1 to the Registration Statement on Form S-1 for RiverSource Life
Insurance Company, File No. 333-139776, on April 24, 2007, is
incorporated by reference.
3.1 Copy of Amended and Restated By-Laws of RiverSource Life Insurance
Company, filed as Exhibit 27(f)(2) to Post-Effective Amendment No. 28 to
the Registration Statement on Form N-6, File No. 333-69777, on January 3,
2007, is incorporated by reference.
3.2 Consent in writing in lieu of a meeting of the Board of Directors of
American Enterprise Life Insurance Company establishing the American
Enterprise MVA Account dated Aug. 18, 1999, filed as Exhibit 3.3 to
RiverSource Life Insurance Company's Initial Registration Statement on
Form S-1, No. 333-86297, filed on Aug. 31, 1999, is incorporated by
reference.
3.3 Copy of Certificate of Amendment of Certificate of Incorporation of IDS
Life Insurance Company dated June 22, 2006. Incorporated by reference to
Exhibit 27(f)(1) to Post-Effective Amendment No. 28 to the Registration
Statement on Form N-6, File No. 333-69777, filed on January 3, 2007.
4.1 Form of Deferred Annuity Contract for the American Express(R) Signature
One Variable Annuity (form 240180), filed as Exhibit 4.1 to RiverSource
Variable Annuity Account's Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 333-85567, on Dec. 8, 1999,
is incorporated by reference.
4.1(a) Form of Deferred Annuity Contract Data Pages (form 240343) filed as
Exhibit 4.1(a) to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4 for RiverSource Variable Annuity Account, File No.
333-92297, on January 30, 2003, is incorporated by reference.
4.2 Form of Deferred Annuity Contract for the Wells Fargo
Advantage(SM)Variable Annuity (form 44209), filed as Exhibit 4.1 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-4, File No. 333-85567, on Nov. 4,
1999, is incorporated by reference.
4.3 Form of Deferred Annuity Contract for the Wells Fargo Advantage(SM)
Builder Variable Annuity (form 44210), filed as Exhibit 4.2 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1
to the Registration Statement on Form N-4, File No. 333-85567, filed
on Nov. 4, 1999, is incorporated by reference.
4.4 Form of Deferred Annuity Contract (form 240343), filed as Exhibit 4.1 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-4, File No. 333-92297, on Feb. 11,
2000, is incorporated by reference.
4.5 Form of Deferred Annuity Contract for American Express Signature Variable
Annuity (R) (form 43431), filed as Exhibit 4.1 to RiverSource Variable
Annuity Account's Pre-Effective Amendment No. 1 to Registration Statement
No. 333-74865 on Form N-4, filed on Aug. 5, 1999, is incorporated by
reference.
4.6 Form of Deferred Annuity Contract for the American Express(R) Galaxy
Premier Variable Annuity and the American Express Pinnacle Variable
Annuity(SM) (form 44170), filed as Exhibit 4.1 to RiverSource Variable
Annuity Account's Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4, File No. 333-82149, on Sept. 21, 1999, is
incorporated by reference.
4.7 Form of Deferred Annuity Contract Option L (form 271496), filed as
Exhibit 4.1 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-73958, on Feb. 20, 2002, is incorporated by reference.
4.8 Form of Deferred Annuity Contract Option C (form 271491), filed as
Exhibit 4.2 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-73958, on Feb. 20, 2002, is incorporated by reference.
4.9 Form of Deferred Annuity Contract (form 272646), filed as Exhibit 4.2 to
RiverSource Variable Annuity Account's Post-Effective Amendment No. 15 to
the Registration Statement on Form N-4, File No. 333-92297, on October
30, 2003, is incorporated by reference.
4.10 Form of Enhanced Death Benefit Rider contracts (form 44213), filed as
Exhibit 4.3 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-85567, on Nov. 4, 1999, is incorporated by reference.
4.11 Form of Guaranteed Minimum Income Benefit Rider for the American Express
Signature Variable Annuity (R) and the American Express(R) Signature One
Variable Annuity (6% Accumulation Benefit Base) (form 240186), filed as
Exhibit 4.2 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 3 to the Registration Statement on Form N-4, File No.
333-85567, on Feb. 11, 2000, is incorporated by reference.
4.12 Form of Guaranteed Minimum Income Benefit Rider (form 240350), filed as
Exhibit 4.4 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-92297, on Feb. 11, 2000, is incorporated by reference.
4.13 Form of Guaranteed Minimum Income Benefit Rider contracts (form 44214),
filed as Exhibit 4.4 to RiverSource Variable Annuity Account's
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4,
File No. 333-85567, on Nov. 4, 1999, is incorporated by reference.
4.14 Form of 5% Accumulation Death Benefit Rider for the American Express
Signature Variable Annuity(R) and the American Express Signature One
Variable Annuity(SM) (form 240183), filed as Exhibit 4.3 to RiverSource
Variable Annuity Account's Post-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 333-85567, on Dec. 8, 1999,
is incorporated by reference.
4.15 Form of Value Option Return of Purchase Payment Death Benefit Rider for
the American Express (R) Signature One Variable Annuity (form 240182),
filed as Exhibit 4.11 to Registrant's Post-Effective Amendment No. 5 to
Registration Statement No. 333-86297 on Form S-1 on April 28, 2000, is
incorporated by reference.
4.16 Form of 8% Performance Credit Rider for the American Express Signature
Variable Annuity(R) and the American Express(R) Signature One Variable
Annuity (form 240187), filed as Exhibit 4.4 to RiverSource Variable
Annuity Account's Post-Effective Amendment No. 2 to the Registration
Statement on Form N-4, File No. 333-85567, on Dec. 30, 1999, is
incorporated by reference.
4.17 Form of Performance Credit Rider (form 240349), filed as Exhibit 4.2 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-4, File No. 333-92297, on Feb. 11,
2000, is incorporated by reference.
4.18 Form of Benefit Protector(SM) Death Benefit Rider contracts (form
271155), filed as Exhibit 4.15 to RiverSource Variable Annuity Account's
Post-Effective Amendment No. 6 to the Registration Statement on Form N-4,
File No. 333-85567, on March 1, 2001, is incorporated by reference.
4.19 Form of Benefit Protector(SM) Plus Death Benefit Rider contracts (form
271156), filed as Exhibit 4.16 to RiverSource Variable Annuity Account's
Post-Effective Amendment No. 6 to the Registration Statement on Form N-4,
File No. 333-85567, on March 1, 2001, is incorporated by reference.
4.20 Form of Maximum Anniversary Value Death Benefit Rider (form 240346),
filed as Exhibit 4.3 to RiverSource Variable Annuity Account's
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4,
File No. 333-92297, on February 11, 2000, is incorporated by reference.
4.21 Form of Roth IRA Endorsement contracts (form 43094), filed as Exhibit 4.2
to RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1
to Registration Statement No. 333-74865 on Form N-4, filed on Aug. 5,
1999, is incorporated by reference.
4.22 Form of SEP-IRA for the Wells Fargo Advantage(SM) Variable Annuity, the
Wells Fargo Advantage(SM) Builder Variable Annuity, the American
Express(R) Signature One Variable Annuity, the American Express(R) Galaxy
Premier Variable Annuity, and the American Express Pinnacle Variable
Annuity(SM) (form 43412), filed as Exhibit 4.3 to RiverSource Variable
Annuity Account's Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4, File No. 333-72777, on July 8, 1999, is
incorporated by reference.
4.23 Form of SEP-IRA contracts (form 43433), filed as Exhibit 4.3 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
Registration Statement No. 333-74865 on Form N-4, filed on Aug. 4, 1999,
is incorporated by reference.
4.24 Form of Disability Waiver of Withdrawal Charges Rider (form 44215), filed
as Exhibit 4.5 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-85567, on Nov. 4, 1999, is incorporated by reference.
4.25 Form of Unemployment Waiver of Withdrawal Charges Rider for the Wells
Fargo Advantage(SM) Variable Annuity and the Wells Fargo Advantage(SM)
Builder Variable Annuity (form 44216), filed as Exhibit 4.6 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-4, File No. 333-85567, on Nov. 4,
1999, is incorporated by reference.
4.26 Form of TSA Endorsement contracts (form 43413), filed as Exhibit 4.4 to
RiverSource Variable Annuity Account's Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-4, File No. 333-72777, on July 8,
1999, is incorporated by reference.
4.27 Form of Traditional IRA or SEP-IRA Endorsement (form 272108) filed as
Exhibit 4.11 to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4 for RiverSource Variable Annuity Account, File No.
333-92297, on January 30, 2003, is incorporated by reference.
4.28 Form of Roth IRA Endorsement (form 272109) filed as Exhibit 4.12 to
Post-Effective Amendment No. 10 to the Registration Statement on Form N-4
for RiverSource Variable Annuity Account, File No. 333-92297, on January
30, 2003, is incorporated by reference.
4.29 Form of Variable Annuity Unisex Endorsement (form 272110) filed as
Exhibit 4.13 to Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4 for RiverSource Variable Annuity Account, File No.
333-92297, on January 30, 2003, is incorporated by reference.
4.30 Form of Maximum Anniversary Value Death Benefit Rider (form 272869) filed
as Exhibit 4.11 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 7 to Registration Statement on Form N-4, File No.
333-74865, on February 2, 2004, is incorporated by reference.
4.31 Form of 5% Accumulation Death Benefit Rider (form 272870) filed as
Exhibit 4.12 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 7 to the Registration Statement on Form N-4, File No.
333-74865, on February 2, 2004, is incorporated by reference.
4.32 Form of Enhanced Death Benefit Rider (form 272871) filed as Exhibit 4.13
to RiverSource Variable Annuity Account's Post-Effective Amendment No. 7
to the Registration Statement on Form N-4, File No. 333-74865, on
February 2, 2004, is incorporated by reference.
4.33 Form of Guaranteed Minimum Income Benefit Rider (Maximum Anniversary
Value Benefit Base) (form 272872) filed as Exhibit 4.14 to RiverSource
Variable Annuity Account's Post-Effective Amendment No. 7 to the
Registration Statement on Form N-4, Filed No. 333-74865, on February 2,
2004 is incorporated by reference.
4.34 Form of Guaranteed Minimum Income Benefit Rider (5% Accumulation Benefit
Base) (form 272873) filed as Exhibit 4.15 to RiverSource Variable Annuity
Account's Post-Effective Amendment No. 7 to the Registration Statement on
Form N-4, File No. 333-74865, on February 2, 2004 is incorporated by
reference.
4.35 Form of Guaranteed Minimum Income Benefit Rider (Greater of Maximum
anniversary Value Benefit Base or 5% Accumulation Benefit Base) (form
272874) filed as Exhibit 4.16 to RiverSource Variable Annuity Account's
Post-Effective Amendment No. 7 to the Registration Statement on Form N-4,
File No. 333-74865, on February 2, 2004 is incorporated by reference.
4.36 Form of Guaranteed Minimum Withdrawal Benefit Rider (The Guarantor(SM)
Withdrawal Benefit) (form 272875) filed as Exhibit 4.17 to RiverSource
Variable Annuity Account's Post-Effective Amendment No. 7 to the
Registration Statement on Form N-4, File No. 333-74865, on February 2,
2004 is incorporated by reference.
4.37 Form of Deferred Variable Annuity Contract (form 272876-DPSIG) filed as
Exhibit 4.18 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 7 to the Registration Statement on Form N-4, File No.
333-74865, on February 2, 2004 is incorporated by reference.
4.38 Form of Deferred Variable Annuity Contract (form 272876-DPSG1) filed as
Exhibit 4.28 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 13 to the Registration Statement on Form N-4, File No.
333-85567, on February 11, 2004 is incorporated by reference.
4.39 Form of Deferred Variable Annuity Contract (form 272876-DPWF6) filed as
Exhibit 4.29 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 13 to the Registration Statement on Form N-4, File No.
333-85567, on February 11, 2004 is incorporated by reference.
4.40 Form of Deferred Variable Annuity Contract (form 272876-DPWF8) filed as
Exhibit 4.30 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 13 to the Registration Statement on Form N-4, File No.
333-85567, on February 11, 2004 is incorporated by reference.
4.41 Form of Deferred Variable Annuity Contract (form 272876-DPFCC) filed as
Exhibit 4.21 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 5 to the Registration Statement on Form N-4, File No.
333-73958, on February 10, 2004 is incorporated by reference.
4.42 Form of Deferred Variable Annuity Contract (form 272876-DPFCL) filed as
Exhibit 4.22 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 5 to the Registration Statement on Form N-4, File No.
333-73958, on February 10, 2004 is incorporated by reference.
4.43 Form of Guaranteed Minimum Withdrawal Benefit Rider (form 273567) filed
as Exhibit 4.22 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 22 to the Registration Statement on Form N-4, File No.
333-92297, on Jan. 28, 2005 is incorporated by reference.
4.44 Form of Guaranteed Minimum Accumulation Benefit Rider (form 273568) filed
as Exhibit 4.23 to RiverSource Variable Annuity Account's Post-Effective
Amendment No. 22 to the Registration Statement on Form N-4, File No.
333-92297, on Jan. 28, 2005 is incorporated by reference.
4.45 Form of Annuity Endorsement (form 273566) filed as Exhibit 4.24 to
RiverSource Variable Annuity Account's Post-Effective Amendment No. 22 to
the Registration Statement on Form N-4, File No. 333-92297, on Jan. 28,
2005 is incorporated by reference.
4.46 Form of Guaranteed Minimum Lifetime Withdrawal Benefit Rider (Guarantor
Withdrawal Benefit for Life (SM) Rider) (Form 273959) filed as Exhibit
4.22 to Post-Effective Amendment No. 14 to the Registration Statement on
Form N-4, File No. 333-74865, on April 28, 2006, is incorporated by
reference.
4.47 Form of MVA Endorsement (form 44182) filed as Exhibit 4.25 to the Initial
Registration Statement on Form N-4 for RiverSource Variable Annuity
Account, File No. 333-139760, on January 3, 2007, is incorporated by
reference.
4.48 Form of Withdrawal Charges Endorsement (form 44189) filed as Exhibit 4.26
to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.49 Form of Age Endorsement (form 240496) filed as Exhibit 4.27 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.50 Form of TSA Plan Endorsement - RVSL (form 272865) filed as Exhibit 4.30
to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.51 Form of TSA Plan Endorsement - AEL (form 272865) filed as Exhibit 4.31 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.52 Form of 401 Plan Endorsement - RVSL (form 272866) filed as Exhibit 4.32
to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.53 Form of 401 Plan Endorsement - AEL (form 272866) filed as Exhibit 4.33 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.54 Form of Unisex Endorsement (form 272867) filed as Exhibit 4.34 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.55 Form of Fixed and Variable Annuity Contract (form 272876) filed as
Exhibit 4.35 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760, on January 3,
2007, is incorporated by reference.
4.56 Form of Fixed and Variable Annuity Contract - RVSL (form 273954) filed as
Exhibit 4.37 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760, on January 3,
2007, is incorporated by reference.
4.57 Form of Fixed and Variable Annuity Contract - AEL (form 273954) filed as
Exhibit 4.30 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760, on January 3,
2007, is incorporated by reference.
4.58 Form of Contract Data Pages - RVSL (form 273954 DPSIG) filed as Exhibit
4.39 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.59 Form of MAV GMIB Rider - RVSL (form 273961) filed as Exhibit 4.40 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.60 Form of MAV GMIB Rider - AEL (form 273961) filed as Exhibit 4.41 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.61 Form of 5% GMIB Rider - RVSL (form 273962 filed as Exhibit 4.42 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.62 Form of 5% GMIB Rider - AEL (form 273962) filed as Exhibit 4.43 to the
Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.63 Form of Greater of MAV or 5% GMIB Rider - RVSL (form 273963) filed as
Exhibit 4.44 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760, on January 3,
2007, is incorporated by reference.
4.64 Form of Greater of MAV or 5% GMIB Rider - AEL (form 273963) filed as
Exhibit 4.45 to the Initial Registration Statement on Form N-4 for
RiverSource Variable Annuity Account, File No. 333-139760, on January 3,
2007, is incorporated by reference.
4.65 Form of Unisex Endorsement - RVSL (form 273964) filed as Exhibit 4.46 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.66 Form of Unisex Endorsement - AEL (form 273964) filed as Exhibit 4.47 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139760, on January 3, 2007, is incorporated
by reference.
4.67 Form of 5% Death Benefit Rider - RVSL (form 273965) filed as Exhibit 4.48
to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.68 Form of 5% Death Benefit Rider - AEL (form 273965) filed as Exhibit 4.49
to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139760, on January 3, 2007, is
incorporated by reference.
4.69 Form of Greater of MAV or 5% Death Benefit Rider - RVSL (form 273966)
filed as Exhibit 4.50 to the Initial Registration Statement on Form N-4
for RiverSource Variable Annuity Account, File No. 333-139760, on January
3, 2007, is incorporated by reference.
4.70 Form of Greater of MAV or 5% Death Benefit Rider - AEL (form 273966)
filed as Exhibit 4.50 to the Initial Registration Statement on Form N-4
for RiverSource Variable Annuity Account, File No. 333-139760, on January
3, 2007, is incorporated by reference.
4.71 Form of Contract Data Pages (form 240343-EDP) filed as Exhibit 4.28 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139763, filed on January 3, 2007, is
incorporated by reference.
4.72 Form of Contract Data Pages - RVSL (form 273954DPINN) filed as Exhibit
4.31 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139763, filed on January 3, 2007,
is incorporated by reference.
4.73 Form of Contract Data Pages - AEL (form 273954DPINN) filed as Exhibit
4.32 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139763, filed on January 3, 2007,
is incorporated by reference.
4.74 Form of Variable Annuity Contract (form 271498) filed as Exhibit 4.29 to
the Initial Registration Statement on Form N-4 for RiverSource Variable
Annuity Account, File No. 333-139759, filed on January 3, 2007, is
incorporated by reference.
4.75 Form of Contract Data Pages - RVSL (form 273954DPFCC) filed as Exhibit
4.33 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139759, filed on January 3, 2007,
is incorporated by reference.
4.76 Form of Contract Data Pages - AEL (form 273954DPFCC) filed as Exhibit
4.34 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139759, filed on January 3, 2007,
is incorporated by reference.
4.77 Form of Contract Data Pages - RVSL (form 273954DPFCL) filed as Exhibit
4.35 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139759, filed on January 3, 2007,
is incorporated by reference.
4.78 Form of Contract Data Pages - AEL (form 273954DPFCL) filed as Exhibit
4.36 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139759, filed on January 3, 2007.
4.79 Form of Contract Data Pages - RVSL (form 273954DPSG1) filed as Exhibit
4.39 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139762, filed on January 3, 2007.
4.80 Form of Contract Data Pages - AEL (form 273954DPSG1) filed as Exhibit
4.40 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139762, filed on January 3, 2007.
4.81 Form of Contract Data Pages - RVSL (form 273954DPWFB) filed as Exhibit
4.41 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139762, filed on January 3, 2007.
4.82 Form of Contract Data Pages - AEL (form 273954DPWFB) filed as Exhibit
4.42 to the Initial Registration Statement on Form N-4 for RiverSource
Variable Annuity Account, File No. 333-139762, filed on January 3, 2007.
4.83 Form of Unisex Traditional and SEP IRA Endorsement (form 43412) filed as
Exhibit 4.3 to RiverSource Variable Annuity Account's Pre-Effective
Amendment No. 1 to Registration Statement No. 333-74865 on Form N-4, on
Aug 4, 1999, is incorporated by reference.
4.84 Form of Guaranteed Minimum Withdrawal Benefit Single Life Rider (form
273959-sg) filed as Exhibit 4.51 to RiverSource Variable Annuity Account
Post-Effective Amendment No. 1 to Registration Statement 333-139763 on
Form N-4, on Feb. 23, 2007, is incorporated herein by reference.
4.85 Form of Guaranteed Minimum Withdrawal Benefit Joint Life Rider (form
273959-jt) filed as Exhibit 4.52 to RiverSource Variable Annuity
Account's Post-Effective Amendment No. 1 to Registration Statement
333-139763 on Form N-4, on Feb. 23, 2007, is incorporated herein by
reference.
4.86 Form of Contract Data Pages - RVSL (form 273954DPBAC) filed as Exhibit
4.57 to Registrant's Post-Effective Amendment No. 3 to Registration
Statement on Form N-4, File No. 333-139759 on May 18, 2007 is
incorporated herein by reference.
4.87 Form of Contract Data Pages - RVSL (form 273954DPBA7) filed as Exhibit
4.58 to Registrant's Post-Effective Amendment No. 3 to Registration
Statement on Form N-4, File No. 333-139759 on May 18, 2007 is
incorporated herein by reference.
4.88 Form of Guaranteed Minimum Withdrawal Benefit Single Life Rider (form
275062-sg) filed as Exhibit 4.59 to Registrant's Post-Effective Amendment
No. 12 to the Registration Statement on Form N-4, File No. 333-139759 on
June 5, 2009 is incorporated herein by reference.
4.89 Form of Guaranteed Minimum Withdrawal Benefit Joint Life Rider (form
275062-jt) filed as Exhibit 4.60 to Registrant's Post-Effective Amendment
No. 12 to the Registration Statement on Form N-4, File No. 333-139759 on
June 6, 2009 is incorporated herein by reference.
4.90 Form of Deferred Annuity Contract (form 411265) filed as Exhibit 4.55 to
Registrant's Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009 is
incorporated herein by reference.
4.91 Form of Deferred Annuity Contract (form 411265) data pages for
RiverSource FlexChoice Select Variable Annuity filed as Exhibit 4.62 to
Registrant's Post-Effective Amendment No. 14 to the Registration
Statement on Form N-4, File No. 333-139759 on Nov. 25, 2009 is
incorporated herein by reference.
4.92 Form of Guarantee Period Accounts Endorsement (form 411272) filed as
Exhibit 4.57 to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009
is incorporated herein by reference.
4.93 Form of Maximum Anniversary Value Death Benefit Rider (form 411278) filed
as Exhibit 4.58 to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009
is incorporated herein by reference.
4.94 Form of 5% Accumulation Death Benefit Rider (form 411279) filed as
Exhibit 4.59 to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009
is incorporated herein by reference.
4.95 Form of Enhanced Death Benefit Rider (form 411280) filed as Exhibit 4.60
to Registrant's Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009 is
incorporated herein by reference.
4.96 Form of Return of Purchase Payment Death Benefit Rider (form 411277)
filed as Exhibit 4.61 to Registrant's Post-Effective Amendment No. 10 to
the Registration Statement on Form N-4, File No. 333-139763 on Nov. 25,
2009 is incorporated herein by reference.
4.97 Form of Benefit Protector(SM) Death Benefit Rider (form 411281) filed as
Exhibit 4.62 to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009
is incorporated herein by reference.
4.98 Form of Benefit Protector(SM) Plus Death Benefit Rider (form 411282)
filed as Exhibit 4.63 to Registrant's Post-Effective Amendment No. 10 to
the Registration Statement on Form N-4, File No. 333-139763 on Nov. 25,
2009 is incorporated herein by reference.
4.99 Form of Guaranteed Minimum Accumulation Benefit Rider (form 411283)filed
as Exhibit 4.64 to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009
is incorporated herein by reference.
4.100 Form of Guaranteed Lifetime Withdrawal Benefit Single Life Rider
SecureSource Stages(R) Rider (form 411284-sg) filed as Exhibit 4.65 to
Registrant's Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009 is
incorporated herein by reference.
4.101 Form of Guaranteed Lifetime Withdrawal Benefit Joint Life Rider
SecureSource Stages(R) Rider (form 411284-jt) filed as Exhibit 4.66 to
Registrant's Post-Effective Amendment No. 10 to the Registration
Statement on Form N-4, File No. 333-139763 on Nov. 25, 2009 is
incorporated herein by reference.
4.102 Form of Guaranteed Lifetime Withdrawal Benefit Single Life Rider
SecureSource Stages 2 Rider filed as Exhibit 4.48 to RiverSource Variable
Account 10 Post-Effective Amendment No. 61 under Registration Statement
333-79311 on July 12, 2010 is incorporated herein by reference.
4.103 Form of Guaranteed Lifetime Withdrawal Benefit Joint Life Rider
SecureSource Stages 2 Rider filed as Exhibit 4.49 to RiverSource Variable
Account 10 Post-Effective Amendment No. 61 under Registration Statement
333-79311 on July 12, 2010 is incorporated herein by reference.
5. Opinion of Counsel and consent to its use as to the securities being
registered, is filed herewith.
6-22. Not applicable.
23. Consents of Independent Registered Public Accounting Firms, are filed
herewith.
24. Power of Attorney to sign Amendments to this Registration Statement,
dated March 20, 2012 filed electronically as Exhibit 13 to RiverSource
Variable Account 10's Post-Effective Amendment No.66 to Registration
Statement No. 333-79311, filed on or about April 20, 2012 is incorporated
by reference.
25-99. Not applicable.
Item 17. Undertakings
Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933,
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement,
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement,
(iv) Registrant represents that it is relying upon the no-action assurance
given to the American Council of Life Insurance (pub. Avail. Nov. 28, 1988).
Further, Registrant represents that it has complied with the provisions of
paragraphs (1) - (4) of that no-action letter.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) That all post-effective amendments will comply with the applicable forms,
rules and regulations of the Commission in effect at the time such
post-effective amendments are filed, and
(4) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
RiverSource Life Insurance Company, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minneapolis, and State of
Minnesota on the 20th day of April, 2012.
RiverSource Life Insurance Company
(Registrant)
By /s/ John R. Woerner*
-----------------------------
John R. Woerner
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on the 20th day of April, 2012.
Signature Title
------------------------ -----------------------------------------
/s/ Gumer C. Alvero* Director and Executive Vice
--------------------------------- President - Annuities
Gumer C. Alvero
/s/ Richard N. Bush* Senior Vice President -- Corporate Tax
---------------------------------
Richard N. Bush
/s/ Bimal Gandhi* Senior Vice President -- Strategic
--------------------------------- Transformation
Bimal Gandhi
/s/ Steve M. Gathje* Director, Senior Vice President and Chief
--------------------------------- Actuary
Steve M. Gathje
/s/ James L. Hamalainen* Director, Senior Vice President -
--------------------------------- Investments
James L. Hamalainen
/s/ Brian J. McGrane* Director, Executive Vice President
--------------------------------- and Chief Financial Officer
Brian J. McGrane
/s/ Bridget M. Sperl* Director and Executive Vice President
--------------------------------- Client Services
Bridget M. Sperl
/s/ Jon Stenberg* Director and Executive Vice President -
--------------------------------- Life and Disability Insurance
Jon Stenberg
/s/ William F. Truscott* Director
---------------------------------
William F. Truscott
/s/ John R. Woerner* Chairman of the Board and President
---------------------------------
John R. Woerner
* Signed pursuant to Power of Attorney dated March 20, 2012 filed electronically
as Exhibit 13 to RiverSource Variable Account 10's Post-Effective Amendment
No.66 to Registration Statement No. 333-79311 filed on or about April 20, 2012,
incorporated herein by reference, by:
/s/ Dixie Carroll
---------------------------------
Dixie Carroll
Assistant General Counsel and
Assistant Secretary
EXHIBIT INDEX
5. Opinion of Counsel and Consent
23. Consents of Independent Registered Public Accounting Firms for RiverSource
Life Insurance Company